1994 (7) TMI 78 - HC - Income Tax

Assessment Proceedings Capital Gains Cost Of Acquisition Failure To Disclose Material Facts Reassessment Proceedings

Summary

Issues:
Challenge to notice under section 148 of the Income-tax Act, 1961 for assessment year 1987-88 based on alleged absence of conditions under section 147(a) regarding disclosure of material facts necessary for assessment.

Analysis:
The petitioner contested a notice issued under section 148 of the Income-tax Act, 1961, for the assessment year 1987-88, arguing that the conditions under section 147(a) were not met as there was full and true disclosure of all material facts. The petitioner cited relevant case laws to support the contention (Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191, CIT v. Bhanji Lavji [1971] 79 ITR 582, Calcutta Credit Corporation Ltd. v. ITO [1971] 79 ITR 483).

The respondents, in their affidavit, revealed that the petitioner had received a sum of Rs. 45,00,000 for the assignment of beneficial interest, claiming exemption from capital gains tax based on a Supreme Court decision. However, the Assessing Officer later found that the cost of the beneficial interest was Rs. 300, not disclosed by the petitioner, leading to the income escaping assessment.

The court analyzed the contentions and reasons recorded by the Assessing Officer, concluding that the disclosure of trust deed and assignment deed did not constitute full disclosure of material facts. The court emphasized the duty of the assessee to disclose all primary facts relevant to the assessment, as per legal precedents (Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191, Indo-Aden Salt Mfg. and Trading Co. P. Ltd. v. CIT [1986] 159 ITR 624 (SC)). The court held that the Assessing Officer had sufficient grounds to initiate proceedings under section 147(a) due to the non-disclosure of the cost of acquisition.

The court dismissed the writ petition, stating that interference was not warranted, but allowed the petitioner to raise all questions before the income-tax authorities. The judgment highlighted the importance of full and true disclosure of material facts by the assessee for a fair assessment process.