TMI Blog1975 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Before the completion of the original assessment the Income-tax Officer issued a letter dated the 11th of December, 1958, to the assessee enquiring whether in a raid conducted by the Special Police Establishment on the 30th of August, 1953, six envelopes containing cash of Rs. 24,800 were found in the almirah of the company which sum was not accounted for in the books and whether the assessee had told the police that the said sum belonged to the ladies of the family. On the 18th of December, 1958, the authorised representative of the assessee replied denying discovery of any such money in its premises. The two letters above-mentioned have been made annexures " A " and " B " respectively to the statement of the case. This amount of Rs. 24,800 was not included in the original assessment as being the assessable income of the assessee. Subsequently, the Income-tax Officer without any further materials initiated proceedings under section 34(1)(a) of the Act and issued a letter to the assessee drawing its attention to the police raid on the 30th of August, 1953, and the discovery of the sum of Rs. 24,800 in an iron safe belonging to the mill and asked the assessee to show cause why pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceeding made enquiries relating to the aforesaid sum. As such, it could not be held that there had been any escapement of assessment on account of any suppression or omission on the part of the assessee to make a full and true disclosure of all the material facts. The learned standing counsel for the department contends that the order of the Tribunal cannot be said to be legal because the assessee had not made a full and true disclosure of all the material facts necessary for its assessment in the year in question as a result of which income chargeable to tax has escaped assessment for that year. Learned counsel contends that since by its reply dated the 18th of December, 1958 (annexure " B ") the assessee had denied the allegation that any such money had been found from the business premises of the assessee, the assessee deliberately concealed a vital material fact which resulted in the non-inclusion of this amount in the assessable income in the original assessment order. I do not think that there is much substance in the contention of learned standing counsel. It is worthwhile to quote in extenso the letter of the Income-tax Officer dated the 11th of December, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash books. These facts being already within the knowledge of the Income-tax Officer and no further material forthcoming, either before the original assessment or even subsequent thereto, the finding of the Tribunal that there had been no escapement on account of any non-disclosure or concealment by the assessse cannot be held to be perverse. It is well settled that in order to confer jurisdiction to issue notice under section 34(1)(a) of the Act, two conditions precedent have to be satisfied--firstly, that the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income-tax have been under-assessed, and, secondly, he must also have reason to believe that such under-assessment had occurred by reason of omission or failure on the part of the assessee either to make a return of his income under section 22 or to disclose fully and truly all material facts necessary for his assessment for that year. So far as the first condition is concerned, it is fully satisfied in the instant case for it cannot be said that the Income-tax Officer had no reason to believe that income, profits or gains chargeable to income-tax had been under-assessed. But what is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du undivided family was reassessed after including the sum of Rs. 19,000 only. Subsequent thereto, a second reassessment proceeding was started on the same facts by which the aforesaid sum of Rs. 1,10,000, purported to have been drawn by the five individual members, was also sought to be included in the assessable income of the Hindu undivided family. In that connection the Supreme Court was dealing with the validity of the initiation of the second reassessment proceeding and their Lordships held that when the first reassessment was made, the primary facts necessary for reassessment of the family were in the possession of the Income-tax Officer. These facts came into possession not by virtue of any disclosure made by the family but by discovery made otherwise. Yet, from the primary facts in his possession, whether on disclosure by the assessee or discovered by him on the basis of facts disclosed or otherwise, the assessing authority had to draw inferences. Having drawn the inferences once, the mere change in the opinion that the amounts withdrawn by the individual members may also be the income of the family, the Income-tax Officer could not vest himself with the jurisdiction to st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer in 1947 raised an inference, which he subsequently regards as erroneous, the proceedings under section 34(1)(a) cannot lie." Keeping these well-settled principles of law in view and having enumerated the facts which had been discovered by the Income-tax Officer before the original assessment order was passed, I have no hesitation in holding that from the facts in the possession of the Income-tax Officer, although not disclosed by the assessee itself, the inference which has been drawn in the course of the reassessment proceedings could well have been drawn before the original assessment was made. The primary facts on the basis of which proceedings under section 34(1)(a) have been initiated were already before the Income-tax Officer from sources other than the assessee itself but that, however, would not make the slightest difference in principle so far as the question of law is concerned. There is thus no substance in the contention of the learned standing counsel for the department that the finding of the Tribunal is in any way erroneous, much less perverse. In the result, therefore, I must answer the question referred in the negative, in favour of the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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