TMI Blog1974 (9) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act. The Income-tax Officer also referred to an allowance of entertainment expenses included in general charges where such expenses were allowed; in the view of the Income-tax Officer, since such expenses were not allowable, the income to that extent had escaped assessment. Therefore, he, accordingly, disallowed the amount of Rs. 19,024 on this count. Similarly, for the assessment year 1965-66, the Income-tax Officer initiated proceedings under section 147 to allow interest of Rs. 2,05,651 against dividend income and correspondingly increased the business expenditure of Rs. 1,56,668 on account of entertainment expenses. The assessee, being aggrieved with this order of reassessment, went in appeal to the Appellate Assistant Commissioner, who was of the opinion that at the time of regular assessment, the Income-tax Officer had all the information in his possession on the basis of which he subsequently initiated reassessment proceedings. The particulars of dividends, interest, borrowings, investment, etc., were, according to the Appellate Assistant Commissioner, all before the Income-tax Officer and it was on the full appreciation of all these facts that the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht not have come to the knowledge of the Income-tax Officer. The meaning of the expression, " information " in the context in which it occurs in section 147(b) of the Income-tax Act, 1961, has been considered by the Supreme Court in Commissioner of Income-tax v. A. Raman Co. That was an appeal arising from the decision of this court where this court exercising the jurisdiction under article 226 of the Constitution of India, set aside a notice under section 147(b) of the Income-tax Act. The facts in that case were that the assessee-firm which dealt in mill goods, etc., started business in 1942, and was supplying goods to, among others, two firms S and A, which were Hindu undivided family firms, the respective kartas whereof were the two partners of the assessee-firm. The two Hindu undivided family firms were started in the account year 1958-59. For the assessment years 1959-60 to 1961-62, the assessee-firm, the two Hindu undivided family firms and the partners as individuals were assessed by different Income-tax Officers, but for the assessment year 1962-63, one common officer took up the assessment for all of them and issued three notices on March 26, 1964, to the assessee-firm t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticulars, or as to law relating to a matter bearing on the assessment. If, as a result of information in his possession, the Income-tax Officer has reason to believe that income chargeable to tax had escaped assessment, the Income-tax Officer has jurisdiction to assess or reassess income under section 147(b) of the Income-tax Act, 1961. Information in his possession that income chargeable to tax has escaped assessment furnishes a starting point, for assessing or reassessing income. If he has that information, the Income-tax Officer may commence proceedings for assessment or reassessment. To commence the proceeding for reassessment it is not necessary that on the materials which came to the notice of the Income-tax Officer, the previous order of assessment was vitiated by some error of fact or law." The question naturally which arises from this observation of the court is, what is the external source the information received from which by the Income-tax Officer would invest him with a power and authority to initiate proceedings under section 147. Is it really de hors the record of the case before him or is it one which is, though within the record of the case, not to the knowled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax and of the Kerala High Court in United Mercantile Co. Ltd. v. Commissioner of Income-tax were approved. Rejecting the view that the relevant information on the basis of which the assessments were proposed to be reopened was available to the Sales Tax Officer from the record itself and, therefore, it was not open to the officer concerned to utilise that information for reopening the assessment proceedings. Mr. justice Hegde, speaking for the court, observed in paragraph 11 as under : " This takes us to the next question whether in the instant case the assessing authority can be said to have been satisfied about the escapement of the assessment as a consequence of any information which had come into his possession. From the notices issued in 1955 as well as later on, it is clear that the assessing authorities were satisfied about the escapement of the assessment due from the appellants. But the real question is whether they were so satisfied ' in consequence of any information which had come into their possession '. The assessing authorities knew that the appellants had neither submitted their returns nor treasury challans in proof of the payment of the tax due from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Commissioner, the Income-tax Officer has not come into possession of any external information to justify his action under section 147. The view of the Appellate Assistant Commissioner that in order that the Income-tax Officer can initiate proceedings under section 147, he must have in his possession any external information is not wholly correct. The information which can be the basis of initiating action under section 147 of the Income-tax Act, 1961, corresponding to section 34(1)(b) of the Indian Income-tax Act, 1922, may be one which the Income-tax Officer may derive from the record itself, and which he might not have observed or to which he might not have applied his mind at the time of the original assessment. It may be also the information which the Income-tax Officer may receive from outside agency. That information may be, as has been often said, as to a fact or as to the position of law : vide Kasturbhai Lalbhai v. R. K. Malhotra, Income-tax Officer . As has been observed by the Kerala High Court in United Mercantile Co. Ltd. v. Commissioner of Income-tax, " information " means to impart knowledge. A detail, available to the Income-tax Officer in the papers file ..... X X X X Extracts X X X X X X X X Extracts X X X X
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