9911796707
TMI Blog1985 (4) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... losed sources. On appeal, the AAC deleted the said addition on the ground that the marriage ceremonies were not held during the previous year relevant to the assessment year 1973-74, but was held in the sub-sequinned years, and also on the ground that assessee had explained satisfactorily the marriage expenses by withdrawals of Rs. 35,000 from his bank account. Subsequently, the ITO issued notices under section 148 of the Income-tax Act, 1961 and served them on the assessee on 2nd March, 1978 for the assessment years 1974-75, 1975-76 and 1976-77 which are now under consideration. The reason for reopening the three assessments has been recorded by the ITO in the order sheet dated 2nd March, 1978 as below : "Marriage expenses are not shown in the accounts and as such income escaped assessment. Issue notice under section 148." In response to the above notices, the assessee took the stand that he did not suppress any material at the time of the original assessments inasmuch as the expenses incurred by the assessee in connection with the marriage of his three daughters during the three assessment years under consideration were explained to the ITO prior to the completion of the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal assessment respectively for the three years under consideration. The ITO had to state in his orders as to how much of the total income assessed by him represented the actual marriage expenses as estimated by him and how much of the same estimated expenses was regarded by him as explained satisfactorily by the withdrawals from the bank. However, by implication it is seen that the amounts assessed by the ITO in the reassessments reduced by the income assessed in the original assessments represented the amounts of the extra marriage expenses that the ITO held as not explained by the bank withdrawals and so assessed by him as the assessee's income from undisclosed sources apparently under section 69 C of the Income-tax Act. It may be stated in this connection that section 69C of the Act was introduced in the Act with effect from 1st April, 1976 so that it is applicable to the assessment year 1976-77 but not applicable to the earlier two assessment years 1974-75 and 1975-76. 3. The assessee appealed to the AAC and challenged the reassessments made by the ITO broadly on two grounds : Firstly, it was urged that the reopening was no justified because the assessee did not conceal anyt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner (1976) 103 ITR 270 (Pat.) in support of this contention. In that case at the time of original assessment, the assessee had declared an expenditure of Rs. 7,041 over the construction of a house subsequently, the Income-tax Inspector inspected the house and estimated the cost of construction at about Rs. 30,000 Thereupon, the ITO started proceedings under section 147 (a) of the Act. When the matter went to the High Court it was held that in this case the ITO's reason to believe that there had been an under-assessment could not be said to be on account of any omission of failure on the part of the assessee, to disclose any primary facts. It was merely a result of the subsequent information given to him by the ITO on the basis of an estimate. At best, therefore, it could be a case under section 147(b) and not a case under section 147(a). In so far as the assessment has been reopened under section 147(a), it was held to be without jurisdiction. It is also held in this case that if the law does not impose any obligation upon the tax payer to disclose any fact, then, non-disclosure of such a fact will not amount to non-disclosure of a primary fact, In that case, there was an obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct nexus or live link between the material on which the belief is based and the belief itself. In this case, the assessee had shown some loans from a creditor and the loans were accepted as genuine at the time of the original assessment. Subsequently, the ITO got the information that the creditor has since confessed that he was doing only namelending. The ITO reopened the assessment under section 147(a) on the ground that income of the assessee had escaped assessment in view of the above confession of the creditor. The supreme Court held that there was no direct nexus between the confession of the creditor in general terms and the belief of the ITO to the effect that income of that particular assessee escaped assessment. In this view of the matter, the Supreme Court held the reopening to be without jurisdiction. Shri Poddar urged that the ITO had merely said that the marriage expenses were not shown in the accounts. Apart from the fact that this statement was incorrect, this fact could not lead to the belief that the assessee had incurred more expenses on marriage than shown by him in the books or that the assessee must have some secret income from which the estimated excess ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. 10. We have considered the contentions of both the parties as well as the facts on record. In our opinion, the contentions raised for the assessee carry force. We find that the ITO already knew about the marriage expenses before the original assessments were completed as is clear from the assessment order for the assessment year 1973-74. As has been held by the Supreme Court in the case of Gemini Leather Stores the assessee was no longer under any obligation to disclose that fact which was already known to the ITO. After all, a person cannot conceal a fact from the ITO if that fact is already known to the later. It follows that the assessee did not conceal anything contemplated in section 147 (a) of the Act and so the assessee is likely to succeed in these appeals on that ground alone because one of the basic conditions for assuming jurisdiction under section 147(a) has not been fulfilled in the present case. There is also force in the ground that the assessee was not under any obligation to disclose the marriage expenses when there is no query to that effect either in the return or in any enquiry made by the ITO vide the decision in the case of Durga Sharan Udho Prasad. simi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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