9911796707
TMI Blog1979 (8) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee as Rs. 2,74,281. The ITO found that out of Rs. 2,74,281 a sum of Rs. 18,742 related to the assessment year 1954-55. The assessee returned a dividend income of Rs. 25,952 for the next assessment year 1956-57. The assessment for the year in question i.e., 1955-56, was completed on March 28, 1960, whereas the assessment for the assessment year 1956-57 was taken up later and completed on March 27, 1961. The amount of Rs. 25,952 shown as dividend income for assessment year 1956-57, was not included in the assessee's income and of course it could not be included for the year 1955-56, as neither the assessee had shown it in the return for 1955-56, nor the ITO had included this amount for that year. However, on July 19, 1961, notice under s. 34(1)(a) was issued to the assessee and the same was served on July 28, 1961. In compliance with the said notice, the assessee, no doubt, filed a revised return, but contended that no dividend income for that year had escaped assessment on account of the omission or failure on the part of the assessee to disclose truly and fully the material facts necessary for assessment in that year and that consequently, the case did not fall under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment records for the year 1956-57, is not correct. The argument appears to be attractive but, as we shall presently show, it is devoid of substance. On the other hand, Shri Choudhary, learned counsel for the assessee, has contended that, in the first place, the dividend income of Rs. 25,952, which had been received by the assessee during the year 1956-57, had rightly been returned in the year 1956-57. The assessee was not bound to return this income in the year 1955-56, during which year only this income had been declared, as, according to the learned counsel, a mere declaration of dividend is not to be regarded as payment within s. 16(2) of the Act of 1922. He has submitted that the finding of the Tribunal, in this respect, is incorrect, and the assessee is entitled to challenge the same in this reference. In the alternative, the learned counsel has also argued that there has been no escapement of income by reason of any failure or omission on the part of the assessee to disclose the true and material facts necessary for assessment. The Tribunal has observed in para. 10 of its order dated June 17, 1966, as follows: " The dividend in question had admittedly been dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --whether, in the facts and circumstances of the case, the provisions of s. 34(1)(a) of the Act are attracted? In other words, whether the ITO had reason to believe that by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts for its assessment for the year in question (sic) ? According to the Tribunal, this income should have been returned in the assessment year 1955-56 and, therefore, there is no escape from the conclusion that the income in question has escaped assessment during the relevent assessment year. So one essential ingredient of s. 34(1)(a) is satisfied. The other important ingredient of the section is that the escapement must have been due to omission or failure on the part of the assessee to disclose fully and truly the material facts. The findings of the Tribunal, on this point are as follows : " In the instant case, undoubtedly, the Income-tax Officer knew that the assessee had dividend income from the shares held by it in various companies. He also knew that in all the past years the assessee's system of accounting for the dividend income was to treat it as its income only when the dividend warrants, had been e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal so far as income from dividend was concerned, it was open to him to take that conclusion and assess the assesee accordingly. Once again, we refer to the observations of their Lordships of the Supreme Court in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191, wherein their Lordships have categorically observed that (at p. 201): " Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else-far less the assessee-to tell the assessing authority what inferences, whether of facts or law, should be drawn." Now, there is no dispute that the assessee had been continuously following a system of accounting with regard to its dividend income, which according to it, was included in the year in which the assessee had actually encashed the dividend warrants and not in the year in which the dividend was declared. This system of accounting, it cannot be gainsaid, was known to the ITO. There is nothing on the record to show that in any of the assessment years preced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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