1994 (12) TMI 131

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....inted out that claim of the assessee for depreciation on diesel generating sets, furniture and tubewell had wrongly been allowed on high rates. Similarly extra shift allowance on electric installations and motor cars had also been wrongly allowed. Even investment allowance on the tubewell was also wrongly allowed. The AO taking note of audit objections, issued notice u/s 148 to the assesseecompany and withdrew the excess depreciation, extra shift allowance and the investment allowance wrongly allowed in the original assessment. In appeal, however, the ld. CIT(A) quashed the initiation of re-assessment proceedings on the ground that there was no failure or omission on the part of the assessee to disclose all the primary facts truly and wholl....

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.... with the ld. D/R. 5. Prior to its substitution by Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1-4-89, clause (d) of Explanation 1 and Explanation 2 to sec. 147 provided that Section 147(1): "Explanation 1 : For the purpose of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely, (a) ** ** ** (b) ** ** ** (c) ** ** ** (d) where excessive loss or depreciation allowance has been computed: Explanation 2: Production before the AO of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of this sub-section." The change brought abo....

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....lier in the provisions of Explanation 1(d) and the Explanation 2 of the substituted sec. 147. It means that there has been no change in the legal position that grant of excessive loss or depreciation allowance would make a case of income chargeable to tax as escaping assessment and production before the AO of account books or other evidence from which material evidence could with due diligence have been discovered by the AO would not necessarily amount to disclosure within the meaning of sec. 147. 7. In the instant case the ld. CIT(A) though appreciated that mistake had been committed by the AO in granting excessive loss or depreciation allowance and investment allowance, yet appears to have been carried away by the fact that since the ass....

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....donee did not become a partner of the firm and there was no transfer of capital. Actually, the question whether the interest in the firm had been transferred by the assessee to the minor is a question of fact, which itself is based on other primary facts. Obviously, the ITO had not applied his mind to all the relevant facts and the production of the settlement deed alone was insufficient to make a proper assessment. The appellate Tribunal has pointed out that the partnership deed itself contains a clause prohibiting the assignment of the share in the firm without the consent of the partners and it is not in dispute that the consent of the other partner had not been taken. Since the ITO had not applied his mind at all to the relevant facts, ....