|COURT:||Bombay High Court|
|CORAM:||A. K. Menon J., S. C. Dharmadhikari J|
|DATE:||March 26, 2015 (Date of pronouncement)|
|DATE:||April 8, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|S. 147/ 148: The notice should not be in a standard format but indicate why s. 147 has been resorted to. The term "failure to disclose material facts" has a specific legal connotation. The non-disclosure has to be of a "material fact" to attract s. 147|
(i) We have noted, on several occasions, that notices of this nature are issued in a standard format and often the officers merely fill in the blanks or tick mark whatever is applicable. We would highly appreciate if the department draws a notice not in this format, but something by which it would be clear in indicating to the Assessee as to why section 147 of the IT Act has been resorted to.
(ii) We are sorry to see such non application of mind and which is apparent …. In the present case, when the Revenue alleges failure to make full and true disclosure of material facts, then, the term failure has some specific legal connotation. Here, material facts are pertaining to the expenses under the head “management fees”. It is apparent that the words employed are material facts. It is not just facts but material facts. The word “material” in the context means “important, essential, relevant, concerned with the matter, not the form of reasoning” (see Oxford Dictionary Concise Eighth Edition). Just as disclosure of every fact would not suffice but for proceeding under section 147 non disclosure ought to be of a material fact. The Assessee disclosed that loss under this head is derived from the acquisition of two centers. If that is known to the Revenue in this case, then, what further facts were expected to be disclosed so as to make the assessment has not been indicated. It is not enough to allege that there is a distortion of facts and as per the convenience of the Assessee.