TMI Blog1967 (1) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... 100 each, out of which Navinchandra owned 2,150 ordinary shares and 9,050 preference shares. Navinchandra had, some time prior to his death, gifted away some part of his share capital to various persons and at the time of his death he only held 975 ordinary shares and 9,050 preference shares of the company. We are primarily concerned in this petition with the valuation of the 2,150 ordinary shares. 2. On 28th March, 1956, after the return was filed, the Assistant Controller of Estate Duty asked the petitioner a number of questions which were replied to and along with the reply was also filed a valuation report dated 10th December, 1956. The replies to the questions were given on 13th February, 1959. The petitioner has also alleged that in the meanwhile a number of hearings took place at which several questions were discussed in connection with the return. On 22nd March, 1960, the then Deputy Controller of Estate Duty, Mr. Jhala, made an assessment order which is at exhibit F. In the order the Deputy Controller has stated that there were several points arising out of the return submitted by the accountable person but all except one of those points had been disposed of by discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner a letter in which he disclosed his own computation of the value of the ordinary shares of the company which the deceased held and informed the petitioner that the various contentions which he had put forward were being considered. Meanwhile he offered his own valuation of the ordinary shares on the assets basis as at the date of death of the deceased and called upon the petitioner to let him have his views regarding the same. It may be stated here that in the assessment order dated 22nd March, 1960, the computation of the value of those shares was made at ₹ 1,250 per share whereas in the computation now made by the deputy controller of Estate Duty the value of each share was assessed at ₹ 2,800, i.e., more then twice the original value of the shares. Though the petitioner has stated that on the date of his death the deceased owned 975 ordinary shares, it is now not in dispute that the date of his death the deceased owned 975 ordinary shares, it is now not in dispute that the assessment has to be made on the basis that the deceased owned 2,150 ordinary shares, for the transfer which is by way of gift would be caught under the Act. On this basis, the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation in his possession when he issued the notice on 23rd January, 1963. On behalf of the department a number of facts and circumstances have been alleged which according to them constituted the necessary information entitling them to act under the provisions of section 59. We shall refer to these various allegations when we come to consider the individual points under each one of the provisions of law. 7. Now before we turn to discuss the points raised it is necessary to say a word about the history of the legislation. 8. The Estate Duty Act of 1953 (Act No. 34 of 1953), was amended by the Estate Duty (Amendment) Act, 1958 (Act No. 33 of 1958), which came into force from 1st July, 1960, by virtue of a notification in the Gazette of India. Inter alia, the Amending Act substituted by section 53 thereof a number of sections in the Estate Duty Act of 1953. These were section 56 to 65 and at the same time repealed several sections of the old Act. We are only concerned with the legislative change brought about so far as section 62 of the unamended Act was concerned. Section 62 as it stood prior to amendment and in so far as it is necessary for the purposes of this petition, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve notwithstanding that there has not been such omission or failure as is referred to in clause (a) that any property chargeable to estate duty has escaped assessment, whether by reason of under-valuation of the property included in the account or of omission to include therein any property which ought to have been included, or of assessment at too low a rate or otherwise, he may at any time, subject to the provisions of section 73A, require the person accountable to submit an account as required under section 53 and may proceed to assess or reassess such property as if the provisions of section 58 applied thereto. 10. Section 61 merely provides that at any time within five years from the date of any order passed by him, the Controller may, on his own motion, rectify any mistake apparent from the record and shall, within a like period rectify any such mistake which has been brought to the notice of the Controller, by the person accountable. The proviso says that no rectification can take place unless the person accountable has been given a reasonable opportunity of being heard in the matter. Now it will be noticed, therefore, that the change brought about by the amending Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the property included in the account or of omission to include therein any property which ought to have been included, or of assessment at too low a rate or otherwise... This ground for action under section 59(b) is nowhere to be found referred to in the old section 62. To that extent the Amending Act brought about a radical departure in the powers conferred upon the Controller. Clause (b) of section 59 prescribes that if any property chargeable to estate duty has escaped assessment, the Controller may proceed to assess or reassess such property as if the provisions of section 58 applied thereto. The provisions of section 58 also introduced by the amending Act relate to initial assessments. This if the grounds prescribed in clause (b) of section 59 exist then the Controller has power to assess or reassess as if the provisions of section 58 applied thereto, that is to say, as if the first assessments were to be made. This is a completely new power conferred upon the Controller and it is comparable to the power conferred by section 34 of the Indian Income-tax Act. But all this shows that there is a vast distinction between the remedies provided by the old section 62 and the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken under 15 read with section 62 of the old Act, and therefore, no immunity was acquired. 13. Now it is the general principle which is well-settled that retrospectivity of a statute is not to be presumed and the general principle is thus quoted at page 388 in Craies on Statute Law, Philosophical writers have, it is true, denied that any legislature ought to have such a power, and it is indisputable that to exercise it under ordinary circumstances must work great injustice. But before giving such a construction to an Act of Parliament one would require that it should either appear very clearly in terms of the Act or arise by necessary and distinct interpretation. And perhaps no rule of construction is more firmly established than this - that a retrospective operation is not to be given to a statute so as to impair an existing right or obligation otherwise than as regards matter of procedure, unless that effect cannot be avoided doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only. At pages 390 and 391, Craies points out that there are only two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final assessment. But when once a final assessment is arrived at, it cannot in their Lordships opinion be reopened except in the circumstances detailed in sections 34 and 35 of the Act (to which reference is made hereafter) and within the time limited by those sections. 15. In Delhi Cloth and General Mills Co. Ltd. v. Income-tax Commissioner Delhi, again a case under the Indian Income-tax Act - (section 66A was there being considered) - the principle was thus stated by Lord Blanesburgh at page 425 : The principle which their Lordships must apply in dealing with this matter had been authoritatively enunciated by the Board in the Colonial Sugar Refining Co. v. Irving, where it is in effect laid down that, while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment. Their Lordships can have no doubt that provisions which, if applied retrospectively, would deprive of their existing final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst place the plea is not to be found stated in any part of the affidavits filed on behalf of the department, but it is also not disputed that that appeal was filed at the instance of the assessee claiming a reduction of tax and nothing further, and in regard to minor item. We do not think that in a case where the assessee claims that he is not liable to tax it can possibly be urged that the department's right to assess or reassess was kept alive. In fact, even on that occasion the department could not have claimed that the assessee was liable to a higher rate of taxation or to a higher amount of tax. Therefore, the mere fact that an appeal on behalf of the assessee was pending would not, in our opinion, affect the question whether the order passed on 22nd March, 1960, was final and completed order or not. That order was a completed and final order. 18. We have already said that the provisions of section 59 are substantially similar to the provisions of section 34 of the Indian Income-tax Act and, while cases directly under the Estate Duty Act are rare so far as the this country is concerned, because it is a comparatively recent Act, questions such as the one we have before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted at any time but once completed it is final. Once a final assessment has been made, it can only be reopened to rectify a mistake apparent from the record (section 35) or to reassess where there has been an escapement of assessment of income for one reason or another (section 34). As regards the provisions of section 18 of the Finance Act, 1956, the Supreme Court held at page 240 : The legislature has given to section 18 of the Finance Act, 1956, only a limited retrospective operation, i.e. up to April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provisions or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorize the Income-tax officer to commence proceedings which before the new Act came into force had by the expiry of the period provided become barred. 19. A similar question came up for decision before this court in S. C. Prashar v. Vasantsen Dwarkadas. In that case a firm of Purshottam Laxmidas was registered under the Indian Income-tax Act. Another firm of Vasantsen Dwarkadas had filed a return for the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted right to the assessee which could not be affected excepted by clear and express terms used by the legislature. By the amending Act of 1953, the legislature had expressed its intention not to give any retrospective operation to the section further than 1st April, 1952. The remedy and the right of the officer to reassess was, therefore, lost before 1st April, 1952, and therefore, the notice was invalid. 20. The principle was thus stated by Chief Justice Chagla at page 890 : Therefore, on the validity of the notice, the very short question that we have to consider is whether, if the remedy or the right to issue a notice under section 34 was already barred at the date when the amending legislation came into force, the amending legislation could revive the remedy by providing an extended period of limitation. The amending Act came into force on 1st April, 1952, and on that date the period of eight years from 31st March, 1943, had already expire. Therefore, the remedy available to the Income-tax Officer assessing the assessee in respect of escaped income had already become barred. Found a legislation by providing that from 1st April, 1952, there would be no limitation at all i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of five judges, two judges expressed one view, two judges expressed another view and the fifth judge did not express any opinion at all with the result that the decision of the Bombay High Court stands so far as this point is concerned. 22. In Commissioner of Income-tax v. Shantilal Punjabji the effect of the Supreme Court decision upon the view taken by the Division taken by the Division Bench of this court in Prashar v. Vasantsen Dwarkadas was considered and at page 73 it reopen an assessment which is barred under section 34 and no subsequent enlargement of time can revive such right by section 31 of the Amendment Act of 1953, as we have pointed out in Mathurdas Govinddas v. G. N. Gadgil, the Bombay decision in Prashar v. Vasantsen Dwarkadas still holds good and is binding upon us as on this point. Out of the five learned judges, two took the view, two a contrary view and the fifth judge, Sarkar J., did not express any opinion at all and, therefore, as held by the Bombay High Court, section 31 did not save the right of the taxing authorities to issue the notice after the right to do so was time-barred under section 34 (1). With respect we are in agreement with this view as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax legally due or a right worthy of little respect and indeed not a right at all. 24. It seems to us that the latter observation of the Chief Justice in Calcutta Discount Co's. case is directly in conflict with the decision of the Supreme court in S. S. Gadgil v. Lal and Co., to which we have already referred, but the point which the learned Chief justice made, that the provisions of Act 48 of 1948 did not introduce a new provision at all, but only brought about a variation in the old provision, was thus put by him at page 489 : As I have already pointed out, the section introduced by Act XLVIII of 1948 is not a new provision altogether, but a variant of an old provision which it replaced. In my opinion, so far at least as initiation of proceedings is concerned, there is no substantial difference between the two from the point of view of the assessee's rights. The new section authorises, as the old section did, initiation of proceedings within eight years from the end of an assessment year or, in case of an innocent escape or under-assessment of income, within four years. So far there is no difference. The basis for the initiation of proceedings is also the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding were the same, the new section affects no rights previously unaffected'. 27. And at the bottom of that page : '... It is true that if time is enlarged by a new enactment, but at the date when the enactment comes into force, no proceeding can any longer be commenced in a particular case under the previous law, the new enactment will not apply to such a case.' 28. And lower down on page 491 : '... As to time, none has a vested right in a period of limitation and a change of the period which does not altogether take away a right of action subsisting at the date of change or revive a right, then already barred under the old law, can always be made and the period applicable thereafter will be the new period, whether enlarged or abridged'. 29. The same comment was made as regards the Calcutta Discount Co.'s case by the Supreme Court in S. S. Gadgil v. Lal and Co., at page 240 as follows : Therefore, the view that even when the right to assess or reassess has lapsed on account of the expiry of the period of limitation prescribed under the earlier statute, the Income-tax Officer can exercise his powers to assessee or reassess under the ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act shall commenced - (a) in the case of a first assessment, after the expiration of five years from the date of death of the deceased in respect of whose property estate duty became payable; and (b) in the case of a reassessment, after the expiration of tree years from the date of assessment of such property to estate duty under this Act. 33. Clause (a) of the section is obviously inapplicable here, because this is not a case of a first assessment. This is undoubtedly an attempt at reassessment and to that extent clause (b) would be attracted provided it has the necessary application to the present case. There is nothing in clause (b) of section 73A to suggest a retrospective operation. No doubt, clause (b) says in the case of a reassessment, after the expiration of three years from the date of assessment of such property to estate duty under this Act, but it does not say that the date of assessment must be a date prior to the coming into force of section 73A. Therefore, even though section 59 is subject to the provisions of section 73A, we do not think that by virtue of section 73A, clause (b), section 59 would apply for any period prior to the date of the comin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Secondly, the action that could be taken under section 62 was only two-fold. If the assessee applied, he could be refunded the excess duty, if any, paid by him or so far as the department is concerned, the only action that could be taken was to determine the additional duty payable on the property. In no case could an assessment made be reopened under the old section 62. In other words, the assessee could not be called upon to render a fresh account or to submit a fresh return which under section 59 the department is expressly authorised to do. The words in section 59 are decisive in this respect, may.... require the person accountable to submit an account as required under section 53 and may proceed to assessee or reassess such property as if the provisions of section 58 applied thereto. Section 53 requires that every person accountable for estate duty shall, within six months of the death of the deceased, deliver to the Controller an account in the prescribed form and verified in the prescribed manner. That is the initial return which the person accountable is called upon to make and that is what the Controller is authorised to call for under section 59, if the conditions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the face of the recore. In reinforcing this distinction he relied upon the decision of the Supreme Court in Income-tax Officer v. Asok Textiles Ltd. In that case a company, which fell within the ambit of section 18A of the Finance Act, was assessed for its accounting period ending December 31, 1951, in its first assessment year 1952-53, and its net assessable income was determined at a certain figure. Later it was found that the company had declared a much larger dividend and it was liable to pay additional income-tax with respect to the excess dividends under the Finance Act, 1952, but this fact had been overlooked by the Income-tax Officer in the original assessment. The Income-tax Officer, therefore, first made an order of rectification under section 35 and imposed an additional Income-tax on the assessee, but later discovered that even that was erroneous and made a second order of rectification and thereby levied income-tax at a much higher rate under section 18A of the Act. It was urged that the mistake which was apparent from the record. The High Court of Kerala in that case had given a finding that it was not a mistake apparent on the face of the record and the Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord the mistake contemplate is not one which is to be discovered as a result of an arguments, but it must be a mistake which becomes apparent from the examination of the record. We fail to see upon that view how section 62 of the unamended Act will not apply to the facts of the case. The words of section 35 of the Income-tax Act are to that extent in pari materia with the words of section 62. We may also mention here that it was urged by Mr. Palkhivala that the very provisions of the law which fell to be considered in Asok Textiles Ltd. case namely Schedule I, Part I, Item B, proviso (ii), of the Finance Act (23 of 1951) were declared not to levy a charge of income-tax at all and to that extent offended against section 3 of the Indian Income-tax Act. See Commissioner of Income-tax v. Khatau Makhanji Spg. Wvg. Co. Ltd., and that, therefore, the question which arose in Asok Textiles Ltd. case need not be gone through. However, it is unnecessary to go into that question, because even accepting the view in Asok Textiles Ltd.'s case, we do not think that section 62 would be attracted in the present case. 40. In paragraph 15 of the affidavit of the Second Assistant Controller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are the letters dated 9th October, 1963, 14th November, 1963, and 16th January, 1964. Even in the reply which the department made to the several queries made on behalf of the petitioner by his chartered accountants, namely, letter dated 16th March, 1964 (exhibit N), the ground upon which the department was claiming to reopen the assessment was not stated beyond mentioning reassessment under section 59 . At any rate, rule 15 was nowhere adverted to. Therefore, the petitioner cannot be blamed for not raising any issue as regards non-applicability of rule 15 in the petition. It was only when it was disclosed for the first time in the return supported by the affidavit of Mr. Ramesh L. Butani, the 2nd Assistant Controller of Estate Duty, that the petitioner became aware that the information in the possession of the department was that rule 15 had not been considered. When the petitioner in his affidavit dated 21st October, 1966, denied that rule 15 was applicable, the reply on the part of the department was made in the affidavit of Mr. K. C. Gopalakrishnan, the 2nd Assistant Controller of Estate Duty. In paragraph 7 of that affidavit, is was alleged, I say that the statement of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances, we can see no reason why we should not accept the affidavit of the petitioner that rule 15 was considered by the original assessing officer. There is no denial of this on the part of the original assessing officer, who was still available. So far as the affidavits of Butani and Gopalakrishnan are concerned, they are admitted to have been made only from the record. 44. Another circumstance that also must be taken into account is the fact that, when the original assessment was made, several meetings took place between the petitioner and his representatives and the assessing officer. This is clear from the correspondence between the parties and from the letter dated 28th March, 1956 (exhibit E), from the Assistant Controller to the chartered accountants of the petitioner and their reply dated 13th February, 1959, and other letters. At all these meetings, which were held from time to time, points arising out of the return were discussed and it appears that the petitioner or his representatives were able to satisfy the assessing officer and the Deputy Controller of Estate Duty who finally passed the assessment order regarding those points. Therefore, most of those points ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 37. If then it is an admitted position that section 37 was considered by the officer who made the original assessment, there can be hardly any doubt that he must have applied his mind to both the alternative principles of valuation mentioned in section 37 and that can only mean that rule 15 must have been considered by him. At any rate, section 37 indicates two methods of valuation, (1) on the basis of the total assets of the company, and (2) on the basis of the market value. The first is under section 37 preferred to the second and it is only in the event that the first principle cannot apply that the second principle is made applicable. Now if the assessing officer makes the assessment on the basis of the second principle, namely, that of market value, we cannot but hod that he must have considered the first principle, namely, the valuation on the assets basis , and rejected it as not ascertainable. This again would support the affidavit made by the petitioner that rule 15 was considered. At any rate, in view of the complete absence of any reference to rule 15 in the record of the original assessment proceedings, in the absence of any affidavit by the officer ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btained such control or capacity by an exercise at that time of a power exercisable by him or with his consent. 51. Sub-rule (4) is not relevant for our purposes, because it deals with the valuation of shares or debentures of a class, viz., a class to which permission to deal has been granted by a recognised stock exchange, which is not the case here. Sub-rule (5) provided that control of a company which a person had in a fiduciary capacity shall be disregarded for the purpose of this rule. Sub-rule (6) provides, In this rule references to the assets of a company shall be construed as references to the assets that it had at the death of the deceased. 52. The principal argument for the department has been that the deceased had or must be deemed to have had control of the company, Mafatlal Gagalbhai Company Ltd. Therefore, rule 15 would clearly apply and, since, it was overlooked, there is a mistake apparent from the record within the meaning of the old section 62, or alternatively that constitutes information in the possession of the assessing officer within the meaning of section 59 of the amended Act. 53. It is clear, upon a perusal of sub-rule (3) side by side wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant time, and that the deceased had authority to exercise all the powers, authorities and discretions expressed to be vested in the directors generally. He was also the chairman of the company. I submit that the deceased had the capacity to exercise the powers of the board of directors of the company, or of a governing director of the company. I further submit that the deceased had also the capacity to control the exercise of the powers of the board of directors of the company. I submit that the deceased had control or must be deemed to have had control of the company as contemplated by the said rule. 55. Now in these pleadings three further facts are alleged : (1) that the deceased was the managing director of the company : (2) that the deceased had authority to exercise all the powers, authorities and discretions expressly vested in the directors generally which has been subsequently clarified in the affidavit of Mr. Gopalakrishnan by referring to article 125 of the articles of association of the company and to the resolution passed by the company on the 23rd June, 1955, which is at exhibit E collectively, and (3) that he had the capacity to exercise the powers of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his shareholdings, the deceased did not have a controlling interest in the company, that is to say, at least more than 50% of the share capital of the company. Therefore, looked at from the point of view of his real control over the company, there was none so far as the deceased was concerned. He could at a general meeting have been always outvoted by the other shareholders and it is well known that the real control of a company lies in the fact that a person or persons hold a majority of the shares in a company and on whether they can control the general meetings of the company. That the deceased had no power to do in the present case. 60. Even so far as the management of the company so vested in the deceased is concerned, two facts may be emphasized, which show, in our opinion, categorically that it was not the deceased who was controlling the board of directors or the management of the company, but that it was really the board of directors or the management of the company, but that it was really the board of directors who were controlling him. These two important facts are : (1) that the operation of the resolution was limited only to one year at a time. Surely, it is a po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Estate Duty Act, 1953, or whether the realisation of the fact that rule 15 was not considered by the Deputy Controller (and here we assume that it was not considered), while making the original assessment, constituted information in the possession of the succeeding Deputy Controller who wishes to reopen the assessment with a view to reassessing the estate of the deceased under section 59(b) as amended. 63. So far as the clauses invoked in favour of the department, mistake apparent from the record or any mistake in the valuation of any property are concerned, we may point out that what must be made to appear is a mistake. In this respect, we have already pointed out that, when making the amendment by the amending Act of 1958, the subject-matter of section 62 was split up and its provisions with reference to rectification of mistakes were relegated to section 61 of the new Act. The present notice has no reference to section 61. The present notice is only under section 59. The provisions of section 61 and the provisions of the old section 62 which refer to mistake are analogous to the provisions of section 35 of the Indian Income-tax Act. Dealing with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 35, we see no reason why a mistake of law which is glaring and obvious cannot be similarly rectifies. 64. In the present case, we are quite unable to find any mistake, much less a mistake which is glaring and obvious or which is plainly and obviously inconsistent with a specific and clear provision of the state . The department, it appears, merely reconsidered the provisions of section 62 read with rule 15 and changed its opinion, though there was no mistake apparent from the record. 65. Having considered the question of the applicability of rule 15, in so far as its alleged non-application could constitute a mistake under the provisions of section 62, we hold that there was no mistake and, therefore, section 62 would not be applicable to the facts and circumstances of the present case. If that be so, then the point we have earlier made that section 59 cannot affect a final and concluded order of assessment made in favour of the petitioner, becomes reinforced. The finality of the order of assessment made on 22nd March, 1960, is not affected by any right existing in favour of the department arising under section 62. Therefore, the provisions of section 59 would not apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeding to reassess the petitioner. Now these provisions we have said are analogous to the provisions of section 34 (1) (b) and though there is no reported decision directly upon the provisions of section 59, for it is very recent, several cases were brought to our notice on the provisions of section 59, for it is very recent, several cases were brought to our notice on the provisions of section 34 (1) (b) as to what constitutes information . In Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, the Supreme Court pointed out that information included not only information as to any fact, but it included information as to the true and correct state of the law. In that case, the information as to the true and correct state of the law was the subsequent decision of the Privy Council overruling a decision of the Patna High Court in Kamakshya Narain Singh v. Commissioner of Income-tax, but whether it is an information on a point of fact or point of law, the Supreme Court pointed out at page 5 : It is clear that two conditions must be satisfied before the Income-tax Officer can act under section 34 (1) (b). He must have information in his possession, which, in the context, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord, and, therefore, it cannot be said that any fresh information was received by the Income-tax Officer as a result of the communication received by him from the Income-tax Officer, A-IV Ward, Bombay... The material question is whether that officer, i.e., who made the assessment on January 27, 1954, knew that the trust had become revocable or not, and on that aspect of the case, there is no finding by either the income-tax authorities or the Tribunal that Income-tax Officer had no knowledge that the trust had become revocable. The mere fact that the Income-tax Officer who reopened the assessment had no knowledge can hardly be of any relevance to sustain reopening of the assessment under section 34 (1) (b). To the same effect are the decisions in Ram Kishan Oil Mills v. Commissioner of Income-tax and Purshotamdas Thakurdas v. Commissioner of Income-tax. Upon these authorities it is clear that the information contemplated in section 59 would, of course include the information both as to fact as well as the information as to law, but whatever be the nature of the information it must be information obtained subsequent to the order of assessment. It is also now settled law that a mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , however, by an order made subsequent to the said original assessment held the company was not a dealer in shares and that this constitutes information within the meaning of the said section 59(b) of the said Act. This was further clarified in the affidavit of Mr. Gopalakrishanan in paragraph 15 of his affidavit where it is state, I repeat that the then My. Controller of Estate Duty, who issued the impugned notice, discovered that the officer making the original assessment (a) had either through error or lack of vigilance had completely overlooked the mandatory provisions of the said rule 15, (b) that the assessing officer had proceeded on the basis that the company was a dealer in shares, whereas the correct position was that the company was an investment company, and therefore, a mistake made by the assessing officer making the original assessment was apparent from the records. I submit that these constitute information within the meaning of section 59(b) of the said Act. 73. Thus two facts or circumstances are alleged as constituting information . One is the fact of overlooking of rule 15. We have already dealt with this ground. The other ground is that the company was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Commissioner of Income-tax v. Rathinasabapathi Mudaliar. All these cases take the view that the information relevant to section 34 (1) (b) need not be wholly extraneous to the record of the assessment itself, as for instance, an error or inadvertence in assessment by which income had escaped assessment, is discovered after the assessment. In Asghar Ali Mohammad Ali v. Commissioner of Income-tax, Chief Justice Desai held that the word 'information' used in the provision covers all kinds of information received from any person whatsoever or in any manner whatsoever or in any manner whatsoever. All that is required is that the Income-tax Officer should learn something, i.e., he should know something which he did not know previously . In fact, the learned Chief Justice went on to doubt whether, when income had in fact escaped assessment and an assessment order had been made under section 34, the order of assessment can be set aside on the mere ground that the Income-tax Officer had no information in his possession to justify the issue the of a notice under section 34. The last mentioned judgment makes no distinction between information and a mere change o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, however, the assessee had sent a letter to the Income-tax Officer stating that the assessee was enclosing the documents relating to the sale and the break-up of the sale price along with the directors' resolution in that behalf. Nevertheless, the assessment was made without reference to the excess sale price. Some time after the assessment was completed, the Income-tax Officer realised that the profits accruing from the sale of the property concerned would fall within the ambit of section 10 (2) (vii) of the Act and had not been assessed and he, therefore, started proceedings under section 34. It was held that it did not appear anywhere in the records in clear terms that the sale transaction had resulted in the assessee obtaining a price for the building, plant and machinery in excess of its written down value, and though that fact could have been ascertained by correlating the various documents on record, working on them, making arithmetical calculations, the mere failure on the part of the Income-tax Officer to correlate the various materials could not entitle the assessee to claim that assessment could not be reopened under section 34 (1) (b). Strong reliance was place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said that the information as to the facts, which are patently or clearly on the record was within the possession of the Income-tax Officer at the time of the original assessment. The same cannot be said of the latter because the correct factual position emerges only after the Income-tax Officer has correlated the various facts and ascertained what the resulting position is. Knowledge secured in the latter case, subsequent to the assessment, in our opinion, is 'information' within the meaning of section 34 (1) (b). 78. In the present case, it can hardly be said that there were any facts which, even if correlated, could have amounted to information in the possession of the Deputy Controller. We have already shown that there were no such facts available to the department. The Malegaon Electricity Co.'s case therefore, is distinguishable upon its own facts. 79. In the view which we take, it is unnecessary to go into the further point urged by Mr. Palkhivala on behalf of the petitioner as to vires of rule 15 What Mr. Palkhivala urged was that, if rule 15 were to justify the assessment of estate duty on the assets basis without providing for it in the tax law, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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