Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Information - Position prior to 1-4-1989 - Assessment years 1950-51 to 1960-61 - Assessee bank having branches abroad had been claiming deduction of expenditure incurred in respect of foreign branches - Such expenses had been allowed from assessment year 1950-51 onwards - Reassessment notice was issued on ground that assessee had been claiming and getting deduction of same expenditure in foreign countries also which fact had not been disclosed amounting to misrepresentation of facts - Whether all relevant facts were there before ITO during original assessments and ITO might have if he had made necessary enquiries, found out that same claim was being made for deduction in other countries also and since no such specific enquiry was made by ITO assessee could not be said to have made any false statement so as to justify reassessment - Held, yes FACTS The petitioner-bank was a world-wide organisation having its branches in several countries including India, the United Kingdom and the United States. Being an exchange bank there were certain expenses which were incurred in the United Kingdom and the United StatesOffices of the bank which could be said to be referable to transactions which originated in India. From the assessment year 1950-51, onwards the assessee had been claiming deduction of a proportion of the expenses of its head office, London office and the U.S.A. offices, respectively, referable to the Indian Offices. The ITOs were also allowing the deductions after calling for records and discussions with the representatives of the Bank. However, during the assessment year the ITO issued notice under section 148 read with section 147, stating,inter alia, that the assessee had been claiming the expenditure, claimed and allowed in India, in the respective foreign countries as having been incurred for earning the income-tax in those countries and the assessee's claim for the deduction, a second time of the same expenses in India was untenable as was a clear case of misrepresentation. It was stated that to believe that by reason to believe that by reason of the omission or failure on the part…

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