Commissioner of Income Tax vs Kalappa

K. Jagannatha Shetty, J.—This is a reference u/s 256(1) of the Income Tax Act, 1961. The Tribunal has referred the following question of law for the opinion of this court :

"Whether the Tribunal was right in law in holding that the repenting of the assessment was not in order ?" he current VERIFY setting. The assessee is an individual. The assessment years is 1973-74. The original assessment had been completed by the Income Tax Officer u/s 143(1) of the Act on the income declared at Rs. 21,640. Subsequently, on the basis of the information that the purchaser of the lorry belonging to the assessee had disclosed the purchase value at Rs. 45,000 to obtain a loan from the bank, the Income Tax Officer has reopened the assessment by invoking the provisions of section 147 of the Act. On appeal, the Appellate Assistant Commissioner rejected the assessee''s contention and upheld the reopening of the assessment. But the Tribunal held to the contrary. The Tribunal was of the opinion that the assessee had made available all the information and disclosed all the primary facts necessary for the assessment along with the return and that the reopening of the assessment was, therefore, bad in law. The Tribunal also held that there has been no omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The Tribunal has given detailed reasons in support of that conclusion on the material facts disclosed by the assessee at the first instance. On their facts found, in our opinion, the conclusion of the Tribunal is justified.

A case similar to the present one has been considered by the Supreme Court in Gemini Leather Stores Vs. The Income Tax Officer B Ward, Agra and Others, The Supreme Court, while reversing the decision of the High Court has observed that if the assessee has primary facts relating to the transactions, it was for the officer to make the necessary enquiries and draw proper inference as to whether the income returned is correct or not. It would be the plain duty of the officer to make an enquiry and if he did not make an enquiry, it is a case of oversight and it could not be said that the income chargeable to tax had escaped assessment by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts. The ration of the decision is clearly applicable to the facts of the present case. Indeed, the facts of the present case are better than those referred to in the aforesaid judgment of the Supreme Court.

In the result, we answer the question in the affirmative and against the Revenue.