N.N. Mathur, J. - (1.) THESE two appeals filed under Section 260A of the Income-tax Act, 1961, (hereinafter referred to as "the Act"), arise out of the common order of the Income-tax Appellate Tribunal dated April 27, 2001. The respondent-assessee, A. R. Enterprises Private Limited, Udaipur, is engaged in the business of drilling of tube-wells and construction activities. The respondent assessee claimed investment allowance amounting to Rs. 5,25,885 on purchase of drilling rigs, which was allowed in the original assessment passed under Section 143(3) of the Act for the assessment year 1985-86 by order dated December 16, 1986. However, in the absence of sufficient profit for that year, the same was carried forward and allowed to be set-off against the income of the assessment year 1987-88. The Supreme Court in a decision rendered on March 7, 1993, in CIT v. N, C. Budharaja and Co. [1993] 204 ITR 412, held that the investment allowance on drilling rigs is not allowable. In view of the decision of the apex court in N. C. Budharaja and Co.'s case [1993] 204 ITR 412, the assessing authority issued a notice under Section 148 of the Act in February, 1995, to the assessee to reopen the case under Section 147 of the Act. The Assessing Officer completed the reassessment by assessment order dated March 15, 1995, and withdrew the investment allowance granted at the time of the original assessment. The assessee preferred an appeal against the order of the Assessing Officer to the Commissioner of Income-tax (Appeals). In the opinion of the Appellate Commissioner, the claim could have been disallowed by the Assessing Officer at the time of the original assessment, if he felt that the claim was inadmissible. But after a lapse of four years, the provisions of Section 147 of the Act could not be invoked merely on the basis of the decision of the apex court as the initial condition for issuing the notice under Section 147 of the Act is that the assessee failed to disclose fully and truly all material facts necessary for assessment. The Appellate Commissioner found that it was not the case of the Revenue that the assessee did not disclose a particular fact at the time of the original assessment. Accordingly, the Appellate Commissioner concluded that the notice issued under Section 147/148 of the Act was not in accordance with the law. Accordingly, he cancelled the reassessment order dated October 19, 1995. The Revenue preferred an appeal before the Income-tax Appellate Tribunal, which was also dismissed by the impugned judgment dated April 27, 2001.
(2.) ASSAILING the judgment of the Income-tax Appellate Tribunal, it is contended by Mr. L. M. Lodha, learned counsel for the Revenue, that by claiming investment allowance on item where it was not allowable by law, the assessee has failed to disclose fully and truly all material facts. Thus, it was a case of escaped assessment under Clause (d) of Explanation 1 appended to Section 147 of the Act. It is further submitted that the word "information" employed in Section 147(b) includes "information" as to the true and correct state of the law and so would cover "information" as to the relevant judicial decision. It is further submitted that the assessing authority has rightly treated the subsequent Supreme Court decision in N. C. Budharaja and Co.'s case [1993] 204 ITR 412, as "information". Learned counsel has placed reliance on a decision of the apex court in Maharaj Kumar Katnal Singh v. CIT [1959] 35 ITR 1. On the other hand, it is submitted by Mr. Gajendra Maheshwari, learned counsel appearing for the respondent-assessee, that the reopening of assessment completed under Section 143(3) of the Act in consequence to the Supreme Court decision is permitted only within a period of four years from the date of the end of the relevant assessment year, if there is no omission or failure as mentioned in clause (a) of Section 147 of the Act. It is submitted that there is not a word in the reassessment about the assessee's failure to disclose material facts, therefore, the Commissioner of Income-tax (Appeals) was justified in cancelling the reassessment made by the Assessing Officer after a period of four years. Learned counsel has placed reliance on the celebrated judgments of the apex court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 and Associated Stone Industries (Kotah) Ltd. v. CIT [1997] 224 ITR 560. Before dealing with the contentions advanced by learned counsel for the parties, it may be apposite to refer to the relevant provisions of law. The material part of sections 147,148 and 149 prior to the amendment with effect from April 1, 1989, reads as follows : "147. Income escaping assessment.--If-- (a) the Assessing Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under Section 139 for any assessment year to the Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). Explanation 1.--For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :-- (a) where income chargeable to tax has been underassessed ; or (b) where such income has been assessed at too low a rate ; or (c) where such income has been made the subject of excessive relief under this Act or under the Indian Income-tax Act, 1922 (11 of 1922); or (d) where excessive loss or depreciation allowance has been computed. Explanation 2.--. .... 148. Issue of notice where income has escaped assessment.--. . . 149. Time limit for notice.-- (1) No notice under Section 148 shall be issued,-- (a) in cases falling under Clause (a) of Section 147- (i) for the relevant assessment year, if... (ii) for the relevant assessment year, . . . b) in cases falling under Clause (b) of Section 147, at any time after the expiry of four years from the end of the relevant assessment year . . ." We have referred to sections 147, 148 and 149 of the Act, as in the instant case, the reassessment notice was served in February, 1995. The provisions of Section 147, 148 and 149 were applicable with effect from April 1, 1989. The Department has also not disputed that the law amended from April 1, 1989, is applicable in the present case. Section 147 deals with the income escaping assessment. Clause (a) deals with two situations ; firstly, where there is an omission or failure on the part of an assessee in submitting a return under Section 139 for any assessment year and, secondly, the income chargeable to tax escaped assessment for that year for the reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment for that year. Clause (b) provides that even if there is no omission or failure as provided under Clause (a) on the part of the assessee, still if the Assessing Officer receives an information which makes him to believe that the income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance. Explanation 1 appended to Section 147 enumerates the instances which shall be deemed to be the cases of escaped assessment. Section 148 provides for issue of notice where income has escaped assessment. Section 149 prescribes the time limit for notice. It prohibits the issue of notice under Section 148 in a case falling under Clause (b) of Section 147, at any time after the expiry of four years from the end of the relevant assessment year. Thus, it is evident that in a case which falls under Clause (b) of Section 147, i.e., where the Assessing Officer intends to issue a notice in consequence of information in his possession, which led him to believe that the income chargeable to tax has escaped assessment, the limitation provided is of four years. As far as Clause (a) of Section 147 is concerned, admittedly the first part of the Clause is not attracted, as it is not a case of omission or failure on the part of the assessee to make a return under Section 139. As far as the second part of Clause (a) of Section 147 is concerned, it is now well settled that the duty of the assessee is only to disclose fully and truly all material facts necessary for his assessment for the relevant year. The expression "material facts" refers only to the primary facts. There is no duty cast on the assessee to indicate or draw the attention of the Assessing Officer to what factual or legal or other inferences can be drawn from the primary facts. Relying on the decision of the apex court in Calcutta Discount Co. Ltd.'s case [1961] 41ITR 191, the apex court in a later decision, viz., Associated Stone Industries (Kotah) Ltd.'s case [1997] 224 ITR 560, held that the duty of the assessee is only to fully and truly disclose all material facts. Explaining the expression "material facts" as contained in Section 34(1)(a), the court observed that it refers only to the primary facts and the duty of the assessee is to disclose such primary facts. The court further observed that there is no duty cast on the assesses to indicate or draw the attention of the Income-tax Officer to what factual or legal or other inferences can be drawn from the primary facts disclosed. There is not a word in the order of assessment if the respondent-assessee omitted to disclose any material fact. Turning to Clause (b) of Section 147 of the Act, irrespective of the fact that there has been no omission or failure as provided under Clause (a), the Assessing Officer in consequence of information in his possession can still consider a case of escaped assessment for any assessment year. The word "information" has been explained by the apex court in Maharaj Kumar Kama) Singh's case [1959] 35 ITR 1. It is observed that the word "information" in Section 34(1)(b) includes information as to the true and correct state of the law and so would cover information as to relevant judicial decisions. Even in consequence of such an "information", no notice under Section 148 can be issued because of the time limit of four years as provided under Clause (b) of Section 149(1), i.e., at any time after the expiry of four years from the end of the relevant assessment year. There appears to be a public policy behind providing such a limitation that there must be a point of finality in the legal proceedings and that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose and set at rest judicial and quasi-judicial controversies as it must in other spheres of human activity. Reference be made to Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC). So far as Income-tax Appeal No. 88 of 2001 for the assessment year 1987-88 is concerned, it does not survive as it is consequential order of the assessment year 1985-86.
(3.) WE are satisfied that the case does not involve any substantial question of law and, as such, both the appeals are rejected.;