9911796707
TMI Blog1998 (11) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee to disclose the same again and it is omission on the part of the Income-tax Officer himself and, therefore, he is not entitled to reopen the assessments under section 147(a) ?" This reference pertains to the assessment year 1975-76. The material facts giving rise to this reference, briefly stated, are as follows : The income of the assessees for the assessment year 1975-76 was assessed by the Income-tax Officer under section 143(3) of the Income-tax Act, 1961 ("the Act"). The assessees owned extensive lands situated in the heart of Panaji town which were valued by them as follows: ------------------------------------------------------------------------------------------------- Sl.No Name of the assessee Area Amount (in Rs.) ------------------------------------------------------------------------------------------------- 1. Mr. Joao de Deuz, Carvalho Vasco 5,481 sq. mtrs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer. The Commissioner (Appeals) accepted this contention of the assessees and cancelled the order of reassessment. Aggrieved by the order of the Commissioner (Appeals), the Revenue appealed to the Income-tax Appellate Tribunal ("the Tribunal"). The contention of the Revenue before the Tribunal was that this was a clear case of failure of the assessees to disclose the material facts. It was contended on behalf of the Revenue that there was not even a whisper in the returns filed by the assessees about the ownership of the lands and the transfer thereof at market value to the firm as capital. It was contended that there being a clear non-disclosure of the primary facts by the assessees, the Income-tax Officer was justified in exercising power under section 147(a) (if the Act and reopen the assessments and reassess the income of the assessees. The Tribunal did not accept the above contention of the Revenue, as it was also of the view that while making the assessment of the firm, Carvalho Real Estate, of which the assessees were partners, the Income-tax Officer was aware of the fact of transfer of the lands belonging to the assessees to the firm and hence there was no necessity fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their individual returns. We have given our careful consideration to the reasoning of the Tribunal. We, however, find it extremely difficult to accept the same. In our opinion, the Tribunal misconstrued and misinterpreted the provisions of section 147(a) of the Act and the settled law on the subject. At the material time, section 147 of the Act read as follows : "147. Income escaping assessment.--- If--- (a) the Income-tax Officer, has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer, or to disclose fully and truly all material facts necessary for his 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 Income-tax 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement was occasioned by reason of omission or failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for the assessment. [See Phool Chand Bajrang Lal v. ITO [19931 203 ITR 456, 464 (SC)]. In the instant case, there is no dispute about the fulfillment of the first condition. Admittedly, profits and gains chargeable to tax had escaped assessment. The only dispute is regarding the second condition, whether the escapement was occasioned by reason of omission or failure on the part of the assessees to disclose fully and truly all material facts necessary for assessment. Obviously, there was a failure on the part of the assessees to disclose material facts relevant for the assessment of capital gains on transfer of lands by them to the partnership firm. The lands were transferred by the assessees to the firm which resulted in capital gains chargeable to tax. In the return of income furnished by the assessees, there was no mention of the transfer of the lands by the assessees to the firm. The Income-tax Officer discovered this omission, may be from the assessment of the firm to which the lands in question were transferred by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay also be made in this connection to the decision of this court in Zohar Siraj Lokhandwala v. M. G. Kamat [1994] 210 ITR 956, wherein it was held that so far as the primary facts are concerned, it is the assessee's duty to disclose all of them. The fact that the Assessing Officer could have found out the correct position by further probing the matter does not exonerate the assessee from his duty to make a full and true disclosure of the material facts. Explanation 2 to section 147 of the Income-tax Act, 1961, makes the position abundantly clear. In Zohar Siraj Lokhandwala v. M. G. Kamat [1994] 210 ITR 956 (Bom), during the accounting year relevant to the assessment year 1987-88, the assessee had received a sum of Rs. 45 lakhs for the assignment of his beneficial interest in Lokhandwala Developers. The assessee showed this amount in his return of income as a receipt and claimed the same to be exempt from levy of capital gains tax on the basis of the decision of the Supreme Court in CIT v. B. C. Srinivasa Setty [1981] 128 ITR 294, wherein it was held that there will be no capital gains from the transfer of a capital asset if its cost of acquisition was nil. This claim of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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