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TMI Blog1975 (6) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... e have escaped assessments. I would therefore require you to show cause on or before 14th July, 1965 in writing why your assessments for the years 1949-50 to 1960-61 will not be reopened under s. 147 of the IT Act, 1961". On 14th July, 1965 the assessee wrote back to the ITO that it desired to make a disclosure under s. 271(4A) of the Act and since for this purpose it was necessary to inspect documents seized by the Department, and adjournment to show cause may be granted for at least three weeks. On 4th Dec., 1965 the assessee further wrote to the ITO that the inspection of the accounts and documents was taking time and, therefore, proceedings under s. 147 of the Act should not be started till it was finished and the assessee could take copies of the documents and know its final position. It appears, the ITO did not agree to the above to the above request of the assessee and submitted a proposal to the CBDT under s. 147(1) of the Act. The brief reasons for starting the above proceedings were given as under:— "Certain books of account and documents in respect of Banshidhar Durgadutt were found in R.P. Rajgarhia's and Nathani's place while conducting search under s. 132 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed but it was the income which the ITO bona fide believed upon definite information to have escaped assessment. He found that in the case of the assessee as a result of search conducted long after the completion of the original assessment voluminous books of account and other records were seized which contained numerous entries showing unexplined introduction of moneys on different dates as well as unexplained investments in various names during a period of 12 years covering the years under appeal. He held that considering the multiplicity and the nature of transactions in various names the ITO formed reasonable and honest belief that the escaped income for each of the years was likely to amount to Rs. 50,000 or more. He, therefore, rejected the above contention of the assessee. On the next contention that the assessee was not allowed proper opportunity to rebut the findings of the ITO the AAC set aside the assessments and directed the ITO to make fresh assessments in accordance with law. 4. Against the above consolidated order of the AAC the assessee has preferred these appeals. The learned counsel for the assessee submitted before us that the conditions precedent to the exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments. Relying on another decision of the Supreme Court in the case of Calcutta Discount Co. Ltd. vs. ITC, 41 ITR 191 (SC), he submitted that the duty of the assessee was only to disclose fully and truly all material or primary facts and that it did not extend beyond that nor was it his duty to in form the ITO about the possible inference which might be raised against him. He also referred to the decision of the Supreme Court in the case of Burlap Benko Ltd., 79 ITR 609 (SC), to support his arguments. 5. The learned Departmental Representative in reply invited our attention to the assessee's reply dt. 14th July, 1965 and submitted that the assessee itself wanted to make a disclosure under s. 271(4A) of the Act before the CIT on the basis of the books seized by the Department which clearly went to show that the income chargeable to tax had escaped assessment and that such escapement was due to the assessee's failure to disclose fully and truly all material facts necessary for its assessments, namely, the books of account. He also pointed out that the assessee's intention to make the disclosure was repeated in its letter dt. 14th Dec., 1965 which left no room for doubt in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him for issuing notice was not mentioned in the report nor had he mentioned the facts contained in the communication referred to by him in that report. The Court further observed in that case that from the report submitted by the ITO to the CIT it was clear that he could not have had reasons to believe that by reasons of the assessee's omission to disclose fully and truly all material facts necessary for its assessment income chargeable to tax had escaped assessment for that year. The Court was also of the opinion that even the Commissioner had mechanically accorded permission. In our opinion the principles laid down by the Hon'ble Court in the cited case fully apply to the present case also. In this case the ITO had not set out any reason for coming to the conclusion that the income that had escaped assessment was likely to amount to Rs. 50,000 or more and the material that he had before him for issuing notice under s. 148 is also not mentioned in the report. He has not even enclosed the assessee's letters dt. 14th July, 1965 and 4th Dec., 1965 to his report for the consideration of the CBDT. Obviously, it appears, the latter also had no material before it to approve the proposal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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