A. China Subbarayudu Vs. Commissioner of Income-tax - Court Judgment

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direct taxation - reassessment - sections 139, 140 and 147 of income tax act, 1961 - assessee produced vouchers of payment and assessment completed - subsequently on report that vouchers of payment fabricated reassessment initiated - it is obligation on person who files return to furnish correct information - failure to do so would be violative of income tax rules - held, reassessment valid as vouchers produced were bogus. head note: income tax business expenditure--payment to vouchers fabricated and false--as per cib report--tribunal rightly rejected them held: no material was borught before the ito or the appellate authorities to contradict or rebut the contents of the central bureau of investigation report that the vouchers produced by the assessee were foreged or fabricated. accordingly, the tribunal's finding that the transport charges claimed by the assessee were bogus based on the enqiury report of the central bureau of investigation is correct. income tax act 1961 s.37(1) reassessment under s. 147--full and true disclosure--deduction claimed for transport charges--claim falsified by cbi report--reassessment valid held: not material was brought before the ito or the appellate authorities to contradict or rebut the contents off the report of the cbi that the vouchers produced by the assessee were forged or fabricated. in the circumstances, the finding arrived at by the ito and confirmed by the appellate authorities that the said vouchers were bogus is perfectly in order and cannot be interfered with and the reopening of the assessment was perfectly in order. income tax act 1961 s.147(a) reassessment under s. 147--full and true disclosure--vouchers of payments, as per subsequent cbi report, fabricated and false--reassessment valid held: not only an assessee is under an obligation to state all information and particulars but is also under an obligation to state them truly and correctly to the best of his knowledge and belief. inasmuch as in this case, it has been found as a fact that the vouchers produced by the assessee are false and fabricated, the reopening of the assessment was perfectly in order. income tax act 1961 s.147(a) - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - the appeals preferred by the assessee to the appellate assistant commissioner and the tribunal failed, whereupon the present reference is obtained. 3. the contention of the assessee before the tribunal was that the reopening of the assessment under section 147(a) was bad. this argument which we find, to put it mildly, quite startling was rejected by the tribunal holding that the assessee failed to furnish the particulars of his income and expenditure truly and fully, the reopening of the assessment was proper. each such return contains a declaration and verification to be signed by the person filing the return that the particulars stated therein are correct and complete to the best of his knowledge and belief and that the information given in the return and the annexures and statements accompanying it is also correct, complete and true. it means, that if a person gives any false, untrue or incorrect particulars, he is guilty of violating the sad declaration and the verification and cannot claim any immunity. not only is an assessee under an obligation to state all information and particulars but he is also under an obligation to state them truly and correctly to the best of his knowledge and belief. inasmuch as in this case it has been found as a fact that the vouchers produced by the assessee are false and fabricated, the reopening of the assessment was perfectly in order. in the circumstances, the finding arrived at by the income-tax officer and confirmed by the appellate authorities that the said vouchers were bogus is perfectly in order and cannot be interfered with.b.p. jeevan reddy, j. 1. two questions are referred under section 256(1) of the income-tax act, 1961, at the instance of the assessee. they are : '1. whether, on the facts and in the circumstances of the case, the reassessment proceedings initiated by the income-tax officer under section 147(a) of the income-tax act for the assessment year 1969-70 are valid 2. whether, on the facts and in facts and in the circumstances of the case, the tribunal's finding that the transport charges claimed by the assessee were bogus based on the enquiry report of the central bureau of investigation is correct ?' 2. for the assessment year 1969-70, the assessment relating to the assessee was completed on march 28, 1970, on an income of rs. 24,640. while making the assessment, several (items of) transport charges said to have been paid by the assessee, in respect of which he produced vouchers of payment, were accepted. subsequently, on the basis of a report of the central bureau of investigation, it came to light that the vouchers produced by the assessee were fabricated and false. the assessee was also being prosecuted by the central bureau of investigation before the special judge in that behalf. indeed, the report was that the fertilizers, which were allotted to the assessee were not at all transported to the destination points as per the allotment orders, but disposed of at or near about the port and that the assessee created bogus evidence supporting the plea of transport. on the basis of the said information, the assessment was reopened and the said vouchers were rejected. it was held by the income-tax officer that the vouchers produced were not genuine and that they were fabricated. the appeals preferred by the assessee to the appellate assistant commissioner and the tribunal failed, whereupon the present reference is obtained. 3. the contention of the assessee before the tribunal was that the reopening of the assessment under section 147(a) was bad. his case was that inasmuch as he has placed all the basic facts before the income-tax officer, he had discharged his duty under act and that he was not obliged to tell the income-tax officer that the vouchers produced by him are not true. this argument which we find, to put it mildly, quite startling was rejected by the tribunal holding that the assessee failed to furnish the particulars of his income and expenditure truly and fully, the reopening of the assessment was proper. 4. section 139 of the act requires every person, whose total income exceeds the maximum amount which is not chargeable to income-tax, to furnish a return of his income in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. section 140 prescribes by whom the return of income is to be signed. the income-tax rules prescribe the form in which the return has to be filed. each such return contains a declaration and verification to be signed by the person filing the return that the particulars stated therein are correct and complete to the best of his knowledge and belief and that the information given in the return and the annexures and statements accompanying it is also correct, complete and true. it means, that if a person gives any false, untrue or incorrect particulars, he is guilty of violating the sad declaration and the verification and cannot claim any immunity. if it is found that any particular statement or information furnished or facts stated in the declaration are false, untrue or incorrect, the assessment is liable to be reopened and it is no answer to say that the assessee has stated basic and primary facts. not only is an assessee under an obligation to state all information and particulars but he is also under an obligation to state them truly and correctly to the best of his knowledge and belief. inasmuch as in this case it has been found as a fact that the vouchers produced by the assessee are false and fabricated, the reopening of the assessment was perfectly in order. accordingly, question no. 1 is answered in the affirmative, that is, in favour of the revenue and against the assessee. 5. so far as question no. 2 is concerned, we must say that no material was brought before the income-tax officer or the appellate authorities to contradict or rebut the contents of the (report of the) central bureau of investigation that the vouchers produced by the assessee were forged or fabricated. in the circumstances, the finding arrived at by the income-tax officer and confirmed by the appellate authorities that the said vouchers were bogus is perfectly in order and cannot be interfered with. accordingly, question no. 2 is also answered in the affirmative, that is, in favour of the revenue and against the assessee. the assessee shall pay the costs to the revenue in this reference.