Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment years 1999-2000 and 2000-01 - Whether requirement of section 147 is that assessee should have failed or omitted to make full and true disclosure of material facts; assessee is not required to disclose, state or explain law - Held, yes - Whether where assessee had furnished full and true details, lapse or error on part of Assessing Officer to apply law to said facts can be attributed and regarded as a failure on part of the assessee to make full and true disclosure of material facts in original assessment proceedings - Held, no - Whether Explanation 1 to section 147 deals with failure of Assessing Officer to discover or infer all material facts on basis of books of account or other evidence produced by assessee; failure to apply law or a section to admitted facts on record is not covered by Explanation 1 - Held, yes - For assessment year 2001-02, Assessing Officer made addition of certain amount under section 2(22)(e) as deemed dividend being amount advanced by group company to assessee- On appeal, Commissioner (Appeals) reduced addition to amount advanced during that year and deleted addition representing amount advanced in earlier years - Thereupon, Assessing Officer reopened assessments of assessment years 1999-2000 and 2000-2001and made addition under section 2(22)(e) - Whether since for assessment year 1999-2000, all facts were already known and on record and lapse was on part of Assessing Officer in not invoking section 2(22)(e), reopening of assessment for that year was unjustified - Held, yes - Whether, however, since proceedings for assessment year 2000-01 were never initiated and books of account and other material were not produced before Assessing Officer, order passed by the Commissioner (Appeals) in the assessment year 2001-02 would constitute information or material from any external source and, therefore, reopening of assessment for that year was justified - Held, yes [Partly in favour of assessee] FACTS For the assessment years 1999-2000 and 2000-01, the assessee-company filed returns of income declaring certain income. For the…

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