Law:

Section:

Section 147 of the Income-tax Act, 1961 – Income escaping assessment – General – Assessment years 1965-66 and 1966-67 – Whether it is not for assessee to point out various possible inferences which could be drawn from primary facts he had disclosed at time of original assessment years Held, yes - Whether, if at time of original assessment, ITO could have reached to different conclusion i.e. different from one which he actually reached on earlier occasion, it would not be open to him to resort to section 147(a) merely on ground that subsequently he came to regard as erroneous conclusion which he had earlier reached – Held, yes FACTS For the assessment years 1965-66 and 1966-67, the assessee-company claimed deduction of certain amount stating that the vice-president of the company spent the amount at his discretion for pacifying the troublesome elements amongst the workmen employed by the company. That explanation on behalf of the company was accepted by the ITO in each of the two years under consideration. Subsequently, for the assessment year 1971-72, when the same amount was claimed as a deduction on the same grounds, the ITO held that, in the absence of vouchers, he would not permit any such deduction. Thus, so far as the assessment years under consideration were concerned, the deduction had become final and in the light of the decision for the assessment year 1971-72, the ITO issued the notices under sections 147 and 148. On writ : HELD It is not for the assessee to point out the various possible inferences which could be drawn from the primary facts which he had disclosed. His duty is to disclose the primary facts and leave it to the ITO to draw the appropriate inference. If, at the time of the original assessment, the ITO could have reached a different conclusion, i.e., different from the one which he actually reached on the earlier occasion, it would not be open to him to resort to section 147(a) merely on the ground that subsequently he came to regard as erroneous the conclusion which he had earlier reached. In the instant case, the assessee had given his explanation, viz., that the amount in each of the years under consideration had been utilised by the…

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