9911796707
TMI Blog1966 (9) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner for assessment of his income-tax he has been showing the income derived from his properties. The petitioner had half share in the property No. 15, Gobinda Mondal Road, Calcutta. The petitioner sold his share in the said property on the 5 th of August, 1960, for the sum of Rs. 1,75,000. This property had all along been shown in the petitioner's returns for the assessment of wealthtax ; and for the purpose of assessment under the Wealth-tax Act the petitioner's share in this property had been valued at Rs. 1,70,000. On basis of the said valuation of the petitioner's share in the said property, the petitioner was being assessed to wealth-tax. The petitioner had obtained necessary clearance certificate as required under the Wealth-tax Act, when the petitioner sold his share in the said property at No. 15, Gobindra Mondal Road. The petitioner had also shown the income derived from his share in this particular property in his income-tax returns for the years prior to the assessment year 1961-62. In the return filed by the petitioner for assessment of his income-tax for the assessment year 1961-62, this property or the income therefrom had not been included but in the said retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice under section 148 of the Income-tax Act, 1961, Income-tax Circle, District III(I), Calcutta. Dated 22nd February, 1966. No. III(I) 665 b/H. TO Sudhir Krishna Bhose, 24-A, Roy Bagan Street, Calcutta. Whereas I have reason to believe that your income chargeable to tax for the assessment year 1961-62 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961. I, therefore, propose to reassess the income for the said assessment year and I hereby require you to deliver to me within thirty days from the date of service of this notice, a return in the prescribed form of your income assessable for the assessment year. . Sd/- Illegible Income-tax Officer, H-Ward, District III(I), Calcutta." By his letter dated the 21st of March, 1966, to the Income-tax Officer, the petitioner challenged the jurisdiction and/or authority to reopen the assessment and requested the said officer to cancel and/or withdraw and/or rescind the said notice and to drop forthwith the said proceedings. The assessment order in respect of the wealth-tax and income-tax of the petitioner for the assessment year 1961-62, and the correspondence which passed between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to tax has escaped assessment, namely :--- (a) where income chargeable to tax has been under-assessed; or (b) where such income has been assessed at too low a rate; or (c) where such income has been made the subject of excessive relief under this Act or under the Indian Income-tax Act, 1922 (11 of 1922); or (d) where excessive loss or depreciation allowance has been computed. Explanation 2.---Production before the Income-tax Officer of 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 within the meaning of this section. " Relying on this provision Mr. Pal has contended that the Income-tax Officer can derive jurisdiction to reopen an assessment for the purpose of reassessment only if the conditions laid down in the said section 147 are satisfied. It is Mr. Pal's contention that unless the conditions laid down in the said section 147 are satisfied, the Income-tax Officer does not have any jurisdiction to reopen any assessment and will, in a case where the conditions laid down are not satisfied, be without jurisdiction and as such illegal and vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otation and the undisclosed facts are material or not according to the circumstances of the assessment in the particular case. The Supreme Court has given the words the meaning ' primary relevant facts '. It is the duty of the assessee to reveal the major facts which have a bearing on the assessment to be made. He must of course make a clean breast of all the sources of his income and the income derived therefrom. He must not hide any books of account or documents which would help the computation of the income. He is not expected to do more than this. He cannot delve into the mind of the Income-tax Officer and try to fathom it and predicate what are material facts in the view of the officer. The facts must be such that if taken into account, they would have an adverse effect on the assessee by the passing of a greater assessment than the one actually made. The rule of full and true disclosure of material and necessary facts should not be so fastidiously construed as would enable the department to say that non-disclosure of a fact which may have a remote hearing on the assessment attracts the section, as the assessing officer would have material use of it to charge the assessee more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for the year. Mr. Pal has argued that the petitioner has disclosed all relevant basic or primary facts and there has been no omission or failure on the part of the petitioner. He argues that the petitioner's share in the said property, No. 15, Gobinda Mondal Road, had been shown in all the wealth-tax returns and for the purpose of the said returns since 1956, his share in the said property had been valued at Rs. 1,70,000 on the basis of which wealth-tax had been computed. At the time of the sale of the said property the petitioner had to obtain the necessary wealth-tax clearance certificate and the petitioner had duly disclosed the fact of sale of the petitioner's share in the said property at a sum of Rs. 1,75,000. He argues that the petitioner has been granted the necessary wealth-tax clearance certificate on the basis of which only the conveyance could be registered. He has drawn my attention to the fact that after the sale of the said property, the income derived from the said property had not been mentioned in the income-tax return, but the income derived from the securities purchased out of the sale proceeds have been included in the return filed by the petitioner. He has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Part VII of the income-tax return. 2. Value of the property as on January 1, 1954, will be less than Rs. 1,70,000, and 3. At the time of the wealth-tax assessment for 1961-62 the Income-tax Officer was informed that the sale price of the house was Rs. 1,70,000. Mr. Pal contends that none of the alleged grounds are tenable and the same cannot and do not justify the reassessment proceeding sought to be initiated by the Income-tax Officer. He argues that there is no legal obligation of filling in Part VII of the income-tax return, particularly when according to the petitioner, there was no question of any capital gain or loss. He has argued that it is not correct to say that at the time of the wealth-tax assessment for 1961-62, the Income-tax Officer was informed that the sale price of the house was Rs. 1,70,000. He has referred to the letter dated July 7, 1960, addressed by the petitioner to the Wealth-tax Officer requesting the officer to grant the certificate as required under section 34 of the Wealth-tax Act and has drawn my attention to the fact that in the said letter, the sale price has been stated to be Rs. 1,75,000. It is to be noted that receipt of this letter is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in grounds (h), (i) and (j) of paragraph 15 of the petition. Mr. S. Mukherjee, learned counsel for the respondents, does not dispute the proposition of law contended for by Mr. Pal. He also does not dispute that, in the instant case, the Income-tax Officer has sought to exercise his jurisdiction under section 147(a) of the Income-tax Act, 1961. He fairly concedes that, if it be held that there has been no omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, the Income-tax Officer will have no jurisdiction to reopen the assessment proceeding and this rule will have to be made absolute. He, however, contends that there has been failure or omission on the part of the petitioner to disclose fully and truly all material facts and the Income-tax Officer in the instant case is perfectly justified in reopening the assessment of the petitioner for the assessment year 1961-62. Mr. Mukherjee has also referred to the decision of the Supreme Court in the case of Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta, and he has relied on the following observations of the court at page 201 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act might have been the same, yet the two proceedings are completely separate and the disclosure of the factum of sale in the wealth-tax assessment proceeding cannot and does not justify non-disclosure of the said fact in the income-tax proceeding. He contends that even if it be held that there was disclosure of the factum of sale, as the fact of sale had been communicated to the very same officer, the price for which the property had been purchased or the fair market price of the property as on January 1, 1954, cannot be said to have been disclosed, as the said fact had not been mentioned even in the wealth-tax assessment proceeding. According to Mr. Mukherjee, the price for which the property had been originally purchased by the petitioner or the fair market value of the property as on January 1, 1954, are primary facts which the petitioner was bound to disclose and non-disclosure of the purchase price or the fair market price as on January 1, 1954, are clear omissions or failure on the part of the petitioner within the meaning of section 147(a) of the Income-tax Act, 1961. He argues that the purchase price of the property and the fair market price as on January 1, 1954, are prim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of those cases. I, therefore, do not consider it necessary to deal with the other cases cited by Mr. Pal at any length. In the instant case it is not disputed that the Income-tax Officer has purported to exercise his jurisdiction under section 147(a) of the Income-tax Act, 1961. For proper and lawful exercise of the jurisdiction and power to reopen the assessment, it is essential that the conditions laid down in the said section 147(a) must be satisfied. It is the case of the respondents that the jurisdiction under the said section is properly attracted, as the petitioner has failed or omitted to disclose truly and fully all material facts necessary for his assessment. It is to be noted that this is the only ground on the basis of which the Income-tax Officer seeks to invoke and exercise his jurisdiction and power to reopen the assessment of the petitioner in the instant case and there is no dispute that the petitioner had duly submitted his return under section 139 for the assessment in question. What constitutes a material fact depends on the facts and circumstances of each particular case. In considering the words " omission or failure to disclose full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner has not filled in Part VII of the return, relied on by the Income-tax Officer is, to my mind, without any substance. There appears to be no obligation on the part of any assessee to fill in the said part ; particularly when the assessee believes that there is no question of any capital gain, there can be no need or occasion for him to fill in the said part. Not filling in the Part VII of the return by the petitioner does not, in my view, amount to any failure or omission within the meaning of section 147(a) of the Income-tax Act, 1961. The next ground relied upon by the Income-tax Officer, namely, that the Income-tax Officer was informed at the time of the wealth-tax assessment that the sale price was Rs. 1,70,000 whereas, in fact, the sale price was Rs. 1,75,000, is not borne out by the materials on record and has no justifiable basis. The letter dated July 6, 1960, addressed by the petitioner to the Wealth-tax Officer mentions that the petitioner was selling the property for about Rs. 1,75,000 (gross). The receipt of this letter which has been annexed to the supplementary affidavit affirmed by the petitioner on August 8, 1966, is not admitted by the respondents ; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price, but he must also disclose the purchase price or the fair market price as on January 1, 1954, and the expenses incidenal to the sale. He has argued that these are all basic or primary facts absolutely material for the purpose of assessment. He had submitted that as these facts have not been disclosed, the Income-tax Officer is competent to exercise the jurisdiction under section 147(a), to reopen the assessment of the petitioner. There appears to be a good deal of force in the contention of Mr. Mukherjee that in any case of assessment in which the question of capital gain may be involved, it is the duty of the assessee not only to disclose the factum of sale and the sale price but also to disclose the purchase price or the fair market price of the property as on January 1, 1954, and expenses incidental to such sale. I agree with the contention of Mr. Mukherjee that in any such case of assessment involving the question of captial gain, the fact of sale, the price at which the property has been sold, the price at which the property has been acquired by the assessee or the fair market price of the property as on January 1, 1954, and the costs, charges and expenses of and incid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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