Sabyasachi Mukharji, J.
1. In this reference the years involved are assessment years 1947-48 to 1957-58. The assessee is a non-resident shipping company registered in Norway and doing business in India also. In the original assessments for these 11 years, depreciation has been allowed in respect of certain ships which were on its fleet for more than 20 years. The assessee had not, in those proceedings, furnished in respect of each ship the number of years for which it was borne on its fleet. The ITO, who reopened the assessments, thought that if a ship was borne on the fleet for more than 20 years, the assessee was disentitled to depreciation in respect of that ship. Hence, the proceedings for all these years were reopened under Section 34(1)(a) of the Indian I.T. Act, 1922, after due formalities. The contention of the assessee-company was indicated and the ITO disallowed the depreciation for certain ships of each of these years. The assessee filed appeals before the AAC. The assessee challenged the orders of the ITO. The AAC disposed of all these appeals by an order dated 12th April, 1971. He held, inter alia, as follows :
'3. On going through the records, I find that at the time of original assessments, the appellant had filed a detailed statement giving the calculation of its income for each of the years under the round voyage basis. In this statement, it had given details of the ships which had visited India during the relevant years, the number of days taken by them for completing the round voyage and the amount of depreciation allowance admissible on various ships. I also find that in some of the years, the ITO had made some queries seeking further particulars regarding the depreciation claimed by the appellant and in response to these queries, the latter had furnished the particulars required by the ITO. On the basis of the particulars filed before him, the ITO was satisfied that the depreciation had correctly been worked out by the appellant and he had, therefore, accepted the returned incomes for different years. This being the position, it cannot be said that any income chargeable to income-tax has escaped assessment by reason of the failure on the part of the appellant company to disclose fully and truly the material facts necessary for the assessments.'
2. After discussing the legal propositions, the AAC further held as follows:
'5. From the facts discussed above it is obvious that the appellant had filed all the necessary particulars of depreciation at the time of original assessment and that there was no failure on the part of the assessee to disclose fully and truly the material facts necessary for the assessments. The question whether in counting the period of 20 years for which depreciation is admissible on ships, those years in which a ship did not come to India are to be taken into account or should be excluded, is a matter of inference only to be drawn from the primary facts. As held by the Supreme Court in Calcutta Discount Co.'s case : 41ITR191(SC) , under Section 34(1)(a), the duty of the assessee is only to disclose primary facts; he is not to indicate what factual or legal inference should properly be drawn from the primary facts.'
3. Therefore, on the basis of the principles enunciated by the Supreme Court, the AAC felt that the appellant had disclosed all primary facts. Therefore, the AAC held that the necessary conditions for taking action under Section 34(l)(a) were not satisfied in this case. He further held that according to the ITO the only income which had escaped assessment in this case was that the appellant was allowed depreciation in respect of the ships which were borne on its fleet for more than 20 years. But this view of the ITO was not upheld by the Income-tax Appellate Tribunal in the appeal for the assessment year 1958-59. Therefore, there was no escapement of income either. On this ground, the AAC set aside the orders of the ITO. Thereafter, there was an appeal to the Tribunal. The Tribunal, following its earlier decision, held that there was no excessive depreciation and regarding the reopening, as there was no excessive depreciation, the Tribunal held that there was no escapement. The Tribunal, however, did not go into the question whether, even if there was any escapement, such escapement was due to failure on the part of the assessee to disclose fully or truly any material or relevant fact, as the Tribunal thought it was notnecessary. Upon these, the Tribunal came to the conclusion that the AAC was right in his decision and the appeals were dismi'ssed. On this, the following two questions were referred to this court :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of Section 34(1)(a) of the Indian Income-tax Act, 1922, had not been correctly invoked in this case
2. If the answer to question No. (1) is in the negative, then, whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was entitled to get depreciation under Rule 8 of the Income-tax Rules even in respect of ships which had formed part of the assessee's fleet for more than 20 years ?'
4. The second question would only arise if the first question is answered in the negative. In order to answer this question fully, it is necessary to rind out first whether there was any escapement of income and, secondly, even if there was any escapement whether there was any failure or omission on the part of the assessee to disclose fully or truly any material or relevant fact. This aspect, viz., whether there was any failure or omission on the part of the assessee to disclose fully or truly any material or relevant fact had not been considered by the Tribunal. Therefore, unless this aspect is considered fully, in our opinion, this question cannot be disposed of because if there was no failure, there could be no reopening and if there was no reopening, the second question would not really arise. Therefore, if the reopening was not valid, the second question would not really arise in this case. In that view of the matter, we remand the case to the Tribunal with a direction to find out whether, in view of the materials on record, there was any failure or omission on the part of the assessee to disclose fully or truly any material or relevant fact at the time of original assessment and whether in consequence of such failure or omission any income had escaped assessment. The Tribunal will decide and send a supplementary statement of case to this court within four months from the receipt of this order.
5. Let this order be drawn up expeditiously and the department is directed to communicate this order forthwith to the Tribunal.
6. Costs of this hearing will abide by the ultimate result of the reference.
Sudhindra Mohan Guha , J.
7. I agree.