A.N. Varma, J. - (1.) AT the instance of the assessee, the following question has been referred by the Income-tax Appellate Tribunal for our opinion : "Whether on the facts and in the circumstances of the case, the Income-tax Officer could validly initiate proceedings for reopening of the assessment under Section 147(a) for the assessment year 1949-50 ?"
(2.) THE original assessments of the assessee for the assessment years 1949-50 and 1950-51 were completed on March 51, 1954, on the basis of a settlement reached between the assessee and the Department covering the assessment years 194445 to 1952-53. THE settlement was arrived at on an appreciation of the overall picture of the accretion to the assessee's wealth between 1943 and 1952. Certain fixed deposits made in the name of Smt. Ram Moorti Devi, the wife of the karta of the assessee's family, and in the names of the two daughters of the assessee as well as in the name of Smt. Premwati, the wife of an employee, were also taken into account as part of the assessee's wealth. THEse deposits were accepted by the assessing authority as having been made out of certain "on money" received by the karta of the assessee-family and his wife, Smt. Ram Moorti Devi, aforesaid. Consequent to certain disputes and eventual compromises between the karta of the assessee-family and his brother, Sri Sheo Prasad, the karta, Sri Banarsi Dass Gupta, agreed to transfer 9,200 shares held by him in Lord Krishna Sugar Mills Ltd. to his brother, Sri Sheo Prasad, in consideration of Rs. 7.7 lakhs to be paid to him and Rs. 50,000 to his wife, Smt. Ram Moorti Devi. In addition, Sheo Prasad was to transfer one-sixth share held by him in Bijnor Mills which was valued at Rs. 4,50,000. A written agreement dated July 14,1948, was executed whereunder Sri Banarsi Dass Gupta was to receive Rs. 8,25,000 in respect of the above transaction. At the time of settlement proceedings before the Department, however, Sri Banarsi Dass Gupta filed a disclosure petition in which he stated that he had received from Sheo Prasad not only Rs. 25 lakhs in cash but also Rs. 7.75 lakhs cash over and above this. In short, it was explained that the total of Rs. 16 lakhs had been received by Sri Banarsi Dass Gupta in connection with the arrangement entered into between him and his brother and that these amounts had been received in June/July, 1948. It was in this backdrop that the original assessment was completed. The Department, apparently, accepted that the assessee had admittedly received Rs. 16 lakhs from Sri Sheo Prasad in June/July, 1948, and the wealth including the fixed deposits had been satisfactorily explained.
(3.) ON August 4, 1962, Sri Banarsi Dass Gupta made a statement in the course of assessment proceedings relating to the assessment of his brother, Sri Sheo Prasad Gupta, in which he stated that the sum of Rs. 16,00,000 including the "on money" of Rs. 7,75,000 had been received by him at the time of the signing of the agreement entered into between the two brothers on July 14, 1948. The Income-tax Officer found this statement to be of some significance when contrasted with the earlier statement made by Sri Banarsi Dass Gupta on April 29, 1954, at the time of the original assessment in which he said that the sum of Rs. 16,00,000 including the "on money" of Rs. 7,75,000 had been received by him in June/July, 1948. The discrepancy between two statements of Banarsi Dass Gupta assumed, according to the Income-tax Officer, considerable importance in view of the fact that though the fixed deposit in the name of Smt. Ram Moorti Devi appeared in the Central Bank of India on August 31, 1948, in point of time the sum of Rs. 5,25,000 had been deposited by the assessee with the bank on July 3, 1948, and this amount was transferred in the name of Smt. Ram Moorti Devi on August 31, 1948. At the time of the original assessment, the Department had proceeded on the premise that the bank deposit made by Sri Banarsi Dass Gupta in the name of Smt. Ram Moorti Devi on August 31, 1948, was subsequent to the receipt of the "on money" and, therefore, the Department felt that the deposit stood fully explained. However, when the assessee made the statement in 1962 that he had received the entire sum of Rs. 16,00,000 at the time of the signing of the agreement on July 14, 1948, the Income-tax Officer felt that the receipt of the "on money" by Banarsi Dass Gupta did not explain the deposit in the name of Smt. Ram Moorti Devi in view of the fact that though the deposit had been made in her name on August 31, 1948, it had come into the hands of the assessee on July 3, 1948, i.e., the deposit had been made on July 3, 1948, and not in August, 1948. On the aforesaid material, the Income-tax Officer reopened the assessment under Section 147(a) on the ground that the assessee had failed or omitted to disclose fully and truly the material facts necessary for the assessment for the assessment year 1949-50.;