Law:

Section:

Section 147 of the Income-tax Act, 1961 [corresponding to section 34(1)(a) of the Indian Income-tax Act, 1922] - Income escaping assessment - General - Assessment year 1948-49 - Whether where cash credits of assessee-firm were examined and accepted by ITO, provisions of section 34(1)(a) of 1922 Act could still be invoked when it was subsequently discovered by ITO that said cash credits were got up ones and not genuine - Held, yes FACTS The assessment of the assessee-firm for the relevant assessment year was completed. During the course of the assessment proceedings for the assessment year 1950-51, the ITO found that certain cash credits allowed were not genuine. He, thus, issued notice under section 34 of 1922 Act dated 12-11-1954, and completed the reassessment. On appeal, the AAC confirmed the ITO's order. On further appeal, the assessee contended that even though action under section 34 of 1922 Act would be said to be justified, the assessment could only have been made under section 34(1)(b) of 1922 Act i.e., within a period of four years, and therefore, notice issued by ITO on 12-11-1954 was barred by time. The Tribunal, however, rejected the assessee's contention and confirmed order passed by the authorities below. On reference : HELD Where the ITO, after considering the cash credits accepted them and allowed interest, when it is subsequently discovered that those cash credits are false and not genuine, the provisions of section 34(1)(a ) of 1922 Act can be invoked because that would be a non-disclosure fully or truly of all material facts necessary for the assessment. The assessee did not fully and truly disclose all the material information necessary for the assessment. Even where the cash credits were examined by the ITO section 34(1)(a ) of 1922 Act could be properly invoked if it was subsequently discovered by the ITO that these cash credits were not up ones and not genuine. It was only after the facts are investigated that the question would arise whether the ITO would act under section 34(1)(a) or section 34(1)(b) of the 1922 Act. In the result, it could be concluded that section 34(1)(a ) of 1922 Act was applicable to facts of the case, and…

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