Mool Chand Rastogi vs Commissioner of Income Tax

Heard. These three reference applications relate to the assessment years 1959-60 to 1961-62. Pursuant to directions given by this Court in IT Case Nos. 142, 143 and 164 of 1976, following questions have been referred for opinion of this Court : 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the action of the income tax Officer in reopening the assessment u/s 147(a) of the income tax Act, 1961 ?

Whether, on the facts and in the circumstances of the case, the assessments were rightly reopened u/s 147(a) of the income tax Act ?

Background facts as enumerated in the statement of case are as follows :

Assessee, an individual at the relevant point of time, was dealing in purchase and sale of glass bottles, tin and caps. Original assessments for these years were completed by the ITO on 4-10-1960, 25-8-1961 and 25-9-1963. In the course of assessment proceedings for the assessment year 1962-63, it was revealed that certain deposits shown in the name of wife and minor children of the assessee during the accounting years relevant to the assessment years 1958-59 to 1961-62 had escaped assess- ment and the assessee failed to disclose all the facts fully and truly. The ITO has recorded reasons for all the three years on the basis of which he formed a belief that the assessee had failed to disclose all the facts truly and fully and he sought approval of the Commissioner to reopen the assessments u/s 147(a) of the income tax Act, 1961 (''the Act''). For the reasons recorded, names of the depositors were given and it was stated that depositors were mere relations and no satisfactory explanation was offered to prove the source of deposits. The Commissioner recorded necessary approval to reopen the assessments. Accordingly, notices were issued u/s 148 to the assessee. The assessee objected to the reopening the assessments. Objections were overruled and reassessments were made including the deposits which had escaped assessment as the assessee''s income from undisclosed sources. The assessee filed appeals which were heard by the AAC. For all the four years, appeals were disposed of by a consolidated order dated 22-6-1971. The AAC confirmed the action of the Assessing Officer. Matter was further carried in appeal before the Tribunal. Main ground of appeal was that there was no enquiry conducted by the ITO before reopening the assessments. There was mere change of opinion. Stand of the revenue was that enquiry had been made before recording reasons and such enquiry revealed that certain deposits had been made in the name of wife and minor children which had escaped assessment as the assessee had not fully and truly disclosed his income. The escapement of income was discovered by the Assessing Officer in the course of proceedings for 1962-63 when statement of one of the depositors Smt. Vidya Wati was recorded on 11-11-1964 and much thereafter on 6-2-1967 the Commissioner accorded approval for reopening the assessments. The Tribunal found no merit in the appeal so far as the issue in question was concerned. A prayer was made for a reference u/s 256, which was turned down. Present reference was made pursuant to the order as aforesaid.

We have heard the learned counsel for the revenue. There is no appearance for the assessee.

The learned counsel for the revenue submitted that the background facts clearly indicate, as noted by the Tribunal, that true and full facts were not disclosed which came to light during assessment proceedings for subsequent years about the non-disclosure. Reasons were recorded and action for reopening was taken. We find that the Tribunal has referred to the material on record to come to the conclusion that the assessee had failed to place full and true material facts. It was noted that adequacy of that material is not justiciable. It was observed that it was not a case of change of opinion. The material which came in possession of the ITO as a result of enquiry later on was the foundation for the reopening. It was also noted that ITO had definite material in the shape of deposits of some of the depositors and information supplied by the Directorate of Inspection. Above being the position, the Tribunal was justified in its conclusion which is essentially factual, giving rise to no question of law. We, therefore, decline to answer the questions.