H.L Agrawal, J.:— The petitioner, Bihar State Road Corporation, is challenging a notice of re-assessment issued under Section 148 of the Income tax Act, 1961 (briefly “the Act”) dated the, 20th March 1969 issued by the Income-tax officer. A-Ward Patna, for re-opening the assessment for the assessment year 1960-1961 and the subsequent notice dated the 26th February 1973 issued by the Income-tax Officer, Special Circle, Patna (copies of which are Annexure 8 and 9 respectively), calling upon the petitioner to produce the accounts and documents mentioned therein, originally, it also contained a prayer for quashing the order dated 14.11.1969 made under Section 154 of the Act (copy of which is Annexure 5) but at the time of hearing, it was not pressed.

2. The relevant facts are these: Prior to the establishment of the petitioner Corporation under the provisions of the Road Transport Corporation Act, 1950, the State of Bihar was operating and running a fleet of buses on various routes in the State, which was known as “Bihar State Rajya Transport”. In pursuance of the scheme of the said Act, all the assets of the Bihar State Rajya Transport was transferred to the Corporation, the capital of which was contributed by the State of Bihar and the Indian Railways, for providing road transport facilities to the general public of the State. The petitioner is said to have received on transfer the vehicles at the original cost price shown in the documents of the Rajya Transport which stood at Rs. 1,53,72,599.00 as also the other assets, such as buildings, etc., at the value of the original cost. It, however, appears that the Rajya Transport was maintaining a separate account as “Depreciation Reserve” in which it was crediting the amount year after year, representing the depreciation of the assets and the total amount standing in the said reserve account was to the tune of Rs. 19,07,258-00. These figures were mentioned in the balance sheet of the Rajya Transport, which was prepared by the State Government at the time of transfer of the undertaking to the petitioner Corporation, on which basis, it is said, the Corporation purchased the assets.

3. The petitioner received the first notice under Section 22(2) of Income-tax Act, 1922 (corresponding to Section 139(2) of the new Act) requiring it to file its return for the assessment year 1960-1961. The petitioner, firstly filed a return showing income at ‘nil’, but subsequently filed a revised return on 27.2.1963 showing a loss of Rs. 38,10,595-00 and the third and further revised return dated 31.10.1964 showing the loss at Rs. 37,05,347/- Simultaneously, it had filed a depreciation chart showing the value of assets on which the depreciation was to be allowed. The assessment was, however, made on 11.2.1965 determining the depreciation at Rs. 34,43,366/- which remained unabsorbed and was allowed to be carried forward for set off in future. A true copy of the order of assessment in question is Annexure “1”. It will appear from this assessment order that the books of accounts of the petitioner were examined by the Income-tax officer and the question of depreciation, which was claimed by it, was considered separately in some detail with respect to each of the assets—movable and immovable.

4. Sometime thereafter the Income-tax Officer started a rectification proceeding under Section 154 of the Act with a view to rectify some mistakes apparent from the records in the computation of depreciation allowance. As it appears from the order dated 17.8.1966 (a copy of which is Annexure 2) passed in this regard by the Income-tax Officer, the written down value of all the assets, namely, (1) factory building, (2) non-factory building, and (3) buses, both petrol and diesel, were taken into consideration and the unabsorbed depreciation loss was determined for the assessment year in question at Rs. 20,16,593/-

5. The Income-Tax Officer again on 21-3-1969 issued a second notice under Section 154 to rectify some further mistakes, and by his order dated 25-3-1969 (a copy of which is Annexure 3) further reduced the value of unabsorbed depreciation to Rs. 12,48,662/- on a comprehensive reconsideration of the entire matter with respect to the assets. By this order he took into account the sum of Rs. 1,12,69,253-00 which was received by the petitioner as the depreciation reserve on transfer from the Rajya Transport, and took the view that the actual cost of the assets must be reduced by the aforesaid amount on the date of the take-over and that depreciation for the year in question “ought to have been allowed by the I.T.O on the net cost of the vehicles of Rs. 41,03,346/- and not on the original cost of the vehicles as shown in the balance sheet of the Corporation…. Thus depreciation as allowed by the I.T.O in his order u/s 154 dated 17-8-66…. was based on wrong amount by mistake which is apparent from the records.” A similar view was taken with respect to the depreciation reserve received by the petitioner with respect to other assets representing the building, and depreciation was allowed on the assets on the written down value less the depreciation reserve.

6. On appeal, the Appellate Assistant Commissioner by his order dated 30-9-1969 (a copy of which is Annexure 4) remanded the matter to the Income-tax Officer, principally on the ground that no reasonable opportunity was afforded to the petitioner to explain the various materials against him. After remand the Income-Tax Officer by his order dated 14-11-1969 (a copy of which is Annexure 5) re-determined the allowable depreciation at Rs. 12,41,386/- The net result of these rectification proceedings was that the original order under which the unabsorbed depreciation loss was allowed to be carried forward for future absorption turned into an order of a taxable income of Rs. 8,47,054/- on which the tax of Rs. 1,75,983/- was assessed as payable. On this amount, a further liability on account of interest Section 217 of the new Act was-also created.

7. The petitioner again filed an appeal before the appellate Assistant Commissioner which was allowed in part by his order dated 30-6-1970 (a copy of which is Annexure 7). A second appeal before the Appellate Tribunal was filed by the petitioner which was pending when the writ application was filed, but has since been decided on 19-7-1973. In the supplementary affidavit filed by the petitioner on 8-2-1976 with our permission, it has been stated that the Tribunal, although held that the purported mistakes in question could be rectified by the Income-Tax Officer within the scope of the provisions of Section 154, but allowed the appeal and cancelled the order of rectification as being barred by limitation. It has further been stated in the supplementary affidavit that on the application of the petitioner, as well as, respondent no. 1 filed separately under Section 256(1) of the Act, the Tribunal has drawn up a consolidated statement of case and has referred two question of law to this Court.

8. The petitioner has also made some further statement in the supplementary affidavit to show that there was “no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment” in question, but these statements cannot be referred to being belated.

9. While the rectification proceedings were going on and the respondent Income-tax Officer was endeavouring to net all the escaped income in this way under his powers under Section 154, the impugned notice under Section 148 of the Act was served on the petitioner on 25.3.1969 as already referred to earlier. It has been stated in the writ application that the petitioner had filed an objection to the issuance of the notice, but the Income-Tax Officer rejected the same. In the application, however, no details has been given as to the nature of objection that were raised by the petitioner before the respondent Income-Tax Officer to the issuance of the notice in question, nor the details of the order passed on its objection has been stated. Mr. Jain, however, on our inquiry informed us that the rejection was oral. Be that as it may, in the writ application as well, no statement of the relevant facts has been made as to raise the grounds on which the issuance of the notice under Section 148 can be impeached by the petitioner. In other words, the necessary factors have not been sufficiently stated, on which this Court can examine the question as to whether the conditions precedent of the powers under Section 147 of the Act did exist or not. The petitioner has simply stated the diary of events and then under the “Reasons” challenging the notice; It has been urged that the notice under Section 148 was without jurisdiction. “In as much as there are no reasons to believe that any income has escaped assessment” and that it was “barred by limitation in as much as the proceedings have been initiated much beyond four years as contemplated under the new Act for initiating the proceeding u/s 147(b).”

10. A counter affidavit has been filed on behalf of the respondents, and after dealing with the various statements made in the writ application, which are not relevant to be noticed and stated for the purpose of the question falling for our determination, it has been stated in paragraph 20, in support of the existence of the conditions precedent, that “there were sufficient reasons to believe that the income had escaped assessment:

“The assesses had filed a depreciation chart on 31.10.54 showing the value of assets on which the depreciation was to be allowed…… depreciation was allowed by the I.T.O more or less on the basis of depreciation chart furnished by the assessee……the assessee either witheld or did not disclose the fact that there were certain reserves against these assets and certain assets were condemned. ……..The income had, therefore, escaped assessment by excessive computation of depreciation allowance as stated above.”

11. There is no denying the fact on the part of the petitioner that it had not filled up the return that was furnished by it under Section 139 of the Act and the various relevant columns were kept blank and in lieu thereof a separate chart was attached. From this fact itself that in the rectification proceedings which were initiated by the Income-tax Officer, these facts mentioned it cannot be said that there was no reason to believe for the Income-tax Officer that the income had escaped assessment within the meaning of Section 147 of the Act.

12. Counsel for the petitioner, however, did not lay much stress upon this part of the petitioner's case and ventured to contend that to the facts of the present case, Clause (b) and not Clause (a) of Section 147 was attracted and, therefore, the proceeding under Section 147 which was initiated just before the expiry of the eighth year from “the date of making of the original order dated 11.2.1965 (Annexure 1)” must be held to be barred by limitation. We were, therefore, addressed at some length by the learned counsel appearing on either side on the question as to whether on the facts of the present case, Clause (a) of Section 147 would apply or not. Now I proceed to consider this question which is a vexed question often falling for consideration before the Courts from a long time.

13. It is true that where once a final assessment is arrived at, it cannot be re-opened except in the circumstances detailed in Sections 147 and 154 of the Act. While Section 154 deals with mistakes apparent from the record and may not cover a case where a re-assessment has to be made to charge tax, if it has escaped assessment, Section 147 covers cases of income escaping assessment where the Income-Tax Officer has reason to believe, in consequence of information in his possession for that purpose, and is not confined to case where the assessee has concealed his income. In cases where re-assessment under Section 147 or rectification under Section 154 are both actually competent, the Department may take action under either section, since the two sections are not materially exclusive. Reference in this connection may be made to the case of (1) Salem Provident Fund Society Ltd. v. Commissioner of Income-tax, Madras (1961) 42 I.T.R 547, where after completion of the assessment of the assessee, when the Income-Tax Officer discovered some mistakes, he proposed rectifying the same under Section 35 of the old Act (now Section 154), but later initiated re-assessment proceedings under Section 34 (now Section 147). When the re-assessment proceedings were challenged, it was held that the proceedings were valid as “Information” for the purpose of Section 34 need not be wholly extraneous to the record of the original assessment. A mistake apparent on the fact of the order of assessment would itself constitute “information” whether some one else gave that information to the Income-Tax Officer or he informed himself was immaterial.

14. I shall refer to a short argument built by Mr. Jain on the basis of the rectification proceeding, already indicated, a little later and would like to dispose of the main contention first which is an attack on the initiation of the proceeding under Section 147 of the Act.

15. Section 147(a) empowers an Income-Tax Officer to make a reassessment where (i) an assessee has failed to make a return under Section 139, or (ii) while making the return, has failed to disclose fully and truly all material facts necessary for the assessment for that year, on which account the income chargeable to tax has escaped assessment.

16. Before making an assessment or a re-assessment the Income-tax Officer has to serve on the assessee a notice contemplated under Section 148, and Section 149 prescribes a time limit for the notice. For cases falling under clause (a) of Section 147, a period of eight years has been fixed from the end of the relevant assessment year, unless the case falls under Sub-clause (ii) of Section 149, prescribing a longer period, with which we are not concerned here. In cases, falling under clause (b), a shorter period of four only has been prescribed.

17. Mr. Jain, accordingly, contended that all the relevant materials were placed by the petitioner before, the Income-tax Officer concerned and that he had passed the original order of assessment after looking to all the books of accounts and the balance of Rajya Transport, where the depreciation reserve was clearly mentioned, and, therefore, if at all, it is a case of income having escaped assessment on account of the mistake of the Income-tax Officer himself and not a case where the petitioner had failed to disclose fully or truly all the material facts in question. In this connection counsel referred to the original order of assessment (Annexure 1) itself to show that the depreciation reserve of Rs. 19,07,258/- was clearly noticed and the depreciation had been considered item by item in the original order. He also put strong reliance upon the statement made in the counter affidavit where it has been stated that the depreciation reserves were mentioned in the balance sheet and the schedule attached to the balance sheet, on the basis of which the petitioner had purchased the undertaking from the Rajya Transport. The Income-tax officer in the original order of assessment dated 11.2.1965 has also referred to the “opening balances in the balance sheet” and has computed the total income “after examination of the books of accounts produced”, on which strong reliance was placed by Mr. Jain in support of his contention that for these reasons it could not be said to be a case covered by Section 147(a). In short, the stand of Mr. Jain is that although the petitioner might have failed to disclose all the primary facts truly and fully while making the return, still there was no occasion for applying the provisions of Clause (a) of Section 147 for the simple reason that in the course of the assessment proceeding, all the relevant and material facts were placed, including the books of accounts of the petitioner and the balance sheet prepared by the Rajya Transport, on the basis of which the undertaking was purchased by the petitioner, so much so that the Income-tax Officer had actually mentioned of having himself examined these materials in the original order of assessment.

18. Counsel of the petitioner cited a Bench decision of this Court in the case of (2) Commissioner of Income-Tax v. Bihariji Mills, Ltd., (1975 Bihar Bar Council Journal 436) and a decision of the Supreme Court in (3) Commissioner of Income-Tax v. Bhanji Lavji (1971) (79 I.T.R 582) where it was observed that:

“The primary facts necessary for assessment being already within the knowledge of the Income-Tax Officer no further duty of any disclosure is cast by law on the assessee.”

19. Both the cases are entirely distinguishable on their own facts. The Patna case was on a reference under Section 66(1) of the Old Act, after pursuing the statutory remedies of both the appeals with respect to the re-assessment made under Section 34(1)(a). While the assessment proceeding for the assessment year 1954-1955 was pending, an inquiry was made by the Income-Tax Officer from the assessee as to whether in the raid conducted by the special Police Establishment in August 1953, the sum of Rs. 24,800/- recovered from an almirah belonged to the assessee and as to whether the assessee had told the police at the time of the raid that the same belonged to the ladies of the family. On the reply of the assessee denying the recovery of any such amount, the amount in question was not included in the original assessment. Subsequently, the Income-Tax Officer without any further material (a finding recorded by the Tribunal) initiated a proceeding under Section 34(i)(a). A preliminary objection was taken by the assessee that the initiation of the proceeding was itself without jurisdiction and the same was upheld on the ground that the material facts of the recovery of the said amount of Rs. 24,800/- were already on the record and within the knowledge of the Income-Tax Officer before the completion of the original assessment proceeding and, therefore, it was not a case of escapement of assessment on account of any suppression or omission on the part of the assessee. From the above discussion, it is mainfest that the case of Bihariji Mills Ltd. is quite distinguishable on its own facts.

20. In the case before the Supreme Court in Commissioner of Income-Tax v. Bhanji Lavji (Supra), the assessee was carrying on the business in ghee at Porbandar, which at the material time i.e, 1947-1948, 1948-1949 and 1949-1950, was outside the taxable territories. The assessment proceedings, however, were initiated against the assessee as a non-resident. The assessee disclosed the facts of having a current account with a Bank in Bombay where sale proceeds in respect of large quantities of ghee supplied outside the taxable territories were credited in that account and then transferred to Porbandar. The assessee had also a current account with a firm in Bombay. The assessee disclosed these facts to the Income-Tax Officer and also produced the Pass Books. On his contention that he had no business in the taxable territories nor any income other than the income of interest from which tax had already been deducted at the maximum rate, the assessment proceedings were dropped. But in 1956, a proceeding for re-assessment under Section 34(1)(a) was initiated. It was under these circumstance that it was held that the assessee had disclosed all relevant and primary materials and “no more detailed disclosure was necessary to comply with the requirement that the assessee had fully and truly to disclose all material facts necessary for the purpose of assessment. It was not the respondent's duty to disclose to or instruct the Income-Tax Officer that there were ‘profits embedded in the receipts’ of the money at Bombay”

21. It does not require any discussion to indicate that this case is equally distinguishable on its own facts and is not an authority for the general proposition that although the assessee might have failed in his duty to make a true and honest disclosure of the relevant facts, still if those facts could have been disclosed alright to the assessing officer at the time of making the assessment, it was not open to him later to initiate re-assessment proceedings under Clause (a) of Section 147 on the ground of the omission on the part of the assessee. If I may say so with great respect, it was rightly observed by the Supreme Court in the leading case on the subject in (4) Calcutta Discount Co. Ltd. v. Income-Tax Officer (1861) 41 I.T.R 191 that what facts are material and necessary for assessment differ from case to case. In every assessment proceeding, the assessing authority would for the purpose of determining the proper tax due from the assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee or discovered by him, on the basis of the facts disclosed or otherwise, the assessing authority has to draw inference of either of other or of the provision of law applicable to the facts of the particular case. It is true that the law did not require the assessee to state the conclusion that could reasonably be drawn from the primary facts, but certainly he is duty bound to disclose all the facts which had a bearing on the question.

22. The Supreme Court itself has clarified the position in the case of (5) Kantamani Venkata Narayana and sons v. First Additional Income-Tax Officer, Rajahmundry (1967) 63 I.T.R 639 where it has been held that the assessee does not discharge his duty to disclose fully and truly material facts necessary for the assessment of the relevant year by merely producing the books of account or other evidence. He has to bring to the notice of the Income-Tax Officer particular items in the books of account or portions of documents which are relevant. It was very clearly laid down that even if it be assumed that from the books produced, the Iacome-Tax Officer, if he had been circumspect, could have found out the truth, he is not on that account precluded from exercising the power to assess income which had escaped assessment.

23. At this very stage I may also refer to the case which was cited for the respondent by Mr. Rajgarhia, namely, (6) Commissioner of Income-Tax, West Bengal v. Hoosen Kasam Dada (India) Ltd. (1973) 91 I.T.R 453, where a Bench of the Calcutta High Court, after considering both the aforesaid cases of the Supreme Court, and some other cases, observed that making of a return by an assessee is not a mechanical job. The statement should be clear and intelligible. It must highlight the necessary features in the income and expenditure in the profit and loss account. That is what is called making a return or statement. The facts of this case may also be usefully indicated. In course of the assessment proceeding, the assessee had shown the sum of Rs. 61,352/12/6 as “Reserve for exchange. Being exchange surplus on remittance from Pakistan” according to the balance-sheet. This amount was the profit arising out of remittance made from Pakistan. The balance-sheet was laid before the Income-tax Officer when the original assessment was made for the assessment year 1955-1956, but he did not tax the exchange surplus in the assessment. Later on, however, the Income-tax Officer issued a re-assessment notice which was challenged on the ground that the fact was already placed before the assessing officer.

24. In this connection reference may also be made to the Explanation 2 to Section 147 of the Act. I would do better to quote it which runs as follows:

“Production before the Income-tax Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section.”

25. It is, therefore, not possible to accept the contention of Mr. Jain that although the petitioner had omitted to make a completed and honest disclosure of the primary facts, the Income-tax Officer while making the assessment, having looked into the balance sheet and the account books of the petitioner and dealt with the question of depreciation on that basis, it was not now open for him to initiate the proceeding under Section 147(a) of the Act and that it could not be held that the Income-tax Officer had any prima facie reason to believe that information, material to the assessment, had been witheld on which account income liable to tax bad escaped assessment.

26. In the case of Kantamani venkata Narayana (supra), Shah, J. who delivered the judgment for the Court observed that in proceedings under Article 226 of the Constitution of India challenging the jurisdiction of the Income-tax Officer to issue a notice under Section 34(i), (a) the High court is only concerned to decide whether the condition which invested the Income-tax Officer with power to reopen the assessment did exist. It is not within the province of the High Court to record a final decision about the failure to disclose fully and truly all material facts bearing on the assessment and consequent escapement of income from assessment and tax. In this view of the matter, it is not necessary to deal with the argument of Mr. Jain that the petitioner was right in showing the written down value according to the balance sheet prepared by the Rajya-Transport. On the basis of Sub-section (6) of Section 43 of the Act, counsel contended that “written down value” meant in the case of assets acquired in the previous year, the actual, cost of the same as paid by the assessee. As it would not be within the province of this court at this stage to go into this question in any further detail, I refrain from discussing the same at all, as that will be a matter falling for decision of the Income tax Officer himself in the re-assessment proceeding. Suffice it to state that there is a prima facie evidence of non-disclosure fully and truly of all the material facts, in consequence whereof income had escaped assessment, and final decision about the failure to disclose fully and truly all material facts appearing on the assessment of income and consequently escapement of income from assessment and tax, could be recorded in the proceedings by the Income-Tax Officer himself. At this stage this Court is only called upon to decide whether the conditions which invested the Income Tax Officer with power to re-open the assessment did exist. The answer to this question has already been recorded earlier against the petitioner and if this is so, the notice issued under Section 148 (a copy of which is Annexure 8 to this application) by the Income-tax Officer cannot be quashed by this court—

27. Mr. Jain also made an argument that the respondents, having taken recourse to the rectification proceedings under Section 154 of the Act which, on the fact of the present case, amounted to cover the entire file of the purported re-assessment sought to be made under Section 147, it was not open to them to prosecute two remedies simultaneously. I do not find any substance in this argument. As already indicated earlier, the scope of the two Sections, namely, Sections 147 and 154 may be to some extent overlapping but taking of action under one Section would not debar the Department to take separate action under the other Section, if the facts and circumstance may so justify, although the scope of inquiry and Investigation under the two provisions are entirely different, as already discussed in paragraph No. 11 earlier.

28. Having examined all the facts and circumstance of this case and the relevant provisions of law, I do not find any merit in this application and would, accordingly, dismiss the same. In the circumstances of the present case, however, I shall make no order as to costs.

29. S.K Choudhari, J.:—I agree.

Application dismissed.