Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment years 1990-91 to 1992-93 - Whether in order to challenge a reassessment on ground of limitation of four years provided under proviso to section 147, it is for assessee to prove that it has furnished all material facts necessary for completion of original assessment - Held, yes - Whether if an assessee who is required to maintain books of account, returns income on estimation basis, it cannot claim that it has fully and truly disclosed all material facts required for assessment - Held, yes FACTS The assessee-firm was engaged in publication of newspapers, periodicals, etc. It did not maintain any books of account and filed the returns of income for all the assessment years on estimation basis without any balance sheet and statement of accounts. The Assessing Officer completed the assessments under section 144 estimating the income. Subsequently, the Assessing Officer got the copies of balance-sheets of the assessee-firm submitted to the bank, which disclosed substantial increase in current accounts and capital accounts of the partners. The Assessing Officer inferred that the increase in the capital accounts and current accounts of the partners of the assessee-firm was share income from the assessee-firm which had escaped assessment in the original assessments of the firm. He, therefore, reopened the assessments and completed the same under section 147. The assessee challenged the assessments on ground of limitation as well as on merits. The Commissioner (Appeals) dismissed the appeal. However, on second appeal, the Tribunal cancelled the assessments completed under section 147 as time-barred for the reason that the reassessments were not completed within four years from the end of the relevant assessment years in terms of the proviso to section 147. On the revenue's appeal to the High Court : HELD The only question for consideration in the instant appeal was as to whether the assessee had, for the purpose of completing the original assessment, made full disclosure of all material facts necessary for its assessment and if it was proved so, then the…

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