Once assessee makes full and true disclosure of all primary facts it is upto AO to decide what inference of fact or law could be drawn there from

IN THE HIGH COURT OF JUDICATURE AT MADRAS

The Relevant Text of the Order as follows :

25. The decision in the case of Smt.A.Sridevi (supra) will not apply to the facts of the case on hand, because the assessee in the said case did not produce the relevant documents. In the case of Chunibhai Ranchhodbhai Dalwadi (supra), the assessee did not declare the long term capital gain in the original return of income nor the Assessing Officer considered the same, whereas in the instant case, the only issue was the claim of cost of improvement against capital gains and there was no other issue. Therefore, the said decision will not assist the case of the Revenue. Equally, the decision in Sword Global India(P) Ltd., (supra), would not apply to the facts of the instant case, as there was no allegation against the assessee that he made a false statement.

Assessing Officer has no Power to Review but has Power to Reassess – Madras HC

26. It would be worthwhile to remind ourselves about the decision of the Hon’ble Supreme Court in the case of Calcutta Discount Co., Ltd., vs. ITO [1961] 41 ITR 191 (SC), wherein the Hon’ble Supreme Court held that the duty of the assessee is to make full and true disclosure of all primary facts and once it is done,. it is for the Assessing Authority to decide what inference of fact or law could be drawn there from.

The law does not require the assessee to state the conclusion that could reasonably be drawn from the primary facts and if there were, in fact, some reasonable grounds for thinking that there had been any non-disclosure as regards any primary facts, which could have a material bearing on the question of “under assessment”, that would be sufficient to give jurisdiction to the ITO to issue notices under Section 34 (1922 Act) and whether these grounds are adequate or not for arriving at a conclusion that there was a non-disclosure of material facts could not be opened for the Court’s investigation.

27. For the above reasons, we find that the Tribunal was right in allowing the assessee’s appeal.

28. Accordingly, the appeal filed by the Revenue is dismissed. Substantial questions of law are answered against the Revenue and in favour of the Assessee. No costs.