9911796707
TMI Blog1971 (7) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act, 1922, on a total income of Rs. 99,475, which included Rs. 48,802 as income from other sources. This assessment was not accepted by the assessee and ultimately his total income was determined Rs. 14,597. The building, machinery and furniture of the cold storage were sold by the on 8th December, 1953, to a partnership firm known as Messrs. Karnal Cold Storage in which the assessee became a partner with a half share. The assessment order (dated March 31, 1959), in the assessee's case did not disclose that the Income-tax Officer had taken into account any surplus arising from the sale of building, machinery and furniture in the total income of the assessee by virtue of the proviso to section 10(2)(vii). The Income-tax Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and furniture of the cold storage were brought to tax under section 34(1)(a). An appeal by the assessee to the Appellate Assistant Commissioner-met with no success and so also his further appeal to the Income-tax Appellate Tribunal. The Tribunal, while rejecting the appeal, observed : ".... that the primary fact, viz., the sale of the building, machinery and plant by the assessee and his realising a surplus over the written down value as a result of the sale was not disclosed by the assessee at the time of the original assessment. The mere fact that the assessee had appended to the return of income a copy of the building and machinery accounts and of the account of M/s. Karnal Cold Storage (newly formed firm), does not amount to a full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to income-tax had escaped assessment for that year ? (ii) Whether, on the facts and in the circumstances of the case, there was any sale within the meaning of section. 10(2)(vii) of the Act ? (iii) If the answer to the above question (ii) is in the affirmative, whether, on the facts, there was any income, profits and gains which had escaped assessment ? (iv) Whether, on the facts, the Appellate Tribunal's judgment is not vitiated in law owing to its failure to deal with the contentions of the assessee on merits ? The Tribunal by its order dated 24th April, 1970, refused to refer questions Nos. (ii), (iii) and (iv) but referred the first question. Mr. A. R. Aggarwal, learned counsel for the assessee, has contended that in fact there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis that there was a sale. The third contention of the learned counsel is based on the following observations of the Supreme Court in Malegaon Electricity Co. P. Ltd. v. Commissioner of Income-tax "For the reasons mentioned above, we are of the opinion, that the High Court should not have and we in our turn will not answer the questions referred under section 66(1) of the Act, because, in our opinion, those questions cannot be answered without first deciding whether the part of the sale price received by the assessee amount to profits under section 10(2)(vii). The Tribunal must first decide that question and thereafter decide the other questions of law arising for decision on the basis of its decision whether there was any profits f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld was supplied to him so as to enable him to find out the price in excess of the written down value realised by the assessee. It is true that if the Income-tax Officer had made some investigation, particularly if he had looked into the previous assessment records, he would have been able to find out what the written down value of the assets sold was and, consequently, he would have been able to find out the price in excess of their written down value realised by the assessee. It can be said that the Income-tax Officer if he had been diligent could have got all the necessary information from his records. But, that is not the same thing as saying that the assessee had placed before the Income-tax Officer truly and fully all material facts ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant facts." There is no denial that the facts of the present case and that of the Supreme Court, excepting the distinction have pointed out, are identical. The assessee in the instant case did not disclose the fact of this sale in Part V of the return of income. On the other hand, column 5 of the return in which the information regarding sale of building and machinery should have been furnished was scored out by the assessee. Therefore, the mere filing of copies of accounts of building, machinery, etc., did not amount to disclosure of material facts in view of the Explanation to section 34(1)(a). For the reasons recorded above, we answer the question referred to us in the affirmative, i.e., against the assessee and in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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