George Cheriyan, Senior Vice-President - (1.) THIS appeal by the Revenue relates to the assessment year 1979-80* The assessee is a public limited company. The accounting period ended on 30-9-1978. The original assessment in this case was completed on 18-11-1982. Subsequently, the Income-tax Officer on 26-3-1984 recorded the following reasons:- It is seen that the a had received a sum of Rs. 38,90,240 during the previous year relevant to asst. year 1979-80, as additional levy price from the Govt. of Tamilnadu. THIS has not been included in the sales and shown as part of the prof it but had been credited to a suspense account,' resulting in an understatement of income and consequently underassessment of income. I have, therefore, reason to believe that by reason of omission/failure on the part of the assessee to disclose fully and truly the material facts necessary for assessment, income had escaped assessment to the extent of Rs. 38,90,240 for the asst. year 1979-80 within the meaning of Section 147(a). Issue notice Under Section 148. In compliance with the same, the assessee filed a return and in making the revised assessment on 27-3-1985, the Income-tax Officer brought to the tax the additional price on levy sugar of Rs. 38,90,240 and he also withdrew an amount of Rs. 33,86,872 which was stated to be excess depreciation allowed.
(2.) The assessee appealed and the first submission before the C.I.T.(A) was that there was no omission or failure on the part of the assessee in fully and truly disclosing all material facts and, therefore, invoking the provisions of Section 147(a) was without jurisdiction. To support the contention, the assessee relied on the fact that the amount of Rs. 38,90,240 stood included under the head 'Current liabilities & Provision' and further there was specific mention of this amount in the Auditor's Report as well as the Directors' Report. According to the assessee, therefore, all material facts had been disclosed.
(3.) THE C.I.T. (A) in particular referred to the contents of the Directors' Report which in substance stated that the loss was arrived at without taking into account the additional sales realization of Rs. 38.90 lakhs which was collected as per the terms of the Madras High Court order. He also referred to a note which was furnished by the assessee during the course of hearing at the time of the original assessment regarding the fixation of levy price. Finally, the C.LT.(A) concluded that the records showed that in respect of the additional sugar price, facts had been stated which would lead to the conclusion that there was no failure or omission on the part of the assessee to disclose all material facts.;