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TMI Blog1989 (4) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act and assessed two items of Rs. 66,600 and Rs. 11,930 as the assessee's income from undisclosed sources. Before the Appellate Assistant Commissioner, the assessee challenged the entire proceedings under section 147(a) and also challenged the additions made by the Income-tax Officer while completing the reassessment of the-assessee. The Appellate Assistant Commissioner found that the assessee's daughter, Smt. Tara Devi Maheshwari, was born on February 2, 1942, and before she became major in 1960, returns of income were filed by her in respect of the assessment years 1951-52 to 1955-56 on September 28, 1959, and those for 1956-57 to 1959-60 on December 20, 1959. In these returns, it was shown that Smt. Tara Devi was deriving income from a partnership firm known as Hem and Co. and it was stated that the initial capital of Rs. 15,000 had come from the gift received from her grandfather, Shri P. D. Maheshwari, who had made a deposit in the name of the daughter of the assessee with the firm known as Nirmal Kumar Devkinandan. It was also shown in the returns that the lady had received gift of Rs. 10,000 on January 14, 1958, from her grandmother. The Income-tax Officer found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any careful application of mind to the facts of the case. On a consideration of the facts and circumstances of the case, the Tribunal held that the proceeding under section 147 had been properly initiated. The Tribunal set aside the order of the lower authorities and directed the Income-tax Officer to make a fresh assessment. On those facts, the following question of law has been referred to this court: "Whether, on the facts and in the circumstances of the case, the income-tax authorities were justified in law in reopening the assessment of the assessee under section 147(a) of the Income-tax Act, 1961, in respect of the assessment year 1960-61 and whether the said proceedings were properly initiated within the time prescribed and in accordance with the law ?" Mr. R. N. Bajoria, learned counsel appearing for the assessee, submitted that the Income-tax Officer did not have any material before him while reopening the assessment. He had drawn our attention to the information which was received by the Income-tax Officer concerned and the reasons recorded by him before initiating the proceeding under section 147 of the Income-tax Act which are reproduced below. On June 26, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee under section 148 of the Income-tax Act, 1961, stating that he had reason to believe that the assessee income chargeable to tax for the assessment year 1960-61 had escaped assessment within the meaning of section 147 of the Income-tax Act. Mr. Bajoria contends that the Income-tax Officer has only relied on the conclusion of the concerned Officer and not on any material on the basis whereof, he allegedly came to the finding that the investments made by the assessee in the name of his daughter are benami transactions. According to him that proceeding under section 147(a) in the case of the assessee could have been initiated, had the assessee failed to disclose truly and fully all material facts necessary for his assessments. The assessee had not failed to disclose any primary fact. Some information has been received by the Income-tax Officer from the file of the assessee's daughter. There is no material to justify such information. Mr. Bajoria has relied on a decision of this court in CIT v. Dwarka Prosad Bazaz [1987] 168 ITR 572. In CIT v. Lakhiram Ramdas [1962] 44 ITR 726, the Supreme Court was considering the validity of the decision of the Bombay High Court in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aft for Rs. 1,10,000." The Supreme Court thereafter proceeded to hold as follows (at P. 731): "In our opinion, in the circumstances of this case, the question whether the assessee had or had not failed to disclose fully and truly all material facts necessary for his assessment was a question of fact and we are unable to accept the argument of the learned advocate for the appellant to the contrary." (emphasis supplied) In CIT v. Kamal Singh Rampuria [1970] 75 ITR 157,160, the question which the Supreme Court was considering is as follows : "Whether, on the facts and in the circumstances of the case, the assessment made under section 34(1)(a) of the Income-tax Act was justified in law?" By its judgment dated September 12, 1963, the High Court answered the question in the negative and in favour of the assessee. The relevant passage of the judgment of the High Court states as follows (at p. 161) : ". . . it appears to us that the Income-tax Officer could have no reason, on the materials before him, to believe that there had been any omission to disclose material facts as stated before ... On the background of the facts stated above, we are of opinion that the finding made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year in question. In our view, the finding of fact having not been challenged as perverse, we cannot embark upon the question whether the Income-tax Officer validly initiated the proceeding or not. The decision relied on by learned counsel for the assessee in Dwarka Prosad Bazaz [1987] 168 ITR 572 (Cal) was decided on its own facts. It appears from the said judgment that the Tribunal, in that case, held for the reasons as recorded by the Income-tax Officer that it was not clear how detection was made that the, loans in question were fictitious and represented the assessee's income from undisclosed sources. There was no nexus or link between the information of the Income-tax Officer concerned and his belief that the income of the assessee had escaped assessment. On those facts, the court held as follows (at p. 585) : "On the facts and in the circumstances of this case, it appears to us that the conclusion of the Tribunal that the Income-tax Officer concerned did not have sufficient or valid reasons to come to the conclusion that the income of the assessee had escaped assessment on account of the assessee's failure to disclose fully or truly all material facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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