TMI Blog1984 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons why the reassessments were sought to be reopened. On March 7,1976, and October 18, 1976, the petitioner wrote to the ITO concerned and asked for the reasons. No reasons were forthcoming. Ultimately the petitioner filed, as required, returns and filed these petitions. There is an affidavit in reply. It is not made by the ITO concerned. In paragraph 7 thereof the deponent states that the petitioner had filed paper book running into 170 pages. Therein were contained statements. The statement which gave details of " purchases and incidental expenses " was only a monetary break-up under heads styled " grey cloth ", " yarn purchase " and " cloth samples ". There was no indication in it that the yarn purchased was imported polyester fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eponent of the affidavit states in paragraph 12 that the ITO " had reopened the assessment only because he had reason to believe that, by reason of the petitioner's failure and omission to furnish fully and truly the material facts, income assessable in his hands had escaped assessment ". In paragraph 14, the deponent states that, " It had come to the notice of the Income-tax Officer, subsequent to the original assessment, that the transactions relating to the purchase of imported yarn were not genuine. say that these facts were clearly within the knowledge of the petitioner and it was the duty of the petitioner to disclose fully and truly all material facts necessary for its assessment which the petitioner failed to do." The Department w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r years from the end of the relevant assessment years, the Commissioner should be satisfied on the reasons recorded by the ITO that it is a fit case for the issue of such notice. The duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the ITO of the account books or other evidence from which material evidence could with due diligence have been discovered by the ITO will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that, his duty ends. It is for the ITO to draw the correct inference from the primary fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formation of the belief and are not extraneous or irrelevant for the purpose of the section. Learned counsel for the Department relied upon the judgment of Division Bench of the Calcutta High Court in Nanji Co. v. ITO [1979] 120 ITR 593. The assessee therein had claimed deduction of income on account of interest paid on a number of hundi loans which were accepted as genuine in the original assessment. Subsequently, the ITO received a circular from the Special Investigation Department which gave a list of bogus hundi creditors which included the alleged creditors of the assessee. The ITO initiated reassessment proceedings. In his recorded reasons, the ITO referred to the list of bogus creditors and he stated that he had reason to believ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction relating to the purchase of imported yarn was not genuine. We are not vouchsafed even in the affidavit in reply what had come to the ITO's notice or when. It would appear that the fact that the yarn was imported was not disclosed has been seized upon as an excuse to reopen the assessment. It does not appear that there was a true belief that by reason thereof any income escaped assessment. There was no satisfaction of the requirements of s. 147(a) of the I.T. Act, 1961, before the assessments were sought to be reopened. This is not a case where, as in the Calcutta case, information had been received that creditors to whom interest was said to have been paid were bogus and the ITO, having recorded this as his reason, reopened the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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