1971 Supreme(P&H) 196

PUNJAB & HARYANA HIGH COURT
Bal Raj Tuli, J.
Karam Chand Kakkar
Versus
Income-tax Officer
Civil Writ No. 1398 of 1971,
Decided On : OCTOBER 22, 1971

The assessee is under no obligation to inform the Income-tax Officer that some of the entries in his account books or in the balance-sheet are false.

Headnote:

INCOME TAX - REASSESSMENT - LIMITATION - SECTION 147(B) - DISCLOSURE OF MATERIAL FACTS - SCOPE - DUTY OF ASSESSEE - CHANGE OF OPINION BY INCOME-TAX OFFICER - NOT PERMISSIBLE.

Fact of the Case:

The petitioner-firm filed its return for the assessment year 1963-64 on September 30, 1963, as required under Section 139 of the Income-tax Act, 1961. The Income-tax Officer issued a notice under Section 143(2) of the Act to the petitioner-firm for appearance before him on March 23, 1964. On that date, the case was adjourned at the request of the petitioner on the ground that the accountant was not keeping fit. The Income-tax Officer again issued a notice under Section 143(2) of the Act on March 31, 1964, to the petitioner-firm for appearance before him on April 10, 1964. On that date the accountant of the petitioner-firm appeared along with an advocate and the Income-tax Officer asked them to prove the cash credits which were appearing in the balance-sheets of the petitioner-firm and file the account of zeera, etc. The case was then adjourned to April 22, 1964. On April 22, 1964, the petitioner-firm submitted the details of the credit entries of all the parties in whose names the credits stood in its books along with dates of payment, letters of confirmation and copies of accounts. The Income-tax Officer felt satisfied with respect to the cash credits of the five firms mentioned above and directed the petitioner-firm to prove the genuineness of payments made on behalf of the following firms: (i) M/s. Pishori Lal Tirath Ram, (ii) M/s. Narain Dass Ishar Dass, (iii) M/s. Tara Singh Dyal Singh. On the next date of hearing, that is, July 21, 1964, the petitioner-firm produced the discharged pronotes, confirmatory letters and certificates of these three firms which were placed on the file. The case was further discussed on July 25, 1964, and July 27, 1964, when the accountant appeared and the account books were examined. Thereafter, the Income-tax Officer passed the assessment order on July 27, 1964. In that order he definitely stated: "The balance-sheet was examined and loans were satisfactorily proved by the assessee." Thereafter, he worked out the net profit of the firm for the purposes of assessment. On December 23, 1970, the Income-tax Officer issued a notice to the petitioner-firm under Ssection 148 of the Act stating that he had reason to believe that the firms income chargeable to tax for the assessment year 1963-64 had escaped assessment within the meaning of Section 147 of the Act and he proposed to reassess the income for the said assessment year and required the petitioner-firm to deliver to him within thirty days from the date of service of the notice, a return in the prescribed form of its income in respect of which it was assessable for the said assessment year.

Finding of the Court:

The impugned notices having been issued more than four years after the expiry of the assessment years 1963-64 and 1964-65 were void and without jurisdiction and no proceedings on their basis can be taken.

Issues: Whether the petitioner-firm had omitted or failed to disclose fully and truly all material facts necessary for its assessment for the relevant years and, therefore, the income chargeable to tax had escaped assessment.

Ratio Decidendi: The duty of the assessee is to disclose fully and truly all primary relevant facts, it does not extend beyond this. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else--far less the assessee--to tell the assessing authority what inferences, whether of facts or law, should be drawn.

Final Decision: These petitions are consequently accepted with costs and the impugned notices are quashed.