Indian Oil Corporation v. Income Tax Officer, Central Circle V, Calcutta & Ors

INDIAN OIL CORFOKATION 1NCt14K TAX OFFICER, CEITTRAL CIRCLE V, CALCU'ITA & 'ORS. MAY 8, 1986 [R.S. PATHAK AND SABYASACHI MUKHARJI, JJ.] Income Tax Act, 1961 - S.147(l)(a) -Income escaping assessment -Initiation of proceedings for reassessment --tNecessary conditions - What are. escaping The assessee at the relevant time was a company incorporated under the laws of the United Kingdom, and had its a company had its was all The ·-L principal place of business in India. The assessee was all r along assessed under the Indian Income Tax Act, 1922. The ·assessee had claimed deductions every year of certain expenses tamounting to L 1,00,000 or over as administrative charges incurred by the Burmah Oil Company Limited of London for management and secretarial work carried on on behalf of the assessee in London. L 1,00,000 represented approximately 40% of the head office expenses of the London Company which, according to assessee, was a reasonable allocation having regard to the work done by the London Office on behalf of the assessee. As similar organisational work was done in London ¥through the London Company, the London office was managing several companies and debiting prorata to the companies whose affairs they were managing and thereafter the assessment was completed on that basis • ,~ During the assessment for the year 1953-54, the assessee had furni$hed in support of its claim for London Management expenses, certificate from the London Auditors that the sum '\specified in the certificate was reasonable having regard to tbe records and materials produced before the auditors , which was about 10% of the total administrative expenses incurred by the Burmah Oil Company Limited, London. The Income-Tax Officer found that such expenses debited actually in the earlier years were far in excess of this percentage. The ~ assessee was, therefore, required to furnish a similar certificate for each of the assessment years 1957-58, 1958-59 .. and 1959-60. No such certificates were produced by the assessee and by three notices dated November 25, 1965 under s.148 of the Income-tax Act 1961, the Income Tax Officer notified that he had reason to believe that the assessee' s \ income chargeable to tax for each of the said assessment year had escaped assessment within the meaning of s. 147(a) and he proposed to reassess the income for the said years and the assessee was required to furnish the returns. The assessee challenged the said notices under Art. 226 of the Constitution on the ground that there was no material to reopen the assessments. A Single Judge of the High Court"t quashed the notices and held that all the facts in possession of the assessee were placed before the taxing authority prior to making of the assessment; that it was for the taxing authority either to accept the claim or to reject the claim either wholly or in part; that after having accepted the claim1" in spite of non-production of the relevant auditors' certificate which was asked for at one stage the revenue could~ not later turn round and say that the income of the assessee had escaped assessment or been under-assessed due to the failure of the assessee to disclose those very auditors' reports and that the under assessment, if any, was due to the laches of the Revenue and not due to any act or omission on the part 0f the assessee. ਮਈ 8, 1986 gfosae ae HITT (AAA) arane afsard, seq afaa-v, HAHA AT eT( 8 4%, 1986 ) (rarrata aIXo THo TSH MT aeratat Aasit) avant atfafia, 1961 (1961 at 43)— ere 147 (%)ate 148—aaer facta a fer 8ataat at setare 148 & ata fruten far a aaa & fay qaa—aa7faaten & wag wistea fears & anet aat stats aval atsme fiat SAI—aret 147 & ae (we) B alte ga: fatemt Bate aH Bt aT aH es wa faalfedt wt avr srate art fratwr & vg var gt at wa fraten feat wat afe saa feet qana aca at gaat a at at—faatfedl atatfaca safan aoa saz ata wT eg a fH sae fam aterfasnaien meq sme STA sI—nega aaaAFfratfect@ aa aa gee az fed a, aa: faatcn wt fat a ala oTawa gta|ae seradta & fs aranx afafran, 1961 at are 148 Feada fer & frat alae % far qaard ard fee ma at GATafar at arer 147 (a) & vets fratfed F gaat Gaara wt gaATATT TT Fatal st fe ga care faz F frat aey st Bears|arenFOTATENT HUTA TET H fre Tata args BT ara catare aal He Bt sea faar cararaa ale satafear quad CHA€afqafsa wt atgaat cafer slat uses faery a seq caraus Tats HARA aia Hea al| Gea eATATAT F As eqTags Ffaary Unaet carateter F fasaat at sae fear ake qaare aera Tay IBA THFTattest seat gsJ 1 aa atta F geaea seq ag sf|wat aaa afefan,1961at are 147 (%) % aeita faatfedtat faatfeorfiat & ater sat faferarea ar? adhe ATT HW gy, |7i| »€Gn f afafaatfea—areay al aafr &are fagaraatafafaar, 1961 at arer 148 % afte freien ag & gaa ayaia & ats ad at vate & faz afafase at are 147% ave (#)alta afearicar sara er & fers At aa Ta at arth afew, weetng fearaat afaarel % Ta 7g fasara HUA BTPITTTHT AT fH BLva care are are at afer ar ar Frater frat vat gar raterwat GY orat 21 gael ag fH sas aA 7g favara BWA BT BITsaat at fa ga vate fauifea a gt oat ar BA faateor far starga ay & faaten & fag anaes adt aan aeal at gd aweate Teal THE BWH AGATA Tatra H fry FATT TTT agarad dat ma qatar wd ZI (FT 26)|| ge fread ot IgA & faw ars araat area aat afar fr:ag ® Prater ® far aravae aet afer aedt alge avg ateadhered ware Bt H aT aT g AT TAHA sigiag frat Ffaw adt afew aeat at gel axe at adl-aal THE FWAfargaa fraifedt ox wader Staal go A: TTETAT ALA BY THT BUTat 2, gat ga aeal aT aT areas &, atat, weer get awe statatfga att ata, aél-aal Dat afer aa-8 cer fratzor & fagathean % att aay g, AAT-AAT aaa & Paea-farr ath t cerafagiza seater A faatfedl ara aa sfaa at al aay arsaute & fae st aa aeal BY TTAAT aTawaa s, TT aat frsHTgt agad F Frater sefaardl at aaa wea @, aT HT Tea gah TTaa 2, ae a fratfedt ere gaz fac ae gi ar same fet ae aeat> gre qt, ae GAR sree AA aE a agaraeqat fratergrfsaret X go sea aed Fares froma fara at farg waqy@ acer faaara at at aerate arferaret aT fasag frarearat eta tFanifeal ® faa ae aranan val & fe ag saa fre frome faster(Gzt 33) ga aaa & ag carat taar arava@ fa faaifedt § aa FG ‘gee mx fear ar ate uses faarr at ag araaret at fe weetgagquosa & at aan aaah aver faaifedt at att & sara fer aa, st faatfedd at ate 3 aot aat aaa HIUAT Hl FO AFITaafaay av ate & eriwarat FT ware Hel at aT FO AA arr Hat Mi at aes aera sr aa wear rates are saniaagit at It ar a aat aT eo aya fafaer aofial atarafer fear sar ar ate 3 go qatT Sfae wr Bel oh, qaiq Awad fraifedl att acag aofaat & sa aqaa F ager at oralat,frat wear sqdt ee ca caret a Sfae ar Fat ot, wares fastaMae asa aga gd araard ft aa sat gana featayo % fac qa faster fara| fratfeat saat at data feosat 7g att fireg aa ava ease set & fa aar meee aoe at qaderrFen a ag at ate att we otag ada 2 fe ga er et Etaq ay dover fendFf fratfedd aod atx ary tafe at SfaeHa AH ay Var arg fecqor Var ar fe at ¥ gaa Sfaz, frat weaweagt BIT wat at, aga afan Vas, gata wear aadt A fHaar‘areata aq fear 2, saa afin feat 21 fax at ex feafe &, qaqaal 7g way srafaa cerSF wT A arden featd FH fears aratalist ara fararar ar, gaat safe att ofearo at ge wxfear arar att agaga afere ar ar adl, ag Un faongfers aor artag ual @ fe araat afgarta aqa-aqaa oz,dar fa sfafaaTATATTTHE El aT 8, FA are H He ate fear ar fx zor Shaefeu ae arg ay araq Beat arer fratfeat waa B fae areaa Fsqra_ fag ag & aear aay aeat Haat are Feu ae Brae afar‘BY ema FH Tae Bu ae ageager azar aafaa arafer ag watar att sfae a) ag tHq Rade F ara R ofan & fawrse atfasag ar faga etar far aor feat qar at ate weet Hat gat eratmt gh ad ale carat at ae wea 8 ok aret afsargai arareal at wa, frat faa araatafearfeal &faraifedd agaa aT, F aa Te ge Prater F aay araHre afrarfeal at TaTY Wa Ti eas aTTs qaHr afer a aaa ga & fraifedtar acfaater ata ar qara fear. faaten ag 1963-64 & facartaal st uyagare, fra gaat ag za fr 10% afeaqaeaTAT Sr, AVSl TAHA gy aadt2, Paw areor freathedt srfraiea aos (aq) & ala qa: ata ar anar & | farg ara ataaye Tt ag vat Her ar ava fH fated? qaiaa Frater aah 3THE HAH HAGA VAT aT| (Fe 34)||qa frator aaa at ararega deat wt gd ave & ate agl-aat Sq AIA FAT ATHYT TA THe FT fag ae a1 fat aae sme aat frat mar ar fe ga art FH aoclera Bt UT aaT at fa:aad aratag & oa FB fraifedd saat at te B faq ae BIA Fafcarn al sata H wat gu fratfedt ar gfeaqaa araeafeeart:faaat Si ga art H alg favarsa ater al 2 fa gama AAA Iaig frateo 3 cee faacett wrger Hwa Tae gfaagatay F areaiqdtars at dat wa gan at 1 gat, sar yfeagaa gat aaa Aeae arcera ar Pasay str ad at ng waa, faatfedt at ate &aaa aratae are fae ag afaafad are at wafa ale aratct STarenz Frater & ah areas sfrard grr gS ag wet F TAT +eq wt far 7 yy aaHe afeard Au aAT aTAT Hl UTatt tty wer var ar fis Dat ua at a ar at | GAR TAGS ATTex afard 3 eaten Pros & frateor wet ar qara vat Pear ate:gaa faaffedt & fiaara arg fasad sat faarar| araa at ea afte& tae ge ag afafaaifta vat fear ar aaat far avi arrearage deatST gal ave ate adl-adt wae al fearaar ar | TT 1963-64 avTAm-Ta & ag sala Alar zg fe aga ast aatifa area feat eralQ aia a Actas —ag alafaafan Moo at seal cata—aAfna.gaa haa ug dee gear larg fH qet ara WHE a arwe atit—fet(fz 35) at fasara adea ox arenfea aat| fear at ana| b fafase facia [1981] [1981] 130 argo do ato 1: aimt ata woe ara Ide fafate aaa awe aaferaret AT Arq;| 41979] [1979] 118 ao eto arto 1: aantafasrit, l-ar, get afea, saneatt aa sara aaata gailfaaien aga fafazs; 30: [1977] [1977] 110 argo do ato 630: aiat aate NeralAIT ACAT FATA MTT aTgaa, ANAT; 32: anaafa gasi— Section: CONCLUSION In the appeal filed by the Revenue, the Division Bench'!' set aside the decision of the Single Judge, upheld the notices and held that the assessee had failed to disclose; (1) the basis of allocation of expenses; (2) correspondence between the London principal and the assessee company on the relevant subject; (3) existence of auditors' certificate fixing~, percentage that would be reasonable for allocation in respect of the subsidiary companies including the assessee and, therefore, there were prima fade materials to form the belief f that there was failure and omission in the part of the' assessee to disclose fully and truly all the relevant and material facts which led to the escapement of income or under assessment of income of the assessee company. Allowing the appeals of the appellant-Corporation to ,.. this Court, HELD: 1. To confer jurisdiction under clause (a) of s.147 of the Income Tax Act, 1961 beyond the period of four years but within a period of eight years from the end of the + relevant year under s. 148 of the assessment year, two condi-tions were required to be fulfilled: first is that the Income-tax Officer llllSt have reason to believe that the income profits or gains chargeable to tax had been underassessed or escaped assessment; the second was that he must have reason to believe that such escapement or underassessment was occasioned by reason so far as relevant for the present purpose to disclose fully and truly all material facts necessary for the 1 assessment of that year. Both these conditions are conditions precedent to be satisfied. [1121 G-H; 1122.A-B] 2. Section 147(a) postulates a duty on every assessee to '1..-disclose fully and truly all material facts necessary for the r assessment. Therefore, the obligation is to disclose facts; ' secondly those which are material; thirdly the disclosure llllSt +be full and fourthly true. (1125 C-D] 3. What facts are material and necessary for assessment will differ from case to case. In every assessment proceed-ings, for computing or determining the proper tax due from the assessee, it is necessary to know all the facts which help the assessing authority in coming to the correct conclusion. From the primary facts in his possession, whether on ¥ disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inferences as to certain other facts. But once the primary facts are with the taxing authority :Lt is for him to draw inferences. It is not necessary for the assessee to draw 'i inferences for him. (1125 D-F] Calcutta Discount Co. Ltd. v. Income-tax Officer, ,~tea District I, Calcutta and Another, 41 ITR 191 at 199, S. lfarayanappa and Others v. Coanissiooer of Income-tax, Bangalore, 63 ITR 219, eo-1.ssiooer of Income-tax, West Bengal, and Another v. Bemchandra Kar and Others, 77 ITR 1 , Income-tax Officer, I-Ward, Hundi Circle, Calcutta and Others v • Madnanf Engineering Worlts Ltd. , 118 ITR 1, Ganga Saran & Sona P. Ltd. v. Income-tax Officer and others, 130 ITR 1 at ..J. 13, Inco.e Tax Officer, I Ward, Dlstt. VI, Calcutta and others "I' v. [1]-akhwmf Kewal Das, 103 ITR 437 and Sheo Nath Singh v. Appellate Assistant Coaaissiooer of Inc011e-Tax (Central), Calcutta and others, 82 ITR 147 at 153, relied upon. P.R. lilkharjee v. ec-issiooer of Income-tax, West Bengal, 30 ITR 535 and Uazi Amir &hd. Mir Aimed v. Comd.ssioner of Income-tax, Allritsar, 110 ITR 630, approved. 30: 32: BASU seT qrarag % anda 7 fearaz, 1973 ¥ avetags % fafavaa % fares fatty sora Far ast af za atta FBera TIT Ae a fe zat araatafafaan,1961 (faa gat sahaaa afafaay ser nat 2) a ara 147(a) % atta faatfeal arfate fae & aa sat fafanra ar? eat acaiea FraterAF 1957-58, 1958-59 AX 1959-60 #1_2. ag Secure & fa afafaan at are 148 % ada fez& faaivr Gat & fay quad ad feu mF oz gaa afafaay atONT 147(%) % achat faaifeatF sar qaareit Bl sa atare gz“aale? at fe ga gart fax & faalwr a@at al aitarg areawtFH fag wy arawt aglet sea casas F fasry waaaaa F RT Aatet Bt Mare at faar alt geama quadafaefosa az a 1oo_ 3. aaa cafes sar uaea faara y yeq eqaTATH avg ‘fastaFINS Upe F AAA earateie aANesy % Be foetal Bl. Gea gaz fer qaaa, atxAaa F Gos agit eqygs ta +|Ba THT AT ate geret ge Bt7| 4. Gaadt waa area aadt atanfeaat ak atfaca efeeas|aaa arcitaa # fafga a ah ef at faaifeatat aie a alfanaraaat fag art oz gan faae fear’fie efteaa aaa areata‘ar ara sfaearfor ax fear are 5. gaa ana oz fautfedt agfaa fafaat & ada gargs farsa a un faafaa aqat at ale gama aaa qt HITaTt aTSRT qeareaa aay usa x female Fara Fartseq alat %AA-ATT AZ Tet AMT TARRY HT BTATT HAT al Af saw aeaTTTay sata afafaan & guearsa & gaadt a, gafae faatfedt azaufaaien gfisaa gay gaadaz, 1922(faa gat eae qeara1922.a1 afafaara seraar eg) & gaara s ada far wat are1922 % afafaan & acta aaa ax faaieoat a faaifeal &, aeaaFact ae aia wae saaaeda att agafadia ara Fefag aaq plant aaa sot fafats aru sata sarafia aa % ‘eq1,00,000 saz agar gad afaa ute ® afara eat atmatfaat ar afaad erar fearfaaiza ad1951-52 Flag ae‘gete fear ar anar 3 fe araat afeartt & fratfed) at ce TFfreer go mrarard ati at) sae a cH TTR TTaa Fate oftfaatfedd & aaa ad a aaa UH aggel AA F faq‘ud aaa afaardt stag aart & few dt ser var ar fe varwat Gt H ga qa F srs arefna fates Sfae (fawfaa) at Teg-agat agi ? ag oa 19 fearaz, 1952 ar ar) faaifedl + aot 97gape gay feat ale araax afar at ag aatat fie 1950-51Sat frat® dda FM aare dare A, sah aqare sails‘aaa ® @T ATAT 1,00,000 Sat F A Teaa HIT H GeaTAy‘ad arama 40% 8198 ad wal ara saat aaa F fratfedt aadt at ate a fae ae saat ate agafadta aAfare eat ft) gat wusre a, Bar, ararfeqea, amis aeara fararr ana &1 faatfedt 3 ae orfaarfeal at ag at qfaa farfe gah aaa aratag 3 darea fe ae wHH fralfedt at aeSaat slater ere feu ae are slema Fwea eq qfaagzadRratfedtardaq aatdt att at &t dfs Xe ganar ga atti ar wT ¥ gar sana & ger zafag ae Taare ¢ fe eat FTfaearegas sete weal arawas 81 fratca ay 1951-52 ¥ faequae % gaz H fraifedd A ag ewe wx fear at fe areT eaant aaa £7at are fee aw ast srenta &, feaar saee fratfedtgaat aca agfral B arg-ara wed 8 az ag aa wat afra fafaeanal qt aega B Pee ae saraaeAa are alt agafadla ata at‘ara ar| gat meal H dfs carat F weet aay BY Alta aatAansaas gra fHar stat at,safaq wea Haat aahegfaal ar pag aeaT aT att agorad: va aafaal wt share Bxsar ar, fark sraaaral ar sara ag Ha ah| AITTAIT HTfaagtey seaeta: TAT ATATT TT Ter fHal WaT at| 6. sat gare faster ag 1953-54 % fag Gar sata gar 8 fe araaz afaard ate fraifedt Aaah ge at ate 1952 %ad a aad Ho ard Ger ae a a aad Ho ard Ger ae a aad Ho ard Ger ae a Ho ard Ger ae a ard Ger ae a Ger ae a ae a a1 traifedd A 9 faaraz, 1953 traifedd A 9 faaraz, 1953 A 9 faaraz, 1953 9 faaraz, 1953 faaraz, 1953 1953 ad a aad Ho ard Ger ae a a aad Ho ard Ger ae a aad Ho ard Ger ae a Ho ard Ger ae a ard Ger ae a Ger ae a ae a a1 traifedd A 9 faaraz, 1953 traifedd A 9 faaraz, 1953 A 9 faaraz, 1953 9 faaraz, 1953 faaraz, 1953 1953-eqart Mart FH. wafaa 1,00,000 eratarf F aeaq Hratea 6420 4.(i) The learned Trial Judge was right and the Appellate Court was in error in holding that there were materials from which it could reasonably be held that the assessee was guilty in not disclosing the basic facts. [1127 F] t 4.(ii) In the instant case, the assessee had all along disclosed and the Revenue was aware that London management expenses were incurred on behalf of the assessee by the London Company who were managing the affairs and doing certain works~ for the assessee as well as certain allied companies belonging 1 to Burmah Oil Corporation Group. The expenses for these allied i concerns were on pro-rata basis charged by the London office and a certain proportion of the expenses were allocated to different companies and they debited certain portions, i.e. these amounts were realised from the assessee and allied companies in proportion to which the London company debited them those charges. This fact was known all along to the Revenue while making the original assessment for the relevant assessment years. The audit report of the assessee company was supplied but it is not clear whether the audit report of the ' London company was supplied and was asked for. It is unlikely that when Londo!\ company was debiting the assessee company and other companies in the audit report every year, there would be any note that such debits by which the London company got certain money which were excessive i.e. the London company r• realised more than it had actually incurred of the expenses. In any event, however, the aa:iunt realised would be mentioned in the audit report as a basic fact. That has been disclosed,, to the Revenue at the time of the original assessment. The nature and the quant1111 of the work done had also been disclosed. Whether it was excessive or not was an inferential fact. The Income-tax Officer, from time to time had some doubts as to whether the entirety of the expenses debited were really incurred for the assessee company by the London company 1 or whether that was unreasonable or excessive having regard to the magnitude of the work done by the London company but that .,.. would be a matter of opinion and on inference drawn from the aa:iunt of the work in correlation to the aD:>Unt debited the fact what was done, what was being claimed by the London office and the difficulties in producing the accounts or the + opinion of the auditors for which the Income-tax Officers had j. called upon the assessee were all known to Income-tax Officers at the time of making the original assessments. In spite of the same, the Income-tax Officer chose to assess the assessee in the manner he did. In the light of the opinion of the Auditors for the assessment year 1963-64 wherein his opinion that ten per cent would be reasonable charge might be good -t information for which the assessment of the assessee could be reopened under clause (b) but on this basis alone it could not be said that the assessee had failed to disclose fully and truly all basic facts at the time of the original assessment of the relevant assessment years. There was no evidence or 'tallegation that such an opinion was there available with the . assessee company the time of the original assessments. Even if +-such an opinion as opinion evidence be considered as a basic fact, a question on which no opinion is required to be ex-pressed, there was no evidence that such opinion was with the assessee at the time or before the completion of the original assessments for the relevant assessment years. [1125 F-H; 1126 A-H; 1127 A] • 6420 att oF ger araaet afrarit at afaa fear ar fe fratfedt FMee IGS A ses ae aave alg fe 1952 FH aeaq malaga wr HeAF 2,75,000 stax at, fat & 2,55,000 stat sara oat arerat 1g dar & fae aeatit wafaat & ast F err fear qa ar taraa} ag it afad fear var ar fe ga yeaa aat a afeata aTaaa att arate % fue ¥ erat fear qrar & var agave aaet &weIS Tifa Troy Hrd Arar FR aaa greg yeray @s ghaaqar’BIS weras sore Hafaal atafer Pear grasa 21 saferol Tg waa HR aay aaa Frat wr fear1,00,000 stat wate.ATTA: 40 gfawat arafte aeat arate & Var afaa Pear arfraifedt at 2 dafaa Paar aor ar fa ag waa faaifedt aaa a” at 2 dafaa Paar aor ar fa ag waa faaifedt aaa a” 2 dafaa Paar aor ar fa ag waa faaifedt aaa a” dafaa Paar aor ar fa ag waa faaifedt aaa a” Paar aor ar fa ag waa faaifedt aaa a” aor ar fa ag waa faaifedt aaa a” ar fa ag waa faaifedt aaa a” fa ag waa faaifedt aaa a” ag waa faaifedt aaa a” waa faaifedt aaa a” faaifedt aaa a” aaa a” a”ANA fee ae ara a ara alena F waz ee ua gfeaqaaaaeq 8gah Te ae aq Feat ware fa aaa aaa aaaATTTT aera HafeatHaas ast J ate caw ara gt aga age srwae asl gearaq aadt 21 das H Preifedd F argare ag wTvar ad % fag gar care ar gfeager arqafan farsa ar ateTega: gaH Aaa ate feurat ar sta: arg aqaa wfaar ar.STPat Tree Te faeaicr ae Hs fee we fate 21 ard, 1955.alge fear marari;‘ fraifedt at 2 dafaa Paar aor ar fa ag waa faaifedt aaa a” at 2 dafaa Paar aor ar fa ag waa faaifedt aaa a” 2 dafaa Paar aor ar fa ag waa faaifedt aaa a” dafaa Paar aor ar fa ag waa faaifedt aaa a” Paar aor ar fa ag waa faaifedt aaa a” aor ar fa ag waa faaifedt aaa a” ar fa ag waa faaifedt aaa a” fa ag waa faaifedt aaa a” ag waa faaifedt aaa a” waa faaifedt aaa a” faaifedt aaa a” aaa a” a” 7. Frater ae 1954-55 % fae 12 garg, 1956 % oa arearmat afrard § at ag tart & etd% faa Fe gears st sarfaatftat att saat sera acd & dla aaa at % 1953-54 F1,10,000 stax at twa fara wet % art F fae ae qarare aySfaferfrat aiat 8. fratfedt @ 14 qatay, 1956% ay Ts IT GIT HVTI Suz fear| faatfed) A war fe ga aaat wT qeaTAT alo allo| «Ao aye at tea aaen aafaal aar sera aod & ara 8, a aaaHuse wat Hfeat ss: gerag area wa are earsHata Fea oMay ate seq faaor arfea art sere fear war:fr ato ato ato ua faatfedl arat arate farsa F <fredtagaqfaat é1 faatfedt a aararfe tela aatar ateafar Tara BT FATT HWA BlHr wera A fear sat 3 araate eanes agiadl sosrt aar area aat val at @dlee as eaaea ara ast F.area area are fara ware BT ota F—| “aa saat ar gers watt FIAT aT alo alto aoat ara adil aafaat Fara 8 ale aaa Few A wat Fefeat oIOoST _-yerarataaare at 7y aard a g—(*) Hela TATAalte aequ faaran (cart xg feag graces feaea a Teufaectaa arat @) t ~>oe—_|.|“YY|vAf;na)nta| STAT |(a) Seda Sater alc| aifan| Baral Br Tae| faRat” (a) dais ate asta avez aat sea adit aal aD.adiat aH aqaear at caret ate az aat GUS Tra F | (3) qaarfas, tara,gsilfaath ate ara Arasfasts dafsa aner sare ate sfeatt atest Br TareSt Sar gett F Carat F arava F fare saws g|1,10,000 sraz sare aaanPeat & Fat, aA, ale.fawrar, te att ac dlar aan qearaa # gaa aed aa F.aurt feet et antares ga daagare sara BT aHe TATATT el S 1” 9, setarta 2 fe aan aaa Hag sere feat war at fafaeifedt aad ar ge araea AF cera aaa Bats qarare TetSlat|an |10. artta 19 Fa, 1957 atarast afeardt 39a arrfaaifedt & ag eqs wza H faq warar fe at 1953 % far1,10,000-s1ae % araet ar arate Far Zi araHe arferarat Tfraifedt at sata arafca fear at fe fratfeat Fae fear ot fargat faoe ae sara aot B ae garare el Slav | Fratfeat & arseml arent vata H faq Ber Tar ar ale AE Gor Tar aT fe ag1953 % fac1,10,000 sraz at waa wa faaa at TE atATTSt fraffedt & acta sara st Gar ate arga faa & afafaa p< +Ss Qearery are st wy Aan at wat Haag ate Aer wr wa” yz‘Fart H ease HAR fre war aa ar; 4.(iii) All the basic facts in this case were disclosed, .f it was however not disclosed as to what was the opinion of the Auditor, as to what is reasonable allocation share of the assessee having regard to the amount of work done on behalf of the assessee company of the London office expenses. 'nlere is no conclusive evidence that at the relevant time i.e. at the time of filing of the return before the assessments, such •i Auditors' opinion about the reasonableness was there. Secondly, wha,t would be reasonable or not would be an inference of the auditor. The am:iunt spent, the nature of the '\work alleged to have been done by London office on beha'lf of the assessee and the basis of the allocation had been explained in reply to the queries made by the Income-tax Officer before the assessment. The Income-tax Officer had asked at one point of time for the auditors' opinion. It was stated that such opinion could not be supplied. In spite of _., the same, the Income-tax Officer did not choose to make a best i judgment assessment and did not draw any adverse inference against the assessee. It cannot, therefore, be held that there was [1127 failure A-El to disclose fully and truly all ba s c 1 f acts. JURISDICTION CIVIL From the Judgment and Order dated 7 .12. 1973 of the Calcutta High Court in Appln. ~o. 189 and 196 of 1971. Dr. Devi Pal, Ms. M. Seal, D.N. Gupta, H.K. Datt and Miss Mridul Ray for the Appellant. C.M. Lodha, Dr. V. Gaurishankar, Miss A. Subhashini and C.V. Subba Rao for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHAR.JI, J. Whether the reopening of the assessments of the assessee under section 147(a) of the Indian Income Tax Act, 1961 (hereinafter referred to as the 'Act') _., was valid, is the question involved in these appeals by 1 special leave from the Bench decision of Calcutta Hlgh Court i dated 7th December, 1973. The assessment years involved are 1957-58, 1958-59 and 1959-60. It may be ment toned that on notices being issued for reopening of the assessments under section 148 of the Act under condition 147(a) of the sald Act, the assessee challenged the said notices on the ground that there were no materials to initiate such reopening. Such challenge was upheld by the learned single judge of the High Court and [.. ]the notices in question were quashed. The revenue being aggrieved preferred appeals before the division bench of the Hl.gh Court. The division bench of the High Court reversed the findings of the learned trial judge and the notices were upheld. Hence these appeals. • The assets and liabilities 'of erstwhile the Assam Oil ( Company have since then vested in the Indian Oil Corporation and on an oral application having been made on behalf of the asses see, we have directed that the name of the Indian Oil Corporation be substituted. The assessee at the relevant time was a company incor-porated under the appropriate laws of the United Kingdom, and had its principal place of business at the relevant time in Y India at Digboi in the State of Assam. It carried on business, inter alia, in oils and lubricants. As t'1e years involved were