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TMI Blog1980 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... irmative, whether, on the facts and in the circumstances of the case, the Tribunal was right in not converting provisions of section 147(a) into provisions of section 147(b) of the Income-tax Act, 1961 ? " The assessee is a limited company. It owned a building known as Radha Krishan Bhawan, Darya Ganj, Delhi. The building was let out to the American Embassy for some years and the assessee was charging a rent of Rs. 3,212.50 per month. During the accounting year relevant to the assessment year 1961-62, the American Embassy vacated the building and it was requisitioned by the Government for its own use. The assessee filed its return for the said year and appended the following note in connection with the property of Radha Krishan Bhawan: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 1965-66, the ITO found that the rent fixed by the Government in respect of the aforesaid building was Rs. 4,658 per month and in this view of the matter the ITO initiated proceedings under s. 147(a) of the Act, 1961, and charged to tax the difference between the revised figure and the original figure in the assessment under reference. Dissatisfied with the assessment, the assessee appealed to the AAC. The AAC held that the assessee failed to disclose fully and truly all material facts necessary for assessments and as such the proceedings under s. 147(a) were valid. He further held that in the circumstances the ITO could change the letting value of the property. With these findings, the appeal of the assessee was dismissed. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt the proceedings under s. 147(a) into s. 147(b) was answered by the Tribunal against the department on the basis of a Full Bench judgment of the Allahabad High Court in the case of Raghubar Dayal Ram Kishan v. CIT [1967] 63 ITR 572. As regards question No. 1 the grounds upon which action under s. 147(a) can be taken is stated in the section itself and the said section reads as under : " 147. If (a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer, or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing pending. All these facts were clearly disclosed by the assessee in the said note and were in the possession and knowledge of the department, which is not disputed. There was no further obligation on the assessee to disclose the correct legal inference in respect of those facts. In the circumstances, the income which had escaped assessment was not due to the failure or omission on the part of the assessee to disclose fully and truly all material facts. The Tribunal correctly relied upon the decision of the Bombay High Court in the case of S. M. Dahanukar v. CIT [1968] 69 ITR 504. In that case during the accounting year 1949-50 the assessee acquired certain plots of land which had been requisitioned by the Government under the Defence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll under s. 34(1)(a). The facts in the present case are similar to the facts in the Bombay case and following the said decision we hold that on the facts and in the circumstances of the case the Tribunal was right in cancelling the assessments made by the ITO in pursuance of the proceedings under s. 147(a) of the I.T. Act, 1961, and answer question No. 1 in the affirmative. As regards question No. 2 the contention of the learned counsel for the petitioner was that the assessment in any case are saved in view of the provisions of s. 147(b) of the I.T. Act, 1961, as the information about the enhanced rent is tantamount to information within the meaning of s. 147(b) of the Act. The Tribunal did not go into the question whether the material c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew taken by the Calcutta High Court and the minority view of Manchanda J., in the Allahabad case. The learned counsel for the assessee placed strong reliance on the case of Johri Lal (HUE) v. CIT [1973] 88 ITR 439 (SC). That was a case where a notice under s. 34(1)(b) had been issued and it was sought to be justified by the Tribunal under cl. (a) of sub-s. (1) of s. 34. Their Lordships of the Supreme Court felt obvious difficulties in that matter. Their lordships of the Supreme Court held in that case that a notice issued on the ground of cl. (b) of s. 34 cannot be later treated as issued under cl. (a) of s. 147 because certain specific and special conditions are required to be complied with in the cases under s. 147 which normally and in o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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