Law:

Section:

Section 147(a) of the income-tax act, 1961-Reassessment-Non-disclosure of primary facts-Assessee disclosed full details relating to loss in sale of shares and loans taken from certain parties, which, after due enquiry, were accepted by ito-original assessment was completed by treating loans as genuine and loss on shares as revenue loss-Whether ito could later on reopen assessment on the grounds that according to departmental report, creditors were renowned bogus name lenders, and that assessee had failed to disclose material facts necessary for drawing correct legal inference that loss on shares was capital loss-held, on facts, no Facts During the assessment proceedings, the assessee furnished full details relating to loss sustained by it on sale of shares, and loans taken by it from certain parties. After due enquiry, the ITO accepted these details and completed the regular assessment by treating the loss as a revenue loss, and the loans as genuine. Later on, he came to know that (i) according to the correct legal position, the loss on shares was to be treated as a capital loss since they were acquired with a view to obtaining managing or selling agency, but the assessee did not make this intention clear during the assessment proceedings; and (ii) according to a report of the investigation wing of the department, the creditors to the loans were renowned bogus name-lenders. He, therefore, took the view that failure to disclose its intention amounted to non-disclosure of material facts which were necessary to draw the correct legal inference qua the loss in shares and that the assessee had made a fictitious claim so far as the loans were concerned. Consequently, the ITO sought to reopen the assessment under section 147(a). On writ: Held It is wellsettled that the expression 'material facts' in section 147(a ) refers only to primary facts. The duty of the assessee is only to disclose the primary facts. In this case, the assessee had furnished all material facts necessary for the purpose of assessment, and it was not the case of the department that anything was left in the accounts produced by the assessee. No obligation has been cast upon the assessee to indicate…

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