9911796707
TMI Blog1991 (2) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... caped assessment and in confirming the initiation of proceedings under section 147 (a) of the Income-tax Act, 1961 ? " The facts leading to this reference are that the assessee is a nationalised bank and carrying on banking business. The original assessment for the assessment year 1962-63 was made on a total income of Rs. 41,09,172. The assessment was made on the basis of facts disclosed relating to loans and advances considered bad and doubtful of recovery. The assessee neither charged any interest on bad and doubtful debts nor credited any sums to the interest suspense account. The justification for following such a method was the Circular No. 41 (V-6) dated October 6, 1962, of the Central Board of Revenue. In the original assessment, ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling of the suit to the date of decree and from the date of decree to the date of payment depends upon the discretion of the court in view of the provisions of section 34 of the Civil Procedure Code. Moreover, in accordance with the regular method of accounting followed by the assessee, interest on bad and doubtful debts has all along been taxed by the Department on realisation basis. The Income-tax Officer, however, holding that, from the statement filed by the bank, the amount of interest credited to the suspense account was not ascertainable and the representative of the bank could not also enlighten him in the matter, resorted to the proviso to section 145 and completed the assessment ex parte under section 144/147(a) after adding an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accrued interest on sticky loans which was not disclosed by the assessee at the time of original assessment. It was further submitted that interest has become due to the assessee as indicated by the Income-tax Officer in the order and on the basis of the decision of the Supreme Court in the case of State Bank of Travancore v. CIT [1986] 158 ITR 102. Learned counsel for the assessee, while supporting the order of the Commissioner of Income-tax (Appeals), submitted that since no amount of interest was credited to the suspense account, the question of non-disclosure of any primary facts by the assessee-bank did not arise and as such the proceedings under section 147(a) were void ab initio. The assessee is following the cash method of accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, supported the order of the Tribunal. Our attention has been drawn to the decision of the Supreme Court in Indo-Aden Salt Mfg. and Trading Co. P. Ltd. v. CIT [1986] 159 ITR 624. In that case, in relation to assets consisting of reservoirs, salt pans, piers and condensers, the appellant had not disclosed in the original assessment proceedings for the assessment years 1955-56 to 1962-63 either by its valuation report or by a statement before the Income-tax Officer as to what portion of those assets were of earth work and what portion was of masonry work. In regard to the entirety of the assets, the Income-tax Officer had allowed depreciation at 6 per cent. There was no dispute that depreciation at 6 per cent. was available only in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it to the notice of the assessing authority. 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 is immaterial. But, if there is omission to disclose material facts, then, subject to other conditions, jurisdiction to reopen is attracted. Furthermore, bearing these principles in mind, in this particular case, whether there has been such non-disclosure of primary facts which has caused escapement of income in the assessment was basically a question of fact. Our attention has also been drawn to the decision of the Supreme Court in Indian Oil Corporation v. ITO [1986] 159 ITR 956. There the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case, it cannot be said that there was no omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the assessment year in question . Apart from the facts, the question whether there was any nondisclosure of primary facts which had caused escapement of income from assessment was basically a question of fact. It was the duty of the assessee to disclose the interest which was not given up as a bad debt and to offer it for taxation. It is immaterial whether the assessee did or did not credit such interest to the interest suspense account or profit or loss account. It was the duty of the assessee to disclose that interest had accrue on what is called "sticky advances" bu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
