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TMI Blog1992 (5) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... and on 6-8-1974 for Rs. 47,500 admeasuring about 45 cottahs in plot/Dag No. 253 and part of Dag No. 255. The assessee was already owner of 30 cottahs of land in the same area since the year 1971 on which godowns were already existing. However, for deciding this appeal this fact is not relevant. The assessee entered into an agreement with M/s Fabicon, a firm of contractors/engineers for construction of the godown on the said land. The said contractors' firm submitted their bill dated 7-11-1974 to the assessee for constructing 20,606 sq. ft. in a sum of Rs. 2,78,181 and the assessee settled their bill for Rs. 2,66,000. The payment to the contractors firm by the assessee was all through account payee bank cheques.The construction of the godown was completed in December 1974. The assessee disclosed rental income of Rs. 90,000 from these godowns for the assessment year 1976-77 (previous year being 30-6-1975) and filed details of construction and report of the registered valuer certifying the cost of construction. The ITO demanded explanation from the assessee about the cost of construction and the sources of the funds to meet such cost of construction. Not being satisfied with the expla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 147(a) and not section 147(b). Besides, on the basis of facts on record, provision of section 147(b) are ruled out as being barred by limitation as per provision of section 149 of the Income-tax Act, 1961. The assessee filed his return again on 16-9-1980 in compliance to the notice under section 148 of the Assessing Officer declaring the same income as declared in the original return. The Assessing Officer was neither satisfied about the objection raised before him by the assessee regarding his power and jurisdiction under section 147(a) nor was he satisfied with the assessee's explanation about the cost of construction and the sources of funds to meet such cost of construction. After due enquiry into the facts of the case and after elaborate discussion the Assessing Officer made an addition of Rs. 9,47,000 to the income returned and completed the re-assessment on 25-3-1985. The assessee being aggrieved with the re-assessment order filed an appeal before the Appellate Commissioner challenging the jurisdiction of the Assessing Officer in issuing the notice and completing the assessment under section 147(a) and also objecting to the income assessed and the liability determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer has not considered the reports of the registered valuer who have certified the cost of construction which are in the paper book and which is in the vicinity of the true cost of construction. The Assessing Officer has made the addition on the basis of reports of Engineers given to the bank by the assessee for sanction of the loan and also on the basis of the report of the Departmental Valuation Cell ; (viii) The CIT has given sanction to the Assessing Officer in a mechanical manner without applying mind to the proposal of the Assessing Officer for reopening of the assessment to invoke the provisions of section 147(a) for making addition under section 69 ; and (ix) The assessment has been reopened after the order of the Appellate Commissioner dated 18-2-1980 for the assessment year 1976-77 wherein it is observed by him (Appellate Commissioner) that the addition falls for consideration in financial year 1974-75 relevant to assessment year 1975-76. At the most the case falls under section 147(b) and as per section 149 no notice can be issued beyond 31-3-1978 for cases falling under section 147(b). 5. The assessee's counsel has relied on the judgment of the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law to disclose and which are necessary for the purpose of making his assessment and then surely he can be accused of having failed to disclose fully and truly all the material facts for the purpose of his assessment. It is a trite law by now commencing from the decision of the Supreme Court rendered in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 that it is always the duty of an assessee to disclose fully and truly all primary facts, but not inferential facts, which are necessary and relevant for the purpose of making assessment by the Assessing Officer. But as stated above the nature of facts to be disclosed by an assessee will necessarily depend upon the nature of information or disclosure that the assessee is obliged to do so by the statute. In the instant case originally the assessee filed his return and his assessment was completed accordingly. When we look to the provision of section 139(1) of the Act, we find that every person whose total income exceeds the maximum amount which is not chargeable to income-tax has to furnish within specified period a return in the prescribed form and verified in the prescribed setting forth along with the return such other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he filing of return by the assessee and he is obliged and commanded to furnish such particulars of his income as are laid down and mentioned in the various columns of the return of income form prescribed by the relevant rules. In other words, the assessee is required to truly and fully supply the information and other particulars sought for in the various columns of the prescribed form of return of income. Now if the Assessing Officer was of the opinion that the information conveyed as per the prescribed form of return of income was complete, correct and sufficient for making the assessment, he could proceed and assess the person filing the return on the basis of such return and at that stage no question, of the assessee furnishing any information other than that required to be furnished in the prescribed form of return, could arise. It, therefore, follows that if the assessee discloses true and full information which he is required to supply in the prescribed form of return no question of his failing to disclose any other particulars of his income at that stage could arise. Then the next stage in the process of making an assessment upon a person was where a return is filed by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse that he had not stated therein that his three sons who had received a share in the income of the partnership firm were in fact, minors. After examining the facts of the case the Hon'ble Supreme Court held that Muthiah was not guilty of failure to disclose true and full facts relating to his assessment. The Supreme Court observed at p. 187 as under : " The Act and the Rules accordingly impose no obligation upon the assessee to disclose to the ITO in his return information relating to income of any other person by law taxable in his hands. " It was then held by the Supreme Court in the said case that the Assessing Officer cannot resort to section 34(1)(a) of the 1922 Act and reopen the assessment. This judgment of the Supreme Court was followed by the Hon'ble Calcutta High Court in the cases of Radheshyan Ladia v. ITO [1971] 82 ITR 247 and also Madanlal Maheswari v. ITO [1973] 87 ITR 295. 12. These observations made by the Supreme Court clearly make out that while filing a return an assessee is not bound or obliged to disclose any information in relation to any fact other than what is required to be supplied and furnished by him in the various columns of the prescribed form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 1972, that is, in the course of the period corresponding to S. Y. 2029 which is the previous year relevant to the assessment year 1974-75. It is only because the ITO decided to add to the total cost, as in his opinion there was an understatement of cost, that the impugned amount came to be added to the total cost and correspondingly to the income of the assessee in the assessment year 1973-74. This could have been done only under section 69 which the Tribunal found could be done in the assessment year relevant to the financial year of which it should be an income and which in the present case would be of financial year 1972-73. It is, thus, clear that the assessee could not be blaimed for not disclosing the true and complete materials for assessing the property income in 1973-74. It is only on account of the addition made by the ITO that this situation had arisen. It is entirely a fortuitous circumstance and, therefore, we cannot agree with the submission made on behalf of the Revenue that the assessee was under duty in law to disclose these facts for the assessment of 1973-74. It is only on account of the addition made by the ITO that this situation had arisen. In that view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 976-77 deleting the addition made under section 69 of the Act as explained investment in constructing the godowns. At the most this may constitute information empowering the assessing officer to resort to section 147(b). But as submitted by the assessee's counsel, with whom we agree, invoking of section 147(b) was barred by time by 31-3-1980 as per section 149 of the Act. 17. On the basis of admitted facts before us it was not obligatory on the assessee to disclose the amount invested by him during the previous year 30-6-1975 for construction of godown which falls within the financial year 1974-75 for invoking and applying the provisions of section 69 of the Income-tax Act, 1961 which is an inferential and enabling provision. In our opinion, therefore, non-disclosure of inferential facts cannot attract the provision of section 147(a), and the Assessing Officer was not justified in reopening the assessment for assessment year 1975-76. 18. We, therefore, vacate the impugned order of the Appellate Commissioner and quash the assessment made on the assessee by resorting to the provision of section 147(a) of the Income-tax Act, 1961, as the same being without jurisdiction. 19. In the ..... 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