JUDGMENT A.N. Varma, J.
1. At the instance of the assessee, the following question has been referred by the Income-tax Appellate Tribunal for our opinion :
"Whether on the facts and in the circumstances of the case, the Income-tax Officer could validly initiate proceedings for reopening of the assessment under Section 147(a) for the assessment year 1949-50 ?"
2. The original assessments of the assessee for the assessment years 1949-50 and 1950-51 were completed on March 51, 1954, on the basis of a settlement reached between the assessee and the Department covering the assessment years 194445 to 1952-53. The settlement was arrived at on an appreciation of the overall picture of the accretion to the assessee's wealth between 1943 and 1952. Certain fixed deposits made in the name of Smt. Ram Moorti Devi, the wife of the karta of the assessee's family, and in the names of the two daughters of the assessee as well as in the name of Smt. Premwati, the wife of an employee, were also taken into account as part of the assessee's wealth. These deposits were accepted by the assessing authority as having been made out of certain "on money" received by the karta of the assessee-family and his wife, Smt. Ram Moorti Devi, aforesaid. Consequent to certain disputes and eventual compromises between the karta of the assessee-family and his brother, Sri Sheo Prasad, the karta, Sri Banarsi Dass Gupta, agreed to transfer 9,200 shares held by him in Lord Krishna Sugar Mills Ltd. to his brother, Sri Sheo Prasad, in consideration of Rs. 7.7 lakhs to be paid to him and Rs. 50,000 to his wife, Smt. Ram Moorti Devi. In addition, Sheo Prasad was to transfer one-sixth share held by him in Bijnor Mills which was valued at Rs. 4,50,000. A written agreement dated July 14,1948, was executed whereunder Sri Banarsi Dass Gupta was to receive Rs. 8,25,000 in respect of the above transaction.
3. At the time of settlement proceedings before the Department, however, Sri Banarsi Dass Gupta filed a disclosure petition in which he stated that he had received from Sheo Prasad not only Rs. 25 lakhs in cash but also Rs. 7.75 lakhs cash over and above this. In short, it was explained that the total of Rs. 16 lakhs had been received by Sri Banarsi Dass Gupta in connection with the arrangement entered into between him and his brother and that these amounts had been received in June/July, 1948.
4. It was in this backdrop that the original assessment was completed. The Department, apparently, accepted that the assessee had admittedly received Rs. 16 lakhs from Sri Sheo Prasad in June/July, 1948, and the wealth including the fixed deposits had been satisfactorily explained.
5. On August 4, 1962, Sri Banarsi Dass Gupta made a statement in the course of assessment proceedings relating to the assessment of his brother, Sri Sheo Prasad Gupta, in which he stated that the sum of Rs. 16,00,000 including the "on money" of Rs. 7,75,000 had been received by him at the time of the signing of the agreement entered into between the two brothers on July 14, 1948. The Income-tax Officer found this statement to be of some significance when contrasted with the earlier statement made by Sri Banarsi Dass Gupta on April 29, 1954, at the time of the original assessment in which he said that the sum of Rs. 16,00,000 including the "on money" of Rs. 7,75,000 had been received by him in June/July, 1948. The discrepancy between two statements of Banarsi Dass Gupta assumed, according to the Income-tax Officer, considerable importance in view of the fact that though the fixed deposit in the name of Smt. Ram Moorti Devi appeared in the Central Bank of India on August 31, 1948, in point of time the sum of Rs. 5,25,000 had been deposited by the assessee with the bank on July 3, 1948, and this amount was transferred in the name of Smt. Ram Moorti Devi on August 31, 1948. At the time of the original assessment, the Department had proceeded on the premise that the bank deposit made by Sri Banarsi Dass Gupta in the name of Smt. Ram Moorti Devi on August 31, 1948, was subsequent to the receipt of the "on money" and, therefore, the Department felt that the deposit stood fully explained. However, when the assessee made the statement in 1962 that he had received the entire sum of Rs. 16,00,000 at the time of the signing of the agreement on July 14, 1948, the Income-tax Officer felt that the receipt of the "on money" by Banarsi Dass Gupta did not explain the deposit in the name of Smt. Ram Moorti Devi in view of the fact that though the deposit had been made in her name on August 31, 1948, it had come into the hands of the assessee on July 3, 1948, i.e., the deposit had been made on July 3, 1948, and not in August, 1948.
6. On the aforesaid material, the Income-tax Officer reopened the assessment under Section 147(a) on the ground that the assessee had failed or omitted to disclose fully and truly the material facts necessary for the assessment for the assessment year 1949-50.
7. After reopening the assessment and hearing the assessee, the Income-tax Officer concluded that the assessee had received no "on money" at all from Sri Sheo Prasad and that the true nature and source of the fixed deposit made by the assessee in the name of his wife had remained unexplained. He, therefore, completed the reassessment by adding the sum of Rs. 5,25,000 in the reassessment for 1949-50.
8. Aggrieved by the aforesaid order, the assessee appealed to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner allowed the appeal and came to the conclusion that the Income-tax Officer had no jurisdiction to reopen the assessment. He pointed out that the question whether the assessee had received the "on money" or not had been the subject-matter of investigation and all the necessary material facts had been placed before the Income-tax Officer at the time of the original assessment. He, therefore, vacated the reassessment and restored the original assessment.
9. The Department went up in appeal to the Tribunal. In the Tribunal, there was difference of opinion. The Judicial Member agreed with the Appellate Assistant Commissioner and held that all the material facts relevant for the assessments had been disclosed at the time of the original assessment and that, therefore, there was no ground for reopening the assessment. The Vice President, however, disagreed in regard to the assessment year 1949-50 and held that the initiation of proceedings under Section 147(a) was fully justified. The two members, having differed, the matter was referred to the third Member who disagreed with the Judicial Member and agreed with the Vice President and held that the reopening of the assessment by the Income-tax Officer was fully justified.
10. The Judicial Member observed that the statement made by Sri Banarsi Dass Gupta in 1962 that the entire sum of Rs. 16,00,000 had been received by him at one and the same time, i.e., at the time of the signing of the agreement on July 14, 1948, was patently erroneous as it was wholly inconsistent with the terms of the agreement and that as the question whether any "on money" could have been received by the assessee at all had been the subject-matter of discussion at the time of the original assessment, there was nothing new that could be gathered in the course of the reassessment proceedings to justify the conclusion.
11. The third Member to whom the appeal was referred was, however, of the view that the question for consideration in the appeal was a limited one, namely, whether the initiation of the proceedings under Section 147(a) by the Income-tax Officer was justified or not. The learned Member emphasised that the question whether the statement made by Sri Banarsi Dass Gupta in 1962 was correct or not and whether the reassessment made by the Income-tax Officer by adding Rs. 5,25,000 was justified on merits or not had yet to be gone into. He further observed that as the Appellate Assistant Commissioner had not gone into the merits of the reassessment the matter will have to be remanded to the Appellate Assistant Commissioner. In accordance with the majority opinion, the Department's appeal was allowed. The case will have to be sent back to the Appellate Assistant Commissioner for disposal of the assessee's appeal on merits.
12. In our opinion, the initiation of the proceedings for reopening the assessment under Section 147(a) of the Income-tax Act by the Income-tax Officer was perfectly valid and justified. The discrepancy arising between the assessment of Sri Banarsi Dass Gupta recorded on August 4, 1962, that the full consideration of a sum of Rs. 16,00,000 including the "on money" of Rs. 7,75,000 was received by him at the time and that at the time of the signing of the agreement and that recorded earlier on March 29, 1954, at the time of the original assessment wherein he had stated that the sum of Rs. 16,00,000 including the "on money" of Rs. 7,75,000 had been received by him in June/July, 1948, could constitute relevant material for reopening the assessment. The Member went on that the discrepancy assumes significance because if the statement made by Sri Banarsi Dass Gupta on August 4, 1962, is taken to be correct, then obviously the receipt of "on money" could not explain the deposit in the name of Smt. Ram Moorti Devi inasmuch as though the deposit had been made in her name on August 31, 1948, it had come into the hands of the assessee earlier on July 3, 1948. In other words, the fact that the deposit of Rs. 5,25,000 has been made on July 3, 1948, became inconsistent with the version of Sri Banarsi Dass Gupta that the sum of Rs. 16 lakhs had been received by him on July 14, 1948. There was, therefore, ground to hold that the assessee had failed or omitted to disclose fully and truly the material facts necessary for the assessment. The third Member was clearly right.
13. As mentioned earlier, the question before us is a limited one, namely, whether the Income-tax Officer could legitimately have reasons to believe that the assessee had failed or omitted to disclose fully and truly all the material facts necessary for the assessment year 1949-50. From that point of view, the discrepancy pointed out by the Income-tax Officer between the statements made by the assessee in 1962 and earlier in 1954 furnish relevant material for reopening the assessment. Whether or not the statement made by Sri Banarsi Dass Gupta in 1962 was correct or could be proved to be wrong with the help of the material placed before the Income-tax Officer are, however, matters which have yet to be gone into when the reassessment is examined on merits. For the present, the question to be addressed is not whether the statement made by the assessee on August 4, 1962, is correct, but whether if the latter statement made in 1962, is taken to be correct, could the Income-tax Officer legitimately form the opinion necessary for reopening the assessment under Section 147(a). We entirely agree with the comments made by the third Member on the significance of the discrepancy between the two statements. Judged in the light of those facts, we have no hesitation in holding that the initiation of reassessment proceedings by the Income-tax Officer was legitimate and proper.
14. Sri Bharatji Agarwal, learned counsel for the applicant, attempted to demonstrate that the statement of the assessee made in 1962 was wrong and, consequently, the same could not constitute a valid basis for reopening the assessment. We are unable to agree. As already observed, we are not concerned here with the correctness or otherwise of the statement made by the assessee as that is a matter which has yet to be considered by the Appellate Assistant Commissioner to whom the case has to go back as he had disposed of the appeal on a preliminary ground.
15. Before concluding we may emphasise once again that in view of the majority opinion of the two Members of the Tribunal and the fact that the Appellate Assistant Commissioner had not considered the merits of the reassessment, the case shall have to go back to the Appellate Assistant Commissioner for decision of the assessee's appeal on merits.
16. In the premises, we answer the question referred for our opinion in the affirmative, in favour of the Revenue and against the assessee. The Revenue will be entitled to its costs which we assess at Rs. 250.