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TMI Blog2012 (3) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... d 7488 of 1990 as both the writ petitions filed by the petitioner involve identical facts and questions. However, facts are being extracted from CWP No.7474 of 1990, as narrated in the petition. 2. The petitioner was a doctor practicing at Jalandhar. He filed his return for the assessment year 1984-85 alongwith balance sheet and profit and loss account. He had later filed a revised computation chart showing investment allowance claim of Rs.23,111/-. Assessment was completed by the Income Tax Officer under Section 143(1) of the Income Tax Act, 1961 (in short, the Act ) on 25.7.1986, Annexure P.2. Similar investment allowance claim was made by the petitioner for the earlier assessment year i.e. 1983-84 on the same terms as in the assessment year 1985-86. This claim was disallowed by the Income Tax Officer. On appeal by the petitioner in the assessment year 1983-84, the Appellate Assistant Commissioner allowed the claim of the petitioner for investment allowance under section 32A of the Act. On appeal by the department to the Tribunal, the finding of the Appellate Assistant Commissioner was reversed and investment allowance was disallowed, vide order dated 28.1.1988, Annexure P-5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year to the Assessing Officer or disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income Tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year. Explanation 2 Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing officer will not necessarily amount to disclosure within the meaning of this section. However, by Direct Tax Laws (Amendment) Act, 1987 which was effective from 1.4.1989, Explanation 2 was transposed as Explanation I without any material change. 6. Further, it would be advantageous to refer to Section 149 (1) (a) and (b) of the Act, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaping assessment.-If the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year,he may, subject to the provisions of ss. 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereinafter in this section and in ss. 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-s. (3) of s. 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under s.139 or in response to a notice issued under sub-s. (1) of s. 142 or s. 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's duty to disclose all of them including particular entries in account books, particular portions of documents, and documents, and other evidence which could have been discovered by the assessing authority, from the document and other evidence disclosed. 3.3 In other words, the mere production of evidence before the AO is not enough and there may be an omission or failure to make a full and true disclosure if some material for the assessment lies embedded in that evidence which the assessee can uncover but does not. However, if it be merely a question of interpretation of evidence, the assessee cannot be subjected to s. 147, merely because the AO miscarried in his interpretation of evidence. 3.4 To put it differently, if material evidence is not writ large on the document but is embedded in some voluminous records/books of account requiring a careful scrutiny and delving deep into it to notice the necessary material, it is quite possible that having regard to the nature of the documents, material evidence cannot be discovered from such records despite due diligence and the case would attract application of the said Expln. 1 to hold that mere production of the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescue of the assessee as none of them was dealing with interpretation of Explanation 1 to Section 147 of the Act. Therefore, none of the grounds of challenge relating to initiation of reassessment proceedings raised on behalf of the assessee carry any material substance and advance the case of the petitioner any further. However, the merits of the controversy relating to additions to be made shall be gone into by the Assessing Officer at the time of finalisation of reassessment proceedings. 8. Once it is held that the disclosure was not full and true in terms of section 147(a) of the Act, the case would be governed by Section 149(1) (a) (i) and not Section 149(1)(b) of the Act. The issuance of notice for reassessament is, thus, within limitation as the same could be issued within eight years as was prevalent at the relevant time. 9. In view of above, the judgments relied upon by learned counsel for the petitioner do not advance the case of the petitioner. In those cases, Explanation I was not under consideration. However, referring to the merits of the case, since we have held that the notice issued was within the jurisdiction of the Assessing Officer and within limitation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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