V.K. Singhal, J. - (1.) THE Income-tax Appellate Tribunal has referred the following question of law arising out of its order dated May 14, 1981, in respect of the assessment year 1971-72 under Section 256(1) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the learned Tribunal was correct in law in upholding the validity of the Income-tax Officer's action under Section 147(a) read with Section 148 of the Act?"
(2.) THE brief facts of the case are that the assessment of the assessee was completed on December 22, 1973. In the said assessment, a cash credit of Rs. 20,000 appearing in the name of Shri Raoveer Vikram Singh was found. THE said amount was not disclosed in the assessment year at all. Later on, the Income-tax Officer discovered from the statement of Shri Raoveer Vikram Singh that the cash credit of Rs. 20,000 was not genuine and, therefore, he was of the view that the income represented by the cash credit and interest claimed thereon by the assessee escaped assessment. THE Income-tax Officer, therefore, initiated proceedings under Section 147(a) read with Section 148 of the Act. THE notices were issued on July 24, 1975, and were served on August 7, 1975. THE Income-tax Officer gave opportunity to cross-examine the alleged creditor who deposed on oath that he had not advanced Rs. 20,000 to the assessee but it was only a hawala entry. The Income-tax Officer therefore made an addition of Rs. 20,000 in the reassessment proceedings. In the statement given by Raoveer Vikram Singh, it was explained by him that the hawala entry is by way of an accommodation, so that the other party can utilise its undeclared money in the business by crediting it to the account of another party, who is merely a name-lender. Learned counsel for the assessee was not prepared to cross-examine him on the ground that he is not authorised to do so. Another opportunity was given to the assessee, but no one turned up on behalf of the assessee and therefore the assessment was finalised. In the appeal before the Appellate Assistant Commissioner of Income-tax the matter was challenged, but the order of the Income-tax Officer was confirmed as the version of the alleged creditor was found uncontroverted. In the second appeal before the Tribunal, it was held that from the statement of the creditor, it is clear that the assessee failed to disclose true facts and therefore the initiation of proceedings for reassessment under Section 147(a) read with Section 148 was justified. Without going to the various points, which have been raised and mentioned, sufficed to say that the present matter is covered by the decision of the apex court in Civil Appeal No. 1235 of 1977 (Phool Chand Bajrang Lal v. 1TO [1993] 203 ITR 456), decided on July 13, 1993, wherein it has been held by the apex court that (at page 464) : "From the plain phraseology of Sections 147, 148 and 149 of the Act, it appears that two conditions precedent which are required to be satisfied before an Income-tax Officer can acquire jurisdiction to proceed under Clause (a) of Section 147 read with Sections 148 and 149 of the Act, beyond the period of four years but within a period of eight years from the end of the relevant year, are : (a) that the Income-tax Officer must have reason to believe that the income, profits or gains chargeable to tax had either been underassessed or had escaped assessment and (b) that the Income-tax Officer must have reason to believe that such escapement or underassessment was occasioned by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Both these conditions must co-exist in order to confer jurisdiction on the Income-tax Officer. The Income-tax Officer is obliged, before initiating proceedings under Section 148 of the Act, to record the reasons for the formation of his belief to reopen the assessment". It has been further held that (at page 473) : "Acquiring fresh information, specific in nature and reliable in character, relating to the concluded assessment which goes to expose the falsity of the statement made by the assessee at the time of the original assessment is different from drawing a fresh inference from the same facts and material which were available with the Income-tax Officer at the time of the original assessment proceedings. The two situations are distinct and different. Thus, where the transaction itself, on the basis of subsequent information, is found to be a bogus transaction, the mere disclosure of that transaction at the time of original assessment proceedings cannot be said to be a disclosure of the 'true' and 'full' facts in the case and the Income-tax Officer would have the jurisdiction to reopen the concluded assessment in such a case. It is correct that the assessing authority could have deferred the completion of the original assessment proceedings for further enquiry and investigation into the genuineness of the loan transaction but, in our opinion, his failure to do so and complete the original assessment proceedings would not take away his jurisdiction to act under Section 147 of the Act, on receipt of the information subsequently. The subsequent information on the basis of which the Income-tax Officer acquired reasons to believe that income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true disclosure of the primary facts was relevant, reliable and specific. It was not at all vague or non-specific".
(3.) IT has also been held that (at page 477) : "From a combined review of the judgments of this court, it follows that an Income-tax Officer acquires jurisdiction to reopen an assessment under Section 147(a) read with Section 148 of the Income-tax Act, 1961, only if on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reasons, which he must record, to believe that, by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profits or gains chargeable to income-tax has escaped assessment. He may start reassessment proceedings either because some fresh facts had come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruth fulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. Since the belief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief is not for the court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. IT would be immaterial whether the Income-tax Officer, at the time of making the original assessment, could or could not have found by further enquiry or investigation, whether the transaction was genuine or not if, on the basis of subsequent information, the Income-tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 147(a) of the Act, that the. assessee had not made a full and true disclosure of the material facts at the time of original assessment and, therefore, income chargeable to tax had escaped assessment". The argument that the question regarding the truthfulness or falsehood of the transactions reflected in the return can only be examined during the original assessment proceedings and not at any stage subsequent thereto was rejected. It was observed that (at page 478) : "The argument is too broad and general in nature and does violence to the plain phraseology of Sections 147(a) and 148 of the Act and is against the settled law laid down by this court. We have to look to the purpose and intent of the provisions. One of the purposes of Section 147 appears to us to be to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say 'you accepted my lie, now your hands are tied and you can do nothing'. It would be a travesty of justice to allow the assessee that latitude". The ratio of the decision of CIT v. Burlop Dealers Ltd. [1971] 79 ITR 609 (SC) and ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) was explained and it was observed (at page 472) : "Thus, it is seen that in Burlap Dealers' case [1971] 79 ITR 609 (SC), apart from the Income-tax Officer holding during the assessment proceedings of the same assessee for a subsequent year, that the alleged agreement between the assessee and Ratiram was bogus, there was no other information or material from any other external source which came to the notice of the Income-tax Officer after the assessment proceedings which could enable the Income-tax Officer to form a reasonable belief that the income of the assessee had escaped assessment in the earlier year. As a matter of fact, after the conclusion of the original assessment proceedings, there was no fresh material at all available with the Income-tax Officer in Burlop Dealers' case [1971] 79 ITR 609 (SC), which could have enabled the Income-tax Officer to entertain any reason to believe that the income of the assessee had escaped assessment for the assessment year 1949-50. An assessment order for a subsequent year could not by itself lead to any inference, much less to the formation of a reasonable belief that income chargeable to tax had escaped assessment in the previous year, on account of the failure on the part of the assessee to make a true and full disclosure of the primary facts during the proceedings of the concluded assessment. The judgment in Burlop Dealers' case [1971] 79 ITR 609 (SO cannot be understood as laying down any such proposition that even where the Income-tax Officer gets some fresh information which was not available at the time of the original assessment, subsequent to the conclusion of the original assessment proceedings, which enables him to form a reasonable belief that the income of the assessee had escaped assessment because of the omission or failure of the assessee to disclose true and full facts during the assessment proceedings, he cannot reopen the assessment". ;