TMI Blog1971 (9) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroduction of section 12B in the Indian Income-tax Act, 1922. Section 12B provided, inter alia, that the tax shall be payable by an assessee under the head "Capital gains" in respect of any profits or gains arising from the sale, exchange, relinquishment or transfer of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, relinquishment or transfer took place. Since the rotary machine was a capital asset and it was sold by the assessee on 28th October, 1956, that is, after 31st March, 1956, the profit or gain of Rs. 25,450 arising to the assessee from the sale of the rotary machine was liable to be taxed in the hands of the assessee as capital gain under section 12B. The assessee, however, did not show this capital gain which had resulted to it in the return filed by it for the assessment year 1957-58. Section A of Part I of the return specified various heads of income and required the assessee to show the amount of income, profits and gains against each head of income. The last head of income set out in Section A of Part I of the return was " capital gains " and the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 147(a). The Income-tax Officer accordingly included the capital gain of Rs. 25,450 in the total income of the assessee and reassessed the assessee on the basis that it was liable to be taxed in respect of such capital gain under section 12B. The assessee being aggrieved by the order of reassessment made by the Income-tax Officer preferred an appeal to the Appellate Assistant Commissioner but the appeal was unsuccessful. The assessee carried the matter in further appeal to the Tribunal but the Tribunal also took the same view as the lower authorities and confirmed the reassessment made on the assessee. The assessee thereupon applied to the Tribunal for making a reference to this court and on the application of the assessee, the Tribunal referred the following question, namely : " Whether, on the facts and in the circumstances of the case, proceedings for reassessment under section 147(a) of the Income-tax Act, 1961, were validly initiated ? " for the opinion of this court. Now it is clear on a plain reading of section 147(a) that to confer jurisdiction under that section to issue notice in respect of assessments beyond the period of four years from the end of the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer, Calcutta, that the " material facts " which are required to be disclosed by an assesses at the time of his assessment are primary facts, material and necessary for the purpose of his assessment. The duty of the assesses is to disclose only primary facts and it is for the assessing authority to decide what inference of facts can be reasonably drawn from the primary facts and what legal inferences must ultimately be drawn from the primary facts and the other facts inferred from them. The assesses is not bound to tell the assessing authority what inferences, whether of fact or law, should be drawn and his failure to communicate to the assessing authority the proper and correct inference to be drawn from the primary facts cannot be regarded as failure to disclose " material facts ". The assesses is required to disclose only primary facts and the primary facts to be disclosed by him must be material or relevant to the decision of the question before the assessing authority so that the non-disclosure of such facts would have a material bearing on the question of escapement of income from assessment. If the assessee has disclosed primary facts which are material and necessary f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d November, 1956. It was not apparent from the machinery account as to whether the rotary Machine was sold between 15th November, 1955, and 31st March, 1956, or between 1st April, 1956, and 2nd November, 1956. It could have been sold during either of the two periods. The actual date of sale of the rotary machine was not disclosed by the assessee. It is rather curious that, though the assessee did set out in the machinery account the dates on which different machines were purchased by the assessee during Samvat Year 2012, no date was mentioned so far as sale of the rotary machine was concerned. It is difficult to perceive any reason why the assessee should have followed a different practice in regard to sale of the rotary machine. But whatever be the reason, the fact remains that the actual date of sale of the rotary machine was a primary fact, material and necessary for the purpose of determining whether the profit or gain aria to the assessee from the sale of rotary machine was chargeable to tax and this primary material fact was not disclosed by the assessee at the time of the original assessment. The question then arises as to whether the capital gain of Rs. 25,450 emped asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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