9911796707
TMI Blog1976 (11) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter referred to as " the Act of 1922 "). The predecessor in interest of the respondent by the assessment order dated April 16, 1959, assessed the total income of the appellant at Rs. 4,60,372. In computing the said income the Income-tax Officer allowed depreciation amounting to Rs. 5,05,487. For the assessment year 1959-60 the appellant likewise filed return. Assessment order in respect of that year was made on March 30, 1961, and the income of the appellant was assessed at Rs. 11,04,650 after allowing depreciation of Rs. 3,57,926. On October 5, 1965, a letter was addressed on behalf of the respondent to the appellant stating that there had been a mistake in the calculation of the depreciation allowance in respect of certain items of the capital assets of the appellant for the period covered by the assessment years 1955-56 to 1962-63. As a result of the mistake, it was stated, a sum of Rs. 2,39,723 had been allowed as depreciation allowance in excess of the permissible limit. Enclosed with the letter was a chart showing excess depreciation allegedly allowed during the above-mentioned period. The excess amounts of depreciation for the years 1957-58 and 1959-60 were menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, was filed in opposition to the petition. According to that affidavit, the appellant did not disclose in the return that initial depreciation in respect of certain items of capital assets had been allowed in the past and that the same should be taken into account while calculating the depreciation allowable for the assessment years in question. The High Court found that the first requirement of section 147(a) of the Act of 1961 was satisfied inasmuch as the Income-tax Officer had reason to believe that the income of the appellant for the two assessment years in question had escaped assessment. The mistake arose because of the fact that the initial depreciation allowance which had been allowed to the appellant in respect of some of the items of the capital assets was not taken into account while computing the depreciation allowance during the relevant years. As a result of that, it was found that the depreciation allowance during the various years, including the initial depreciation, exceeded the original cost of those items of the capital assets to the appellant. Dealing with the question as to whether there was omission or failure on the part of the appellant to disclose tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (via) or under any Act repealed hereby, or under the Indian Income-tax Act, 1886 (II of 1886), shall, in no case, exceed the original cost to the assessee of the buildings, machinery, plant or furniture, as the case may be ; (via) in respect of depreciation of buildings newly erected, or of machinery or plant being new which has been installed, after the 31st day of March, 1948, a further sum (which shall be deductible in determining the written down value) equal to the amount admissible under clause (vi) (exclusive of the extra allowance for double or multiple shift working of the machinery or plant and the initial depreciation allowance admissible under that clause for the first year of erection of the building or the installation of the machinery or plant) in not more than five successive assessments for the financial years next following the previous year in which such buildings are erected and such machinery and plant installed and falling within the period commencing on the 1st day of April, 1949, and ending on the 31st day of March, 1959. " It is apparent from the above provisions that depreciation of three distinct kinds could be allowed in respect of buildings, mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act of 1961, according to which it would be a case of income escaping assessment where excessive depreciation allowance is computed. The material part of section 147 of the Act of 1961 reads as under : " 147. income escaping assessment.---If--- (a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer, or to 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 concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). " Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the Income-tax Officer of the account books or other evidence from which material evidence, could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the Income-tax Officer to draw the correct inference from the primary facts. It is no responsibility of the asseesse to advise the Income-tax Officer with regard to the inference which he should draw from the primary facts. If an Income-tax Officer draws an inference which appeal subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessments : See Income-tax Officer v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC). The words " omission or failure to disclose fully and truly all material facts necessary for his assessment for that year " postulate a duty on the assessee to disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The present is not a case where the assessee had omitted or failed to file the return. Question then arises as to what has been omission or failure on the part of the assessee to make a full and true disclosure. There is nothing before us to show that in the return filed by the assessee-appellant the particulars given were not correct. Form C under rule 19 of the Indian Income-tax Rules, 1922, at the relevant time gives the form of return which had to be filed by the companies. Part V of that form deals with depreciation. The said part requires a number of columns to be filled furnished or any of the particulars given in those columns by the appellant-company were factually incorrect. Nor is it the case of the revenue that the appellant failed to furnish the particulars required to be inserted in those columns. Indeed, the copy of the return has not been held and consequently no argument on that score could be or has been addressed before us. Part V of the form no doubt requires the assessee to state the written down value in column No. (2). Such wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to that effect was consequently sent to the assesse that the higher amount of depreciation had been allowed and the income as such had escaped assessment because of the omission or failure on the part of the assessee to disclose truly and fully all material facts. Reference to such omission or failure came only in a subsequent communication. The submission made on behalf of the appellant is not without force that reference was made to the assessee's omission or failure to disclose truly and fully all material facts because it was realised that after the expiry of four years from the end of the relevant assessment year, no action for reopening of assessment could be taken on the basis of detection of mistake alone unless there was also an allegation that the income had escaped assessment because of the omission or failure of the appellant to disclose fully and truly material facts. Looking to all the facts, we are of the opinion that it cannot be said that the excess depreciation was allowed to the appellant-company and its income as such escaped assessment because of its omission or failure to disclose fully and truly all material facts. It has been said that the taxes are the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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