TMI Blog1996 (1) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income from " salary " from Hotel Banjara Ltd. Though the assessee claims that after filing of the said return of income a notice under section 143(2) of the Act was issued by the Income-tax Officer, Ward-15(6), and, in response thereto he had filed a letter dated September 26, 1989, the issue of any such notice is denied by the Revenue. It, however, appears that subsequently another return of income for the assessment year in question, marked as duplicate, was filed on February 26, 1990, before another officer, namely, the Deputy Commissioner of Income-tax (Special Range 12), New Delhi, who vide his order dated March 15, 1990, passed the assessment order under section 143(1) of the Act, accepting the income declared by the assessee. No further tax was found to be payable by the assessee. Thereafter, vide order dated July 11/16, 1991, the Commissioner of Income-tax, Delhi-IX, transferred the case of the assessee from the Deputy Commissioner, Special Range-12, to the Assistant Commissioner, Central Circle-12, who has now issued the impugned notice under section 148 of the Act, requiring the assessee to file the return as he has reason to believe that certain income chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly all material facts necessary for the assessment of the year ". On the merits it is claimed that during the course of assessment proceedings, copies of the lease/rent deeds between the assessee and Hotel Banjara Ltd. and Gulmohar Estates Ltd. were filed by the assessee along with his letter dated September 26, 1989, the same were on record when the assessment was completed by the Deputy Commissioner of Income-tax, Special Range 12, on March 15, 1990, and, therefore, no material fact regarding interest-free securities was suppressed by the assessee and he was under no obligation to tell the Assessing Officer to minutely peruse and scrutinise the lease/rent deed to ascertain the correct annual letting value of the property in question or the inference he should draw therefrom. The allegations of excessive claim for municipal taxes and non-disclosure of value of perquisites are also denied and it is submitted that there had been no non-disclosure of material facts on the part of the assessee, the assessing authority could not be permitted to reopen a concluded assessment. In the counter-affidavit filed on behalf of the respondent-Assessing Officer, it is denied that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised the question and addressed us at some length as to whether the old section 147 as it existed prior to its amendment by the Direct Tax Laws (Amendment) Act, 1987, would, as claimed by the assessee, or the amended section, which admittedly is much wider in scope as claimed by the respondent, apply to the facts of the case. The pre-amendment position was that before proceedings under section 147(a) could be initiated, the twin conditions, namely : (i) the Assessing Officer having reason to believe that income chargeable to tax has escaped assessment, and (ii) such escapement was occasioned by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that year, which were held to be cumulative, must be satisfied, whereas the newly substituted section 147 provides that if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, assess or reassess such income. The result is that under the old section the fulfilment of both the conditions (i) and (ii) is the sine qua non for taking action under section 147(a) and this alone could c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts amount to disclosure of primary facts is the question ? Indeed, the answer is given in the dissenting portion of the judgment by Hidayatullah J. (as his Lordship then was) in Calcutta Discount Co.'s case [1961] 41 ITR 191 (SC) saying that if some material for the assessment lay embedded in the evidence which the revenue could have uncovered but did not, then, it is the duty of the assessee to bring it to the notice of the assessing authority because the assessee knows all the material and relevant facts-the assessing authority might not. These observations have been applied and reiterated in subsequent decisions of the Supreme Court and still hold the field. To meet the contention of the assessee that once the aforenoted documents had been produced before the Assessing Officer, there was no further obligation cast on him to disclose further facts, which on due diligence, the Assessing Officer might have discovered, Mr. Rajendra, learned counsel for the Revenue, has invited our attention to Explanation 2 (as it stood at the relevant time) to section 147, which runs as follows : " Explanation 2. --- Production before the Assessing Officer of account books or other evidence fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the meaning of section 147(a) of the Act. In the light of the aforenoted legal position we may now deal with the contentions of learned counsel for the parties. As noted above, the main stand of the Assessing Officer is that the facts regarding furnishing of interest-free securities to the tune of Rs. 14.82 lakhs by the said two companies to the assessee to compensate him for the difference in the market rent of the property and the actual rent paid to him, came into light only during the course of assessment proceedings for the subsequent assessment year, viz., 1988-89, when the assessee had sought to justify the actual receipt of rent at much lesser rate, viz., Rs. 78,000 (declared for the assessment year 1988-89) as against the annual rateable value of Rs. 1,62,400 determined by the municipal corporation for the purpose of property tax. On the other hand, though the assessee, interestingly, has not denied that income from house property declared and assessed, on the basis of actual rent received, was admittedly less than the sum for which the property might reasonably be expected to be let for the year, the reopening of the assessment is being challenged on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax, Central Circle-12, New Delhi, by invoking the provisions of section 147(a) and by issuing notice under section 148 of the Act, after recording the reasons for the formation of his belief that in the original assessment proceedings, the assessee had not disclosed the material facts truly and fully necessary for his assessment under the head " Income from house property ". Since we have upheld the validity of notice under section 148 in respect of the rental income, it is not necessary to go into the question of excessive claim of municipal tax or non-disclosure of value of perquisite and as observed by the Supreme Court in ITO v. Mewalal Dwarka Prasad [1989] 176 ITR 529, it will be for the Assessing Officer to take into account these two items in the fresh assessment proceedings. In view of the foregoing discussion we find it difficult to hold that it was a case where the Assessing Officer had no material in his possession to record his satisfaction that the income of the assessee had escaped assessment for the reason of omission or failure on the part of assessee to disclose fully and truly all material facts necessary for the assessment. Having found so it is not for this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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