9911796707
TMI Blog2002 (2) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... t all primary facts were disclosed by the petitioner in the return and the Income-tax Officer could have asked for further details and that failure on the part of the officer to investigate into the matter further cannot be equated with omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. In support of his submission, he invited our attention to the assessment order passed by respondent No. 1 for the assessment year 1991-92. It is contended that the jurisdictional facts are absent for issuing such notice under section 148. Affidavit-in-reply has been filed by the Revenue pointing out the reasons for reopening the assessment. It is stated that the reasons came to be recorded and the Commissioner of Income-tax, Mumbai City-III Mumbai, has granted sanction under section 151 of the Income-tax Act. Those reasons are annexed and relied upon. It has been pointed out that the statutory requirements are complied with in issuing the said notice. It is denied that there was true and full disclosure and there was reason to believe for respondent No. 1 that income has escaped assessment. In view of the contentions raised, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (c) where an assessment has been made, but-- (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed." Learned counsel for the petitioner drew our attention to various observations made in the assessment order for the assessment year 1991-92. In our opinion, they only indicate how the Portfolio Management Scheme (PMS) was to be operated by a bank. How the petitioner violated the guidelines given by the Reserve Bank of India for operating such accounts. The petitioner treated PMS accounts of its clients as fixed deposits. This included four PMS accounts of Grasim I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,387 was earned on such transactions. This has not been shown either by the Citibank or by Grasim Industries Ltd. in its return for the assessment year 1991-92. The sum of Rs.40,23,45,387 earned on transactions in the PMS account has escaped assessment in the case of the bank." Thus, it is clear that there was an oral understanding between Grasim Industries Ltd. and the petitioner-assessee-bank which became clear from the assessment proceedings of Grasim Industries Ltd. It showed that an amount of Rs.40,23,45,387 was earned by the petitioner over and above the amount paid to Grasim Industries. Because of the said oral understanding, the assessee-bank only paid a fixed return at the rate of 18 per cent. interest under the said Portfolio Management Scheme to Grasim Industries Ltd. and retained the amount of Rs.40,23,45,387 which was earned in excess of the same in those accounts. Learned counsel for the petitioner relied upon the judgment of the apex court reported in Gemini Leather Stores v. ITO [1975] 100 ITR 1. In proceedings for the original assessment of the assessee-firm, though the assessee did not disclose certain transactions evidenced by certain drafts, the officer hims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reopened under section 147(a) of the Income-tax Act, 1961. It was held that the assessee had all along disclosed and the Revenue was aware that London management expenses were incurred on behalf of the assessee by the Burmah Oil Co. who were managing the affairs and doing certain works for the assessee as well as certain allied companies. The nature and quantum of work done was disclosed. The expenses claimed whether excessive or not was an inferential fact. The Income-tax Officer had some doubts as to whether the entirety of the expenses debited were really incurred for the assessee-company. Whether that was unreasonable or excessive having regard to the magnitude of the work done by the London company was a question. It was held to be a matter of opinion and an inference drawn from the amount of the work in co-relation to the amount debited. What would be reasonable or not would be an inference of the auditor. The amounts spent, the nature of the work alleged to have been done by the Burmah Oil Co. on behalf of the assessee and the basis of the allocation had been explained in reply to the queries made by the Income-tax Officer before the assessment. In view of this, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer was not enough, that there may be omission or failure to make a true and full disclosure, if some material for the assessment lay embedded in the evidence which the Revenue could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the assessing authority. It was observed that the assessee knows all the material and relevant facts the assessing authority might not. In respect of the failure to disclose, the omission to disclose may be deliberate or inadvertent. That was immaterial. But if there is omission to disclose material facts, then, subject to the other conditions, jurisdiction to reopen is attracted. In Calcutta Discount Co. Ltd.'s case [1961] 41 ITR 191 (SC), it had been held that if there are some primary facts from which a reasonable belief could be formed that there was some non-disclosure or failure to disclose fully and truly all material facts, the Income-tax Officer has jurisdiction to reopen the assessment. It was held that there was non-disclosure of primary facts which had caused escapement of income. Learned counsel for the respondents then relied upon the judgment of the Division Bench of this court reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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