1981 (6) TMI 20 - HC - Income Tax

High Court upholds Revenue in Income-tax Act case, reassessment valid under section 147(b).

The High Court ruled in favor of the Revenue in a case involving the applicability of sections 147(a) and 147(b) of the Income-tax Act, 1961. The Court ... Reassessment Issues Involved:1. Applicability of section 147(b) of the Income-tax Act, 1961.2. Validity of reopening assessment under section 147(a) for the assessment year 1966-67.Summary:Issue 1: Applicability of Section 147(b)The Tribunal initially rejected the Revenue's argument to invoke section 147(b) for reopening the assessment. The Tribunal held that since the proceedings were expressly reopened under section 147(a), clause (b) could not be applied. However, the High Court disagreed, stating that the field of operation of sections 147(a) and 147(b) is not mutually exclusive. The High Court referenced several cases, including Mriganka Mohan Sur v. CIT and ITO v. Eastern Coal Co. Ltd., to support its view that if the conditions for section 147(b) are met, the reassessment can be sustained under this clause even if initially invoked under section 147(a). The High Court concluded that the Tribunal erred in not allowing the Revenue to support the reassessment by invoking section 147(b). Thus, the first question was answered in the negative, in favor of the Revenue and against the assessee.Issue 2: Validity of Reopening Assessment under Section 147(a)The Tribunal held that the assessee had disclosed all material particulars regarding the commission paid to the sole selling agents, and the reopening of the assessment was merely a change of opinion. However, the High Court found that the ITO discovered new material indicating that the assessee had not truly disclosed all material particulars. The High Court referenced the Supreme Court case CIT v. Burlop Dealers Ltd., which stated that mere production of books of account does not amount to full disclosure if the facts disclosed are later found to be untrue. The High Court also cited its own decisions in Hazi Amir Mohd. Mir Ahmed v. CIT and Kirpa Ram Ramji Dass v. ITO, which supported the view that if new information reveals the untruthfulness of previously disclosed facts, the assessment can be reopened under section 147(a). Consequently, the second question was answered in the negative, in favor of the Revenue and against the assessee. No costs were awarded.