TMI Blog1997 (9) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... ruly all relevant facts necessary for its assessment for the year under consideration as a result of which income chargeable to tax had escaped assessment for that year. The reasons recorded for re-opening the assessment by the Income-tax Officer were to the following effect amongst others : "...During the course of assessment of subsequent years it was discovered that the assessee-company was maintaining guest houses at Allahabad and at Nainital. It was found that expenses incurred on these guest houses included certain expenses which were non-business expenses. The fact of their being non-business for Allahabad guest house has finally been confirmed by the Tribunal in subsequent assessment year. The Department has held that out of the total expenses, expenses to the tune of 90 per cent. were such non-business expenses. Thus, the expenses to this extent would be clearly disallowable in the hands of the company in this year. On the same basis depreciation and notional letting value of guest house to the extent of 90 per cent. will be disallowable and assessable respectively in the hands of the company. For the year 1965-66 the assessee-company has not given the details of expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that year, were not made out. The appeal for the year under consideration was allowed by the Commissioner of Income-tax (Appeals) taking the view as under : "The company's guest house at 24 Queens Road, Allahabad, was established in 1962 and this fact was disclosed in the company's balance sheet for the period ending September 30, 1962. A resolution had also been passed by the board of directors of the company on July 31, 1962, that the company's directors Mr. M. R. Shervani and Mrs. T. R. Shervani would be charged for their stay in the guest house at the rate at which paying guests will be charged by the company. Details regarding the investment in the acquisition of the guest house were furnished by the appellant in a letter addressed to the Income-tax Officer, on January 20, 1964. The fact that Shri M. R. Shervani and Smt. T. R. Shervani were staying in the company's guest house had also been brought to the notice of the Department through the means of the returns of income/wealth filed by these two persons..... ... In view of the foregoing facts and the findings recorded by the Income-tax Appellate Tribunal in their order dated October 25, 1975 in I.T.A. No. 330 (All) of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done in the course of assessment proceedings for the accounting year ended September 30, 1962, and subsequent years, and that all the relevant details were mentioned by the Income-tax Appellate Tribunal in their order for 1968-69 relied upon by learned Commissioner of Income-tax (Appeals)." On consideration of the rival submissions in a very elaborate manner to which we will revert again, the Tribunal eventually held as under : "... we have no hesitation in coming to the conclusion that the reopening of the assessment for the assessment year under consideration on the ground that the assessee had not disclosed all the primary facts necessary for determining the assessee's proper income was justified in view of the omission on its part to disclose the information regarding the use of its Allahabad guest house for the permanent residence of Mr. and Mrs. Shervani on payment of the token sum of Rs. 5 per day per head only." On this view of the matter, the Tribunal upheld the proceedings under section 147(a) and the order appealed against was reversed. The appeal was restored to the file of the Commissioner of Income-tax (Appeals) with the directions that he would now re-determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inferences as regards certain other facts ; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable... .... Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn." In Gemini Leather Stores [1975] 100 ITR 1 (SC), relied upon by the assessee, the above legal position was re-stated by the apex court in the following terms: "In the case before us, the assessee did not disclose the transactions evidenced by the drafts which the Income-tax Officer discovered. After this discovery the Income-tax Officer, had in his poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier assessment years. The Tribunal has noticed in its order that it was common ground that the relevant details appearing on the issue were brought out in the course of assessment for the assessment year 1969-70. It was again a common ground that no information whatsoever appearing on the issue about the nature of the guest house expenses was placed on record by the assessee during the course of the assessment proceedings for the year under consideration. Before proceeding further, it is necessary to point out that the Tribunal has held in clear terms that in its earlier decision in I.T.A. No. 330 (All) of 1974-75 in respect of the assessment year 1968-69, the controversy arising in the present case, though agitated was not gone into and decided on the merits. Before us, this position was not disputed by learned counsel for the assessee and indeed, during the course of arguments, the order of the Income-tax Appellate Tribunal for the assessment year 1968-69 was not pressed in aid. From the Tribunal's order, it is also apparent that it examined for itself and looked into the assessment records of the assessee for the assessment years 1963-64 and 1964-65 as well as the extracts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs were in progress..." Paragraphs 9.2(d) and 9.1 of the Tribunal's order on which reliance was placed, are of no help to the assessee. Paragraph 9.1 begins with "we have carefully examined the facts of the case". Paragraph 9.2(a) states that the guest house at Allahabad was acquired by the assessee-company for the first time in the accounting period ending on September 30, 1962, corresponding to the assessment year 1963-64. The said paragraph thereafter refers to the directors' report to the shareholders about the acquisition of the guest house. Paragraph 9.2(b) makes mention of the letter dated January 30, 1964, which the assessee had filed on record, giving the break-up regarding the cost amongst various assets acquired. Sub-paragraph (c) of paragraph 9.2 states that no details pertaining to the expenses of the guest house or that the guests staying in it were to be charged at the rate of Rs. 5 per day or that Mr. and Mrs. Shervani would stay in the said guest house on a permanent footing and they will be charged at Rs. 5 per day only, were given in the course of the assessment for the assessment year 1963-64. Then comes sub-paragraph (d) on which heavy reliance was placed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been considered fairly and with due care ; whether the evidence pro and con has been considered in reaching the final conclusion ; and whether the conclusion reached by the Tribunal has been coloured by irrelevant considerations or matters of prejudice. It is not however necessary that the order of the Tribunal must be examined minutely, sentence by sentence, so as to discover a minor lapse here or an incautious opinion there to be used as a peg on which to hang an issue of law. To similar effect there is an earlier decision of the Supreme Court in Homi Jehangir Gheesta v. CIT [1961] 41 ITR 135. The case law referred to and relied upon by learned counsel for the assessee is clearly distinguishable and has no application on the facts of the instant case. The consideration of the Tribunal's order in its entirety, in our opinion, gives no scope for an argument that the assessee had disclosed all material and primary facts within the meaning of section 147(a) of the Act which were necessary for a proper assessment for the year under consideration. In the reasons recorded by the Income-tax Officer for initiation of the reassessment proceedings, it is clearly stated that it was du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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