TaxTMI 
TaxTMI 
1991 (4) TMI 46
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....ation on the part of the assessee to show the initial depreciation in the form of return and, therefore, it cannot be said that the assessee had failed to disclose fully and truly all material facts necessary for its assessment within the meaning of section 147(a) of the Income-tax Act, 1961 ?" " The assessee had installed items of new machinery during the assessment years 1949-50 to 1954-55 in respect of which it was entitled to and was allowed initial or further depreciation at the rate of 20% of the cost of the new machinery under section 10(2)(vi), proviso, clause (c) of the Indian Income-tax Act, 1922. While completing the assessments under reference under section 143(3), the Income-tax Officer had not accepted the assessee's claim fo....
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....er-assessments, i.e., excessive allowance of depreciation in all these years was on account of the assessee's failure to disclose fully and truly all material facts necessary for the assessment. It is common ground that unless it could be held that the under-assessments or excessive allowance of depreciation was due to the assessee's failure to do so, the reopening of the assessments would be invalid. The Appellate Assistant Commissioner and the Tribunal have given a finding that there was no obligation on the part of the assessee to point out to the Income-tax Officer that the assessee had been granted initial depreciation during the assessment years 1949-50 to 1954-55 and that the aggregate of all depreciations ought not to have exceeded....
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....or....." It is evident that mere reasons to believe that the income has escaped assessment is not enough to give the Income-tax Officer jurisdiction to reopen an assessment under section 147(a). There must also be material to show that the assessee failed to disclose fully and truly all material necessary for the assessment. The Supreme Court, in the case of Calcutta Discount Co. Ltd. [1961] 41 ITR 191, has held long back that the duty of the assessee is to disclose primary facts and it is for the Income-tax Officer to draw correct inferences of facts or law from the primary facts. This view has been reaffirmed by the Supreme Court in a number of subsequent cases. The next provision to be considered is the proviso, clause (c) to section 1....