1. The assessee is an employee of Swadeshi Cotton Mills Co. Ltd., Kanpur. The original assessment in his case was made on 17-3-1977. It appears that subsequent to the above, there was a search at the premises of the above company. In this search, the department found a register of properties sold by the company. The register showed that the company had sold certain plots in a colony called Anandpuri of Kanpur. Some of the plots were sold to general public while others were sold to the assessee's own employees. The present assessee had purchased plot No. 80 on 21-6-1973 at the rate of Rs. 55 per sq. yard.
It was further noticed that a similar plot No. 73 of equal area was sold to Dr. Vimla Gupta on 8-8-1973 at the rate of Rs. 80 per sq. yard.
The IAC was, therefore, of the view that the assessment had been granted concession at the rate of Rs. 25 per sq. yard by the company.
According to him, this concession amounted to 'perquisite' in terms of Section 17(2)(iii)(c) of the Income-tax Act, 1961 ('the Act').
According to this section, perquisite includes the value of any benefit or amenity granted at concessional rate by an employer (including a company) to an employee whose income under the head 'Salaries', exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds Rs. 18,000. There was no dispute that the income of the assessee under the above head excluded Rs. 18,000.
According to the IAC, therefore, the assessee was provided with a benefit which amounted to perquisite and was, therefore, liable to be assessed as income from salary under Section 17(7)(z'v). The value of the concession was worked out by him at Rs. 19,444. Since this amount had not been taxed in the original assessment and had also not been shown in the return or disclosed to the department, proceedings under Section 147(a) of the Act were started against the assessee. In this connection, the ITO specifically referred to a decision of House of Lords in Abbot v. Philbin (Inspector of Taxes)  44 ITR 144.
2. On behalf of the assessee, there was two submissions before the assessing officer: The first submission was that the provisions of Section 147(a) had no application to the case of the assessee. It was contended before him that the assessee had made full and true disclosure of all material facts necessary for his assessment and, therefore, it could not be said that income chargeable to tax had escaped assessment because of any omission or failure on the part of the assessee. In this connection, it was pointed out that the payments for the purchase of the plot had been made by cheque which were reflected in the bank accounts of the assessee. It was also submitted that those bank accounts were scrutinised by the IAC making the original assessment. It was also contended that the assessee had shown the above plot in his wealth-tax return. These contentions were rejected by the IAC. In his opinion, disclosure of the plot in the wealth-tax return of the assessee was of no consequence, nor the payment by cheque reflected in his bank account affected the application of Section 147(a). In this connection, he referred to Explanation 2 to Section 147(a). According to this Explanation, production before the ITO of account books or other evidence from which material evidence could with due diligence have been discovered by the ITO was not necessarily to amount of disclosure within the meaning of Section 147(a).
3. Another contention raised before the IAC was that there was actually no benefit or concession granted to the assessee. It was argued that no right had been conferred on the assessee as an employee with regard to the purchase of the plot and, therefore, the assessee as an employee of the company had not received any benefit. This contention was also rejected by the IAC as, in his opinion, formulation of a scheme by the company to sell plots to its officers and members of staff at concessional rate amounted to a benefit or amenity in favour of the employees. In this connection, the IAC heavily relied on the decision of the House of Lords in Abbot's case (supra). The IAC finally computed the value of the benefit or perquisite at Rs. 19,444 on the basis that a similar plot had been sold to Dr. Vimla Gupta at the rate of Rs. 80 per sq. yard involving a concession of Rs. 25 per sq. yard to the assessee.
4. The assessee was also provided with a rent-free accommodation by the company. In the original assessment, the assessee had returned the value of this perquisite at Rs. 2,548. In the opinion of the IAC, this was low. He considered a similar question in the assessment year 1973-74 and following his finding in that year, he computed the value of the perquisite in the form of rent-free residential accommodation at Rs. 8,135. According to him, it was not necessary to apply the provisions of Section 147 once again to the case, as the assessment had already been reopened. He recomputed the value of the perquisite at Rs. 8,135 and included it in the assessment in place of Rs. 2,548 originally assessed.
5. The assessee appealed to the Commissioner (Appeals). The Commissioner (Appeals) was of the opinion that the provisions of Section 147(a) did not apply to the case as the assessee could not foresee that there was any concession in the sale of plots to him. He was further of the view that the assessee had not failed or omitted to disclose any facts necessary for his assessment. According to him, therefore, the provisions of Section 147(a) were not applicable to the assessee's case. He then considered whether the assessment could also be reopened under Section 147(6) in regard to the valuation of the perquisite provided in the form of rent-free accommodation to the assessee. Here, he followed his order in the assessment year 1973-74 and held that even Section 147(6) had no application to the case. He, thus, quashed the reassessment made by the IAC and allowed the appeal.
In the view he took he did not consider the additions on merits.
6. The department is now in appeal before us. The learned departmental representative mainly challenged the quashing of the reassessment proceedings initiated by the IAC, by the Commissioner (Appeals). On behalf of the assessee, the order of the Commissioner (Appeals) was sought to be supported. In this connection, the argument placed before the IAC was also repeated before us.
7. We have given our careful thought to the entire matter. We will first deal with the question of the selling of the plot at the concessional rate to the assessee. Here also we will first deal with the application of Section 147(a) to the case. In our opinion, the above section is clearly attracted. This section applies to a case where the assessee either omits or fails to disclose fully and truly all material facts necessary for his assessment and the ITO by reason of such omission or failure had reason to believe that income chargeable to tax had escaped assessment. The leading authority on this issue is the decision of the Supreme Court in Calcutta Discount Co.
Ltd. v. ITO  41 ITR 191. It was held in this case that it was the assessee's duty to disclose all the primary facts, including particular entries in the account books, particular portions of documents, and documents and other evidence which could have been discovered by the assessing authority, from the documents and other evidence disclosed.
The Court held that the duty, however, did not extend beyond the full and truthful disclosure of all primary facts. Once all the primary facts were before the assessing authority, it was for him to decide what inferences of facts could be reasonably drawn and what legal inference had ultimately to be drawn.
8. The question for consideration is whether the assessee had disclosed the primary facts regarding the purchase of plot from his employer to the ITO. The case of the assessee here is that he had placed his bank pass book containing the payments for the purchase before the IAC/ITO, who had also examined them. Further, his case is that he had also included the above plot in his wealth-tax return. In our opinion, none of these amount to disclosure of any primary facts. As rightly pointed out by the IAC in his order, production of account books or other evidence, from which material evidence could with due diligence had been discovered, was not necessarily to amount to disclosure.
Production of pass books fell under this category. Inclusion of the plot in the wealth-tax return was of no consequence as that disclosure was not under the Act. We do not agree with the finding of the Commissioner (Appeals) that the assessee could not think that he was provided any benefit or concession by its employer and, therefore, it was not possible for him to disclose such benefit in his return. He has clearly gone wrong in law in this regard. We have already stated above that the assessee's duty was to disclose primary facts and not to tell the ITO that he had gained any benefit or perquisite as such. The Commissioner (Appeals) failed to consider the first aspect, i.e., the omission or failure on the part of the assessee to disclose primary facts necessary for his assessment. In our opinion, therefore, the assessee failed to disclose the primary facts necessary for assessment in regard to the purchase of plot and the provisions of Section 147(a) were clearly attracted and rightly applied to his case.
9. A submission was made by the learned counsel for the assessee that the department itself was not sure about its position inasmuch as it had also initiated gift-tax proceedings against the employer-company itself. He, however, admitted that subsequently those proceedings had been dropped by the GTO. In our opinion, this cannot help the assessee.
The department has to take proper care of its revenue and protective assessments are clearly permitted in law. In any case, the gift-tax proceedings were not in the case of the assessee but in the case of the company, which was different from the assessee. We, therefore, find no merit in this contention.
10. The next submission of the learned counsel for the assessee before us was that even if there was any concession, it did not amount to a perquisite in terms of Section 17(2)(iii)(c). He contended that the service contract of the assessee did not lay down any such condition that the company was bound to provide the plot to the assessee at a concessional rate. According to him, it amounted to a normal commercial sale by the company to the assessee, which did not amount to any perquisite which could be brought to tax as part of the assessee's salary. In this connection, he referred to the following decisions of the Tribunal. A.K. Chellani v. ITO  3 ITD 194 (Hyd.), M.C.Muthanna v. ITO  3 ITD 46 (Mad.) and K.P. Pednekarv. ITO  6 ITD 483 (Bom.).
He also referred to Sub-clause (vi) of Section 17(2), which was added by the Taxation Laws (Amendment) Act, 1984. According to this new clause, the concession granted to an employee by an employer in the form of a loan was to amount to a perquisite. The learned counsel submitted that this was the only clause applicable from the assessment year 1985-86. This clause has been omitted by the Finance Act, 1985, with effect from 1-4-1985, which alone extended the definition of perquisite to a concession granted by an employer to an employee.
According to him, other concessions did not amount to perquisite.
11. On behalf of the department, it was submitted that the company had formulated a regular scheme which was specifically meant for its officers and staff by which concessional rate had been charged from them in the sale of plots in Anandpuri colony. The contention of the learned departmental representative was that the concession was an incident to the employment of the assessee and, therefore, it amounted to a perquisite in terms of Section 17(2)(iii)(c). In this connection, he again referred to the decision of the House of Lords in Abbot's case (supra).
12. In our opinion, the stand of the learned departmental representative requires to be accepted. In the case of Abbot (supra), the secretary of a company was granted an option to purchase certain shares in the company at a concessional rate. In this connection, the Court, in the words of Lord Radcliffe, made the following observations: ... I think that the conferring of a right of this kind as incident of service is a profit or perquisite which is taxable as such in the year of receipt so long as the right itself can fairly be given a monetary value.... (p. 163) 13. A similar position is available in the present case also. As would appear from the preamble of the scheme formulated by the company, there was a request from its officers and staff members for some concession in the rate as also for payment on deferred basis in regard to sale of plots. The company considered the request and in pursuance of the decision taken by its board of directors in their meeting held on 29-7-1972, it formulated a scheme. The scheme was applicable to permanent officers/staff members (excluding workers) drawing salary of Rs. 500 per month or more. The scheme also lays down a detailed procedure for recovery of the amounts. There is a separate clause for recovery in the case of retiring members of the staff or those who might have resigned. A reading of the scheme clearly goes to show that it was an incident of service and not an offer to the employees in the true commercial sense. It was, therefore, in the nature of a perquisite to the assessee also and could rightly be evaluated in terms of Section 17(2)(iii)(c).
14. We do not think that the decisions of the Tribunal, relied upon by the learned counsel for the assessee are of any help. In none of these decisions, to the best of our knowledge, the above decision of the House of Lords was considered. Each one of them emphasised the fact that the transactions were commercial in character and that they were not part of any service contract. Besides, in fact, these decisions are distinguishable on their own facts. They are also to be distinguished on the principle laid down by the House of Lords in the case of Abbot (supra) in the sense that the provision of the concession in the present case clearly was the incident of service. We, therefore, hold that if the assessee had earned any concession, it was clearly in the nature of a perquisite under Section 17(2)(iii)(c). We do not agree with the submission of the learned counsel for the assessee that merely because of new Sub-clause (vi) having been added to that section, that alone laid down the different categories of perquisites. Admittedly, that clause related to a concessional loan granted to an employee and not to any other form of perquisite, as is the case here. We, therefore, set aside the order of the Commissioner (Appeals) on this issue.
15. Since the Commissioner (Appeals) has not considered the question of quantum of concession, we have no alternative but to direct him to do so now after we have held that the reopening of the assessment was valid and further, the concessions, if any, was the perquisite liable to be taxed as the part of the assessee's salary.
16. We now deal with the question of perquisite in the form of rent-free accommodation provided to the assessee by the company. This issue came up for our consideration in the assessment year 1973-74.
Following our finding in that year, we direct the IAC to recompute the value of such perquisites on the basis of the municipal valuation of the property.