COMMISSIONER OF INCOME-TAX VS CORPORATION BANK LTD.
2004 P T D 2134
[254 I T R 791]
[Supreme Court of India]
Present: M. Srinivasan and Umesh C. Banerjee, JJ
COMMISSIONER OF INCOME‑TAX
Versus
CORPORATION BANK LTD.
Civil Appeals Nos.4733 of 1991 and 4584 to 4590 of 1990, decided on /01/.
rd
February, 1999. (Appeal by special leave from the judgments and orders dated September 20, 1983, October 28, 1983 October, 21, 1983, October 25, 1983, November 2, 1983, November 8, 1983 and November 10, 1983, of the Karnataka High Court in I.T.R.C. Nos. 175, 176, 177, 179, 298 and 99 of 1982 and 137 of 1983).
Income‑tax‑‑‑
‑‑‑‑Reassessment‑‑‑Failure to disclose fully and truly material facts‑‑ Banking Company‑‑‑Loans and advances‑‑‑Recovery doubtful‑‑‑ Interest credited to interest suspense account‑‑‑Amount disclosed in balance‑sheet filed alongwith return‑‑‑Original assessment excluding such interest‑‑‑No failure to disclose material facts‑‑‑Notice for reassessment‑‑‑Not valid‑‑ Indian Income Tax Act, 1961, S.147(a).
For the previous year ending December 31, 1968, the assessee, a Banking Company, had taken the sum of Rs.54,485, which represented interest on loans recovery of which, was doubtful, to the interest suspense account. The assessee had disclosed this sum as unrealized amount of interest in the balance‑sheet filed by it alongwith the return. In the original assessment, the Income‑tax Officer accepted the return and had excluded this amount in his assessment order. Thereafter, the assessment was reopened by a notice issued under section 147(a) of the Income Tax Act, 1961, and the sum of Rs.54,485 was brought to tax. The Appellate Tribunal held that the reopening of the original assessment was not justified, and on a reference, the High Court held that the reopening of the assessment under section 147(a) was not valid. On appeal to the Supreme Court:
Held, affirming the decision of the High Court, that since the assessee had furnished particular pertaining to the sum of Rs.54,485, as not recoverable and had filed statements alongwith the original return disclosing full details of the interest suspense account, there was no failure on the part of the assessee to disclose fully and truly material facts necessary for the assessment and section 147(a) had no manner of application and was not attracted to the fact of the case.
State Bank of Travancore v. CIT (1986) 158 ITR 102 (SC) ref.
CIT v., Corporation Bank Ltd. (1986) 157 ITR 509 affirmed on this point.
Dr. V. Gaurishankar, Senior Advocate, S. Rajappa and B.K. Prasad Advocates with him for Appellant.
S.N. Bhatt, Advocate for Respondent (in C.A. No. 4733 of 1991).
Mrs. Janki Ramchandran, Advocate for Respondent (in C.As. Nos.4584 to 4590 of 1990).
ORDER
The assessee, a banking company, had the assessment for the year ending on December 31, 1968, completed on October 4, 1969. Subsequently, however, the assessment was reopened under section 147(a) of‑ the Income Tax Act, 1961, to bring to tax a sum of Rs.54,485 in respect of interest suspense account. It is, however, according to the assessee, the sums representing interest on loans, recovery of which was considered doubtful. Incidentally be it noted that the assessee had disclosed this sum of Rs.54,485 in the balance‑sheet as unrealized amount of interest alongwith the return filed by it and the Income‑tax Officer had accepted tee return and as a matter of fact had excluded that amount in the assessment order completed on October 4, 1969.
The factual score depicts that in terms of a notice under section 147(a) of the Act, the assessment was reopened and a sum of Rs.54,485 was subjected to tax on the ground that the interest accrued and due on the loans advanced by the bank was the income of the bank for the relevant assessment year and the assessee has failed to disclose this income in the return filed earlier.
In the appeal against the assessment order, the Commissioner of Income‑tax (Appeals) upheld the order of the Income‑tax Officer and on further appeals, the Tribunal, however, reversed the view of the Commissioner and held that the instructions of the Central Board of Direct Taxes contained in circular dated October 6, 1952, would govern the case and the reopening was not justified and on a reference before the High Court under section 256(1) of the Income‑tax Act, the High Court answered the reference in favour of the assessee upon recording its approval on to the order of the Tribunal.
The records depict that two questions were raised before the High Court (see (1986) 157 ITR 509) namely (page 510):
"(1)Whether, on the facts and in the circumstances of the case, the Income‑tax Appellate Tribunal is right in law in holding that the provisions of section 147(a) are not attracted?
(2)Whether, on the facts and in the circumstances of the case, the Income‑tax Appellate Tribunal is right in law in holding that the interest of Rs.54,485 taken directly to interest suspense account is not assessable to income‑tax?"
So far as the second question is concerned, the High Court recorded that the matter need not be gone into by reasons of .the circular, dated October 6, 1952, issued by the Central Board of Direct Taxes. Neither do we feel it necessary to go into the issue any further.
Turning attention to the first question as regards the provisions under section 147(a) be it noted and as the facts depict, there is no failure on the part of the assessee in furnishing the particulars pertaining to the abovenoted sum as not recoverable for the relevant accounting year and the statements filed alongwith the original return disclose the full details of the aforesaid account. There is, therefore, no failure on the part of the assessee to disclose fully and truly the material facts necessary for the assessment years for the respective years and as such section 147(a) has no manner of application and is not attracted in the facts of the matter under consideration. The High Court on consideration of the facts came to the conclusion that the Tribunal was justified in coming to the said finding and we also record our concurrence therewith.
Incidentally this issue came for consideration before this Court in a batch of cases on more or less identical situations and this Court while dealing with this matter finally, recorded that the question as regards reopening of the assessment under section 147(a) of the Act would not arise further. The question in the facts of the matter under consideration is thus covered by the judgment of this Court in State Bank of Travancore v. CIT (1986) 158 ITR 102.
In that view of the matter, these appeals fail and are dismissed. No order as to costs.
M.B.A./1102/FCAppeals dismissed.