TMI Blog1983 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ntum. The AAC confirmed the quantum of cost of construction but did not give a finding on the validity of the reopening of the assessment. The assessee thereafter appealed to the Income-tax Appellate Tribunal questioning the validity of the reopening of the assessment. In view of the fact that the AAC has not given any finding on that question, the Tribunal remitted the matter back to the AAC to give a finding on that issue. The AAC submitted remand report dated March 15, 1976, and his finding was that on the state of the records, he was unable to give a finding either way. The Tribunal thereafter heard the appeal and held that the ITO was justified in reopening the assessment and that the order of reassessment is also correct on merits. Aggrieved by the view taken by the Tribunal on the question of validity of the reopening of assessment, the assessee has sought and obtained, a reference on the following question : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that all the materials necessary for the assessment have not been furnished by the appellant and the reopening of the assessment under section 147(a) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing some details of expenses towards the cost of construction. On perusing the note-book (it was found that it) has been prepared for the occasion that it was not written as and when the transactions took place and that, therefore, unless the relevant vouchers and other materials in support of the expenses claimed in the note-book are produced, the note-book by itself cannot be taken as authentic. According to the approved plan of the building, the assessee is found to have got permits for 14 1/2 tons of cement on December 22, 1964, and for 14 1/2 tons of cement on September 18, 1964. The purchase of cement to the tune of 29 tons has not been shown in the books produced by the assessee to prove the cost of construction. When this was pointed out, the assessee had no explanation to offer. The ITO, therefore, took the difference between Rs. 87,300 and Rs. 21,235 as unexplained investment in the properties by the assessee. Thus, on the materials set out above, it is seen that subsequent to the original assessment there was investigation, and that investigation revealed that the assessee has undertaken reconstruction of both the buildings at cost of Rs. 87,300 and that he has not eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not furnished fully and truly all the requisite materials, it is not possible for us to agree with the said contention of the assessee. Merely because the assessee has furnished at the time of the original assessment the account books and other materials, the power of the ITO to invoke s. 147(a), if he finds that the materials furnished are not complete or true, is not taken away. That section clearly contemplates the reopening of the assessment when the assessee has failed to disclose fully and truly all material facts bearing on the assessment. Here, though the assessee has returned the cost of the improvements made to the building and other details, those materials which were straight-away accepted by the ITO have been found to be not true. Therefore, the assessee cannot be taken to have disclosed the materials fully and truly, and this would attract s. 147(a). In Kantamani Venkata Narayana Sons v. 1st Addl. ITO [1967] 63 ITR 638, the Supreme Court, while dealing with the scope of s. 34 of the 1922 Act (corresponding to s. 147 of the 1961 Act) had observed that the assessee does not discharge his duty to disclose fully and truly material facts necessary for the assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hettiar v. CIT [1969] 73 ITR 26, a Division Bench of this court had expressed the view that an assessee cannot object to reopening of the assessment merely on the ground that all the account books were before the original authority and a little more circumspection on his part would have brought to light the so-called primary facts latterly discovered by the reopening authorities, relying on the decision of the Supreme Court in Kantamani Venkata Narayana Sons v. 1st Addl. ITO [1967] 63 ITR 638, referred to above. The learned counsel for the assessee refers to the decision of a Division Bench of the Madhya Pradesh High Court in Lokendra Singh v. ITO [1981] 128 ITR 450 dealing with the scope of s. 147(a) of the 1961 Act wherein the court has expressed that when the primary facts were already before the ITO and after some routine enquiry, the ITO could have assessed the income on the basis of such information, it is not open to him to invoke the provisions of s. 147(a) and reopen the assessment even though he may have omitted to notice the facts mentioned in the return by oversight. In that case, agricultural lands belonging to the assessee were acquired by the Government and posse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission had been paid, it has to be refunded to the company. In view of the statutory prohibition against payment of commission, the sole selling agent in that case was held not entitled to any commission and, therefore, income has not escaped assessment so as to enable the ITO to invoke s. 147(a). This decision also does not help the assessee. In a recent decision of the Bombay High Court in Keki Hormusji Gharda v. Raisinghani, WTO [1982] 135 ITR 386, a case more or less similar to the one before us came up for consideration. In that case, an assessee had valued his property for the assessment year 1976-77 at Rs. 1,17,793. For the subsequent assessment year 1977-78, the assessee himself filed valuation report showing the valuation of the property as on March 31, 1977, at Rs. 5,05,000. The assessee, soon thereafter, sold the property for the almost equivalent value of Rs. 5,00,000. Having regard to the difference in the assessee's own valuation in 1976-77, the WTO issued a notice to reopen the assessment for the assessment year 1976-77 under s. 17 of the W.T. Act, 1957, on the ground that he had reason to believe that the net wealth of the assessee chargeable to tax had escape ..... X X X X Extracts X X X X X X X X Extracts X X X X
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