LexINDO- ADEN SALT MFG. & TRADING CO. PVT. LTD. versus COMMISSIONER OF INCOME TAX, BOMBAY
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INOO-ADEN SALT MFG. & TRADING CO. PVT. LTD. v. COMMISSIONER OF INCOME TAX, BOMBAY MARCH 12, 1986 [SABYASACHI MUKllARJI AND K.N. SINGH, JJ.] 627 Jurisdiction to reopen assessment by the Income Tax Officer, when arises - Reopening assessment on the ground that the assessee had obtained depreciation at 6 per cent on the assets as masonry works, but the assets consisted of earth work wholly or substantially - Whether escaped assessment Duty of the assessee to disclose primary facts and truly - Income Tax Act, 1961, section 147 (a). A B c A partnership firm business carried on by M/s. lndo Aden D ·• Salt Works Co. was taken over by the appellant-assessee by an agreement dated 24.8.1949. During the assessment year 1950-51, the said Agreement as well as the Valuation Report of the assets had been filed before the assessing authority. The Income Tax Officer did not discuss the point whether the assets were constructed of masonry or made of earth but on the E assessee's letter conveying its agreement that for the purpose of depreciation the value should be taken as Rs.20,31,000 in the aggregate, in the assessment order allowed 6 per cent depreciation. Later it was found that 93% of the construction works were made of earth and only 7% of masonry and that 59% ~ of piers were made of masonry and 41% of them were made of F earth were allowed 12% depreciation which rate is available only if constructed entirely or mainly of wood. The Income Tax Officer, on these facts proposed to reopen the assessment on escaped income for the years 1955-56 to 1962-63. The jurisdic- tion of the Income Tax Officer to reopen the assessment under · section 147(a) of the Income Tax Act, 1961 and the High G Courts' 'declining to call for a statement of case on a question of law by rejecting the application under section --( 256(2) of the Act are under challenge in the appeals on certi- ficate granted by the Bombay High Court. Dismissing the appeal,s, the Cour~, H A B c D E G H 628 SUPREME COURT REPORTS [1986] 1 S.C.R. HEU>: l, l If there are some primary facts from which reasonable belief could be formed that there was some non- Y disclosure or failure to disclose fully and truly all material facts, the Income Tax Officer has jurisdiction to reopen the assessment. Assessee itnows all the materl.al and relevant facts - the assessing authority might not. In respect of the failure to disclose, the omission to disclose may be deliberate or inadvertent. That was immaterial. But if there is omission to , disclose material facts, then, subject to the other ,,,. conditions, jurisdiction to reopen is attracted. [632 D-F] ~ 1.2 The obligation of the assessee is to disclose only primary facts and not inferential facts. What facts are material facts would depend upon the facts and circumstances of each case. Further, whether there has been such non-disclo- sure of primary facts which has caused escapement of income in the assessment was basically a question of fact. In this case, what portion of the asset consisted of l earth and what portion or proportion consisted of masonry work was indubitably a material fact for the purpose of calculating the depreciation. If over depreciation has been allowed on the basis that the entire work consisted of masonry work, income might have been under-assessed. The Income Tax Officer can reasonably be said to have material to form that belief. (631 E-F] l, 3 Mere production of evidence before the Income Tax Officer and leaving him to find out the position by further probing is not enough. The assessee nust make full disclosure~ truly. There msy be omission or failure to make a true and full disclosure, but if some material for the assessment lay embedded in the evidence which the revenue could have uncover- ed but did not, then, it is the duty of the assessee to bring it to the notice of the assessing authority. (632 D] Calcutta Discount Co. Ltd. v. Incone Tax Officer Companies District I, Calcutta & Another, 41 I;T,R, 191; Hazi Aalr Mohd. Mir Ahmed v. Collllll.ssioner of Income-Tax, Amritsar, "- 110 I.T.R. 630; Income Tax Officer I Ward, Distt VI Calcutta & Ors. v. Laldmani lfewal Das, 103 I. T. R. 437; and Malegaon Elee- tricity Co. P. Ltd, v. Coumi.ssioner of Income Tax, Bombay, 78 I,T.R. 466 applied. '· INDO-ADEN SALT v. C.I.T, [MUKHARJI, J.] 629 CIVIL APPELLATE JURISDICTION (NT)·of 1974. Civil Appeal Nos. 800-807 From
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