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TMI Blog1982 (7) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... stment of Rs. 7,375 was made by the assessee out of sale proceeds of Rs. 14,800 of a house situated at Barnala and as the ITO after going through the information and after going through the file of M/s Zamindara Tractors, Sirsa, found the contention of the assessee absolutely wrong, as he came to the conclusion that the said sum of Rs. 14,800 on the sale proceeds of a house situated at Barnala was actually invested by the assessee in a firm styled as M/s Zamindara Tractors. On this basis, the ITO resorted to s. 147(A) proceedings and after issuing a notice under s. 148 computed the assessee's total income at Rs. 24,775, Rs. 10,000 being on account of dairy income as disclosed by the assessee and Rs. 14,775 being on account of undisclosed investment (Rs. 7,375 on account of plot purchased by the assessee in auction and Rs. 7,400 on account of purchase of buffaloes). 3. The ITO also levied a penalty amounting to Rs. 1,360 as the return in question was filed on 22nd Feb., 1978 in response to s. 147(a)/148 notice which, according to the revenue, ought to have been filed on 15th Aug., 1973. 4. The assessee carried both the matters in the first appeal mainly contending that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73) 92 ITR 338 (All) and CIT vs. Assam Automobiles and Accessories Agency (1978) 111 ITR 411 (Gau). He however, also mentioned the case of CIT vs. Rakha Singh IT Ref. No. 38 of 1973 dt. 9th April, 1973 but was unable to make a copy of the same available to us, as it was not a reported case. 7. The ld. Deptl. Rep. Mr. M.P. Singh, on the other hand, besides relying on the orders of the two lower authorities submitted that s. 147(a) is properly applied. He argued at length that the purpose of the Act should not be ignored. He submitted that in s. 147(a) the word used in 'or' and not 'and' and in s. 147(a) the word 'or' is disjunctive. This is true that under s. 139(1) income had escaped assessment and the assessee had not filed the return of his own accord and, therefore according to him, s. 147(a) proceedings are in order. In respect of penalty appeal under s. 271(1)(a), he placed his reliance on the case of Partop Steel Rolling Mills vs. CIT (1978) 111 ITR 183 (P H) beside the orders of the two lower authorities. 8. The ld. counsel for the assessee, on the other hand, in rejoinder, submitted that the assessee is an agriculturist, his main source of income is agriculture dairy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n thereof is concerned, it is stated that I sold one residential house situated at Barnala on 21st Feb., 1971, as I wanted to settle at Sirsa. That the sale proceeds of Rs. 14,800 was kept by me as I wanted to purchase some house which could not be purchased till 4th Aug., 1972 and thus out of that money a sum of Rs. 7,375 was paid as instalment of the plot and balance of Rs. 7,400 was invested in purchase of buffaloes to run the milk dairy. So I started sale of milk since Oct' 72 in the plot purchased by me, as stated above. It is further stated that I sold another plot of mine situated at Barnala on 17th Oct., 1972 against Rs. 6,000, which was invested by me in construction of the plot as I constructed two rooms and a verandaha on the ground. Necessary evidence regarding sale of house and a plot is attached herewith for your kind perusal. Balance instalment of Rs. 4,687.60 was paid on 23rd Jan., 1974 which was paid by me from the source of my income from milk as my earning for the year 1973-74 was round about Rs. 4,500. Further a sum of Rs. 4,203.18 was paid on 4th June, 1974 which was also paid from the source of sale of milk as my income from the milk during this year was Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee to make a return under s. 139 for any assessment year to the ITO or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in cl. (a) on the part of the assessee, the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, He may subject to the provisions of ss. 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereinafter in sections 148 to 153 referred to as the relevant assessment year.) According to s. 148 of the Act of 1961, before making the assessment, reassessment or recomputation under s. 147, the ITO shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-s. (2) of s. 139; and the provisions of the Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. The ITO has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence which he should draw from the primary facts. If an ITO draws an inference, which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessments. See ITO vs. Lakhmani Mewal Das (1976) CTR (SC) 220 : (1976) 103 ITR 437 (SC). The words 'omission or failure to disclose fully and truly all material facts necessary for his assessment for that year' postulate a duty on the assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case." From the above, it is clear that for proceedings under s. 147(a), the ITO must have reason to believe that income chargeable to tax has escaped assessment and he must have reasons to believe that such income has escaped assessment by reason of the omission of failure on the part of the assessee to make a return under s. 139 of the assessment year or to disclose fully and truly material facts necessary for his assessment of that year. According to their Lordships of the Supreme Court, both these conditions must co-exist to confer jurisdiction upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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