TMI Blog2002 (2) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... h was allowed in the original assessment passed under section 143(3) of the Act for the assessment year 1985-86 by order dated December 16, 1986. However, in the absence of sufficient profit for that year, the same was carried forward and allowed to be set-off against the income of the assessment year 1987-88. The Supreme Court in a decision rendered on March 7,1993, in CIT v. N.C. Budharaja and Co. [1993] 204 ITR 412, held that the investment allowance on drilling rigs is not allowable. In view of the decision of the apex court in N.C. Budharaja and Co.'s case [1993] 204 ITR 412, the assessing authority issued a notice under section 148 of the Act in February, 1995, to the assessee to reopen the case under section 147 of the Act. The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance on item where it was not allowable by law, the assessee has failed to disclose fully and truly all material facts. Thus, it was a case of escaped assessment under clause (d) of Explanation 1 appended to section 147 of the Act. It is further submitted that the word "information" employed in section 147(b) includes "information" as to the true and correct state of the law and so would cover "information" as to the relevant judicial decision. It is further submitted that the assessing authority has rightly treated the subsequent Supreme Court decision in N.C. Budharaja and Co.'s case [1993] 204 ITR 412, as "information". Learned counsel has placed reliance on a decision of the apex court in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). Explanation 1.--For the purposes of this section, the following shall also be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... caped assessment for that year for the reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that year. Clause (b) provides that even if there is no omission or failure as provided under clause (a) on the part of the assessee, still if the Assessing Officer receives an information which makes him to believe that the income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance. Explanation 1 appended to section 147 enumerates the instances which shall be deemed to be the cases of escaped assessment. Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1997] 224 ITR 560, held that the duty of the assessee is only to fully and truly disclose all material facts. Explaining the expression "material facts" as contained in section 34(1)(a), the court observed that it refers only to the primary facts and the duty of the assessee is to disclose such primary facts. The court further observed that there is no duty cast on the assessee to indicate or draw the attention of the Income-tax Officer to what factual or legal or other inferences can be drawn from the primary facts, disclosed. There is not a word in the order of assessment if the respondent-assessee omitted to disclose any material fact. Turning to clause (b) of section 147 of the Act, irrespective of the fact that there has been no o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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