VENKATESH POWER WORKS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal, Bangalore Bench, Bangalore, at the instance of the assessee, has stated the case and has referred the following question of law for consideration and opinion of this Court:

(2.) THE assessee was carrying on the business of generating and supplying electricity in the township of Bagalkot. For the assessment year 1973-74, the assessee had filed its return of income on 3-11-1975, declaring the income of Rs. 32,953/- for the accounting period 1-4-1972 to 18-11-1972, on the ground that the business of the assessee firm was taken over by the Government on 13-11-1972. Assessment of the assessee for this year was originally completed by the Assessing Officer under Section 143 (3) of the Act on 11-12-1975, determining the taxable income at Rs. 45,130/ -. After completion of the assessment proceedings, the Income Tax Officer had received the information, that since the undertaking of the assessee firm had been taken over by the State Government, the assessee is entitled to get compensation amount on that account. In view of this information, the Assessing Officer was of the opinion that by reason of the aforesaid omission or failure on the part of the assessee to disclose fully and truly all material facts in the return of income filed under Section 139 of the Act for the assessment year 1973-1974, for his assessment the income chargeable to tax has escaped assessment for that year, as envisaged under Section 147 (a) of the Act. Accordingly, in order to bring to tax the escaped income, the Assessing Officer had issued and served a notice to the assesee under Section 148 of the Act, inter alia directing the assessee to show cause, why the concluded assessment should not be reopened and to bring to tax the income which has escaped assessment. In response to the said notice, the assessee firm had filed the return of income under protest on 4-9-1980, declaring the business income of Rs. 32,953/- and the compensation of Rs. 6,94,912/- was shown in Part III of the return.

(3.) BEFORE the Income Tax Officer, it was the contention of the assessee's representative, that there was no material on record on the basis of which, a belief has been formed that, income has escaped assessment within the meaning of Section 147 (a) of the Act and in the absence of such material, the Income Tax Officer could not have initiated any reassessment proceedings. The other contention that was canvassed was, that the primary facts of taking over the business concern by the Karnataka Electricity Board had been disclosed in the return of income filed at the time of original assessment and the claim made for payment of compensation before the Karnataka Electricity Board was brought to the notice of the Assessing Officer and the same is taken note of by the Income Tax Officer at the time of completing the original assessment under Section 143 (3) of the Act and therefore, the Assessing Officer has no jurisdiction to initiate any action under Section 147 (a) of the Act for the assessment year 1973-1974. These facts would show that the assessee had disclosed fully and truly all material facts necessary for his assessment for the assessment year 1973-1974.