1985 (5) TMI 65 - AT - Income Tax

Summary

Issues Involved:
1. Application of Section 147(a) of the Income-tax Act, 1961.
2. Determination of whether the concession on the plot purchase amounted to a perquisite under Section 17(2)(iii)(c).
3. Valuation of rent-free accommodation provided by the employer.

Issue-wise Detailed Analysis:

1. Application of Section 147(a) of the Income-tax Act, 1961:

The primary issue was whether Section 147(a) was applicable in the case of the assessee. The assessee contended that he had made a full and true disclosure of all material facts necessary for his assessment, and therefore, income chargeable to tax had not escaped assessment due to any omission or failure on his part. The payments for the plot were made by cheque and reflected in his bank accounts, which were scrutinized by the IAC during the original assessment. Additionally, the plot was shown in his wealth-tax return. However, the IAC rejected these contentions, stating that the production of account books or other evidence from which material evidence could have been discovered did not necessarily amount to disclosure within the meaning of Section 147(a). The Tribunal agreed with the IAC, citing the Supreme Court decision in Calcutta Discount Co. Ltd. v. ITO, which held that the duty of the assessee was to disclose all primary facts. The Tribunal concluded that the assessee failed to disclose the primary facts necessary for assessment regarding the purchase of the plot, thereby attracting the provisions of Section 147(a).

2. Determination of whether the concession on the plot purchase amounted to a perquisite under Section 17(2)(iii)(c):

The IAC considered the concession on the plot purchase as a perquisite under Section 17(2)(iii)(c), which includes the value of any benefit or amenity granted at a concessional rate by an employer to an employee. The assessee argued that there was no benefit or concession granted, as there was no right conferred on him as an employee regarding the purchase of the plot. However, the IAC, relying on the decision of the House of Lords in Abbot v. Philbin, rejected this contention, stating that the formulation of a scheme by the company to sell plots at a concessional rate amounted to a benefit or amenity in favor of the employees. The Tribunal upheld the IAC's view, noting that the scheme formulated by the company was an incident of service and not a commercial offer, thereby constituting a perquisite under Section 17(2)(iii)(c).

3. Valuation of rent-free accommodation provided by the employer:

The IAC recomputed the value of the perquisite in the form of rent-free residential accommodation provided to the assessee, increasing it from Rs. 2,548 to Rs. 8,135. The Commissioner (Appeals) quashed the reassessment, but the Tribunal directed the IAC to recompute the value of such perquisites based on the municipal valuation of the property, following their finding in the assessment year 1973-74.

Conclusion:

The Tribunal held that the provisions of Section 147(a) were rightly applied to the assessee's case due to the failure to disclose primary facts necessary for assessment. The concession on the plot purchase was deemed a perquisite under Section 17(2)(iii)(c), and the IAC was directed to recompute the value of the perquisite in the form of rent-free accommodation. The appeal was partly allowed, and the Commissioner (Appeals) was directed to consider the quantum of concession.