Law:

Section:

Section 147(a) of the income-tax act, 1961-Reassessment-Non-disclosure of primary facts-At time of original assessment, assessee claimed that certain sum had been spent towards cost of improvement of his house properties and assessment was completed on that basis-On subsequent enquiry, ito found that assessee had actually reconstructed said properties at substantially higher cost than disclosed by him-Whether ito was justified in reopening assessment under section 147(a) as assessee had not disclosed materials fully and truly at time of original assessment-Held, on facts, yes Facts At the time of original assessment, the assessee claimed that Rs. 21,235 had been spent towards cost of improvements of his two house properties. The ITO accepted the assessees claim without probing into the matter further, and thus computed the total income of the assessee. Later, when the assessee himself filed valuation reports in the wealth-tax proceedings showing the value of the said houses at a much higher figure, the ITO started inquiry regarding the value of those houses. The investigation revealed that the assessee had undertaken reconstruction of both the houses at a cost of Rs. 87,300 and that he had not effected mere repairs or improvements for Rs. 21,235, as contended by him. Therefore, the ITO reopened the assessment under section 147(a) and added the difference in the cost of construction to the income originally determined. On appeal, the Tribunal also upheld the ITO's order. On reference, the assessee contended that since all the materials relevant for the completion of the assessment had been produced even at the stage of the original assessment, the escapement of income could not be taken to have arisen from non-disclosure of material facts by him and, therefore, section 147( a) could not be invoked. Held In the instant case, the materials gathered subsequent to the assessment by the ITO indicated that the assessee had not disclosed the materials fully and truly, and, therefore, it could not be said that unless there was an overt act by the assessee which amounted to concealment of income, it was not possible for the ITO to invoke his powers under section I47(a).…

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