ANNE NAGENDRAM AND BOMMA REDDI VENKAYYA AND CO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has referred this case to this Court under Sec. 66(2) on the following questions, viz.:-

(2.) IT may be stated that the term "within eight years" has been omitted by S. 18 of the Finance Act with effect from 1-4-1956, and certain provisos were added prescribing the period of limitation to vary with the amount of escapement of income, namely, whether it is below one lakh of rupees or above. We are, however, not concerned with these provisos as the assessment year related to years prior to 1956. The above two provisions while vesting the jurisdiction in the Income-tax Officer, to re-open assessment, have prescribed two different periods of limitation depending on whether there has been a suppression of income by the assessee not fully or truly disclosing the material facts necessary for the assessment of that year or whether in spite of fully disclosing by the assessee the material facts necessary for the assessment, the income has escaped assessment. If the former is the case, the assessment can be reopened within eight years, land in the latter case within four years. The consequence of the presence of an omission to disclose material facts necessary in one case and the absence thereof in the other is that in the first case the period prescribed for reopening the assessment is longer and in the second case it is shorter. The question, therefore, would be whether the assessee has not fully or truly disclosed the material facts necessary for the assessment for that year whereby the income escaped assessment.

(3.) ON the facts in the circumstances of the case and the application of the law as disclosed by the decisions referred to above we have no hesitation in coming to the conclusion that the assessee did not fully and truly disclose all the material information necessary for the assessment. Even where the cash credits were examined by the Income-tax Officer, who accepted his explanation and we are not to be understood as accepting the contention of the learned advocate that he in fact did, the provisions of Sec. 34(1) (a) can be properly invoked if it is subsequently discovered by the income-tax officer that those cash credits were got up ones and not genuine.