V.K.SINGHAL, J. - (1.) THE Tribunal has referred the following question of law arising out of its order dt. 28th Feb., 1981, in respect of the asst. year 1965 -66 : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was failure on the part of the assessee to disclose fully and truly all material facts which were necessary for the purpose of completing the original assessment and consequently the ITO had validly reopened the assessment under S. 147(a) of the IT Act, 1961 -
(2.) THE brief facts of the case are that the assessee is a registered firm and during the relevant assessment year in respect of the accounting period ending on 31st Dec., 1964, the assessee filed a return showing income of Rs. 1,61,734. In the course of the original assessment proceedings, the assessee has submitted copies of accounts of various parties from whom the assessee claimed to have borrowed moneys. One such party was Nandkishore Laxminarain, Bombay, from whom a sum of Rs. 31,000 was alleged to have been borrowed on 4th Dec., 1964. The assessee furnished the Bombay address of this party and also filed confirmation from him. The principal amount and the interest accrued thereon was paid in cash on 1st Sept., 1965. No enquiry was made by the ITO and the assessment was completed and the genuineness of the loan was not questioned by the ITO. Subsequently, Nandkishore Laxminarain made a statement through its partner before the ITO, Hundi Circle, Bombay, to the effect that the said firm was doing only hawala business and they have never advanced the said amount to the assessee but had merely lent their name for some consideration. On the basis of the statement given by the partner, the ITO initiated reassessment proceedings under S. 147(a) of the IT Act to tax the said amount. The ITO was of the view that the assessee had not furnished full facts before the then ITO and hence the income escaped assessment. The assessee had shown its inability to produce the creditor for cross - examination and no other witness in respect of genuineness of the loan was produced. The copy of the statement of Nilamani recorded under S. 131 of the IT Act and that of Prem Lata Ras Behari Lal and the proceedings before the Third ITO, X -Ward, Bombay, were sent by the ITO, Bombay, to the ITO A -Ward, Jaipur. In the proceedings before the ITO, Bombay, the statements of Neelamani and Prem Lata Ras Behari Lal, witnesses on behalf of Nandkishore Laxminarain, were recorded and cross -examination was allowed to the assessee -company in which it was stated that it was only a hawala entry and the money was not actually given to the assessee -firm. In the assessment order, the ITO was of the view that commission was issued to the ITO, Bombay, for cross - examination of Nandkishore Laxminarain which was done on 20th March, 1976, in which it was stated that the loan was never advanced as a genuine loan and it was only a hawala entry. On the basis of the statement given by the parties and the opportunity of cross -examination being allowed, the amount of Rs. 31,000 was included in the assessment year as income from undisclosed sources.
(3.) IT was submitted before the CIT (A) that since the copies of accounts were given along with their confirmation, the material particulars regarding the loans were produced before the ITO and there is no omission or failure on the part of the assessee to disclose any material fact. The CIT (A) came to the conclusion that the assessee had failed to disclose fully and truly all material facts necessary for assessment, on account of which income had escaped assessment and, therefore, the proceedings were rightly initiated. In the second appeal before the Tribunal, it was observed that the assessee had not disclosed fully and truly all material facts for completing its assessment. The matter with regard to calling for the books of account of Nandkishore Laxminarain was restored to the file of the ITO for fresh determination as the books were not produced at the time of cross -examination at Bombay. The question as to whether there was failure on the part of the assessee to disclose fully and truly all material facts which were necessary for completion of the original assessment was considered recently by the apex Court in the case of Phool Chand Bajrang Lal vs. ITO (1993) 113 CTR (SC) 436 : (1993) 203 ITR 456 (SC) and the decision of this Court in the case of M. D. Jewellers vs. CIT (1993) 115 CTR (Raj) 497 : (1994) 208 ITR 196 (Raj) (D.B. IT Ref. No. 18 of 1982 -decided on 12th Oct., 1993). We are of the view that the point referred by the Tribunal is fully covered by these decisions and adopting the same reasoning, we are of the view that the provisions of S. 147(a) were rightly involved in this case.;