Law: Income Tax Act, 1961

Section: 147

(a) Income-tax---Reassessment---Failure to disclose material facts necessary for assessment---Duty of assessee is to disclose primary facts---Names of creditors and documents proving loans furnished at time of original assessment---Subsequent notice of reassessment on the ground that "creditworthiness" of creditors was doubtful---Not valid---Indian Income Tax Act, 1961, S.147. The obligation of the assessee is to. disclose all material facts fully and truly; he is, however, not expected to also tell the Assessing Officer that his conclusions are not correct. In fact, he is not supposed to disclose his own conclusion and inference to the Assessing Officer. It is for the Assessing Officer to draw his inference and conclusions on the basis of such facts. He may for this purpose make such investigation as he considers necessary and also, in this regard, call upon the assessee to place such further evidence or materials as may be considered necessary. After having completed the assessment and accepted the return, as originally filed or with alterations, it is not open to him to take recourse to the provisions of section 148 of the Income Tax Act, 1961, read with section 147. He can do so only on the basis of any material or piece of information. However, he is not supposed to make a roving or fishing enquiry for this purpose. While it is open to him to collect evidence or new materials by himself through his own agencies, at that stage he cannot compel the assessee to associate himself with any such roving or fishing enquiry. It is only after he comes to form a reasonable belief, distinct from suspicion or doubt, on the basis of some fresh material or evidence that he can issue notice under section 148 and start reassessment proceedings. Where two views on a matter are possible and the Assessing Officer takes one view, later he or the successor Assessing Officer cannot start reassessment proceedings merely because he seeks to take another view of the same matter and on the same materials: Held; (i) that the submission that the present case would be governed by the amended provisions of section 147 of the Act was completely misconceived. Having regard to the fact…

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