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Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts Where during assessment, letters addressed by petitioner, carrying on business of life insurance, including note appended to computation of income clearly set out fact that there was a surplus in shareholders' account and that deficit in policyholders' account was met by a transfer from shareholders' account to policyholders' account and petitioner disclosed that in Form 1, surplus/deficit was shown to be nil and submitted that position reflected in Form 1 was subsequent to internal transfer of funds which took place from shareholders' to policyholders' account, since it was after petitioner had filed its explanation by several letters that Assessing Officer passed an order of assessment under section 143(3), reopening of assessment four years after expiry of relevant assessment year on ground that assessee had filed incorrect computation of income was not justified [Assessment years : 2002-03 & 2003-04] [In favour of assessee] ICICI Prudential Life Insurance Co. Ltd. v. Asstt. CIT [2010] 231 CTR (Bom.) 233 During assessment, the letters addressed by the petitioner, carrying on business of life insurance, including the note appended to the computation of income clearly set out the fact that there was a surplus in the shareholders' account and deficit in the policyholders' account which was met by a transfer from the shareholders' account to the policyholders' account. The petitioner disclosed that in Form 1, the surplus/deficit was shown to be nil and submitted that the position reflected in Form 1 was subsequent to the internal transfer of funds which took place from the shareholders' to the policyholders' account. It was after the petitioner had filed its explanation by several letters that the Assessing Officer passed an order of assessment under section 143(3). However, the assessment was reopened. The reasons which have been furnished in support of the reopening of the assessments were that, under section 44 read with rule 2 of the First Schedule, income of life insurance business assessable under the Act had to be as per the surplus declared in an…

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