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TMI Blog2018 (3) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... fic allegation, which we have found to be correct, is of non-disclosure of full and true material facts necessary for assessment. We answer the question of law in favour of the Revenue and against the assessee. - I.T.A. No.1375 of 2009 - - - Dated:- 8-3-2018 - MR. K. VINOD CHANDRAN AND MR. ASHOK MENON, JJ. For The Appellant : SRI. P. K. R. Menon, Senior Counsel, GOI (TAXES) And Sri.Jose Joseph, Standing Counsel GOI (TAXES) For The Respondent : Sri. E.K. Nandakumar [Senior Advocate] Sri .P. Benny Thomas. JUDGMENT Vinod Chandran, J: The question of law raised in the above appeal is re-framed as follows: Whether the first appellate authority and the Income Tax Appellate Tribunal were correct in finding a full and true disclosure of all material facts necessary for assessment, when the assessee had not returned the income received as interest from deposits in Banks? 2. The assessment year is 1994-95; for which regular assessment was completed as per Annexure-A1 dated 03.01.1997. Later, after four years, as stipulated in the first proviso to Section 147 of the Income Tax Act, 1961, proceedings for re-assessment were taken on grounds of escape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that there could be no allegation of non-disclosure of full and material facts alleged against the assessee for the subject assessment year. The Tribunal too concurred with the first appellate authority and found that in Section 147 proceedings, the balance sheet, more particularly,Schedule-IV was referred to allege the non-disclosure, which was already available with the A.O. at the time of regular assessment. 6. The respondent/assessee has produced Annexure-A1 assessment order. A reading of the assessment order indicates that the return was filed only declaring a total income of ₹ 3,14,050/-. The Accounts Officer of the Company appeared and contended that the return of income was a mistake committed; on misconception of law, especially since the assessee had un-utilized funds obtained by way of loans and advances from financial institutions and others, which were kept in short term deposits. The interest income so obtained from the short term deposits was only to be set off against the interest liability in the various loans and advances, was the argument. The assessee had also not commenced production in the previous year to the assessment year and there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le contention of production of books of accounts and other evidence and an assertion made by the assessee that the Income Tax Officer ought to have employed due diligence and discovered further facts as available from the books of accounts. The Hon'ble Judges referred to Section 64 and the Explanation therein, which specified the production of books of accounts or other evidence before the ITO from which material facts could be discovered by due diligence which would not necessarily amount to disclosure within the meaning of the said Section. Explanation-I, in patri materia; is still available under Section 147. 11. Calcutta Discount Co. (supra) and the instant appeal are clearly distinguishable. There the share transactions were disclosed and the same was taken account of by the Assessing Officer and were found to be casual transactions in the regular assessment. In the instant case the assessee raised a contention that the interest income returned was so returned only on a misconception of law. The deduction claimed of the interest income returned, from the computation of total income was rejected in the regular assessment. The interest income was determined as taxab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possible contention that when some account books or other evidence has been produced, there is no duty on the assessee to disclose further facts, which on due diligence, the Income Tax Officer might have discovered, the legislature has put in the Explanation, which has been set out above. In view of the Explanation, it will not be open to the assessee to say, for example - I have produced the account books and the documents: You, the assessing officer examine them, and find out the facts necessary for your purpose: My duty is done with disclosing these account-books and the documents. His omission to bring to the assessing authority s attention these particular items in the account books, or the particular portions of the documents, which are relevant, amount to omission to disclose fully and truly all material facts necessary for his assessment. Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iced above the further income received as interest, available in the profit and loss account was not disclosed in the returns and by virtue of Explanation-1 this results in nondisclosure of material facts. There cannot be alleged any inference having not been made at the regular assessment, since even in the regular assessment the inference of the Assessing Officer was that the interest income has to be computed in the taxable income. 14. In the above circumstance, the assessee could not have claimed that the Assessing Officer ought to have employed due diligence and found out the further interest income from Bank deposits, which were not returned, but available in the books of accounts. This disclosure, going by the Explanation-I to Section 147, has to be made by the assessee in the return. That details were available in the books of accounts or the balance sheet or profit and loss account cannot absolve the assessee from a true and correct disclosure of material facts necessary for assessment. We are of the opinion that the first appellate authority and the Tribunal went wrong in finding that the facts of the case indicate full and true disclosure of facts which are necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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