TMI Blog1971 (8) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... was shown in the balance-sheet and profit and loss account of the company for the year 1958 at pound 11,108. As against this, the Income-tax Officer had to allow the assessee a proportionate part of the overhead expenses. The total overhead expenses of the company were pound 19,953. As the company was carrying on business not only in India but in other places, the proportionate overhead expenses for its business in India had to be worked out. The total sales of tobacco were of the value of pound 5,34,031 and the sales of Indian tobacco were for pound 4,48,590. Hence the overhead expenses were worked out to be 4,48,590/5,34,031 x 19,953 = 16,760. As the profit was pound 11,108, the loss came to pound 5,652 (pound 16,760-11,108). One-half of this loss, namely, pound 2,826 of Rs. 37,680, was taken to be adjusted loss being the percentage attributable to the purchasing operations in India. The same basis was adopted for the assessment year 1960-61 and after setting off the net income against the previous loss, the total loss was found to be Rs. 96,482. The assessments for the two years were made accordingly. Subsequently, in the course of the assessment proceedings for 1962-63, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 19, 1964, for both the years, but under protest contending that the two notices, one on the representative and the other on the person cannot be made. The Income-tax Officer overruled these objections and completed the reassessment on the non-resident assessee direct revising the computation on the lines already referred to above. The assessee preferred appeals to the Appellate Assistant Commissioner. It was contended before him, firstly, that as the original assessment had been completed on the agents, the reassessment could not be made directly on the assessee. It was also contended that as all the necessary material, including the commission earned, had been furnished to the Income-tax Officer at the time of the original assessment and there was no fresh information in consequence of which the Income-tax Officer had reason to believe that the income had escaped assessment he could not reopen the assessment under section 147(b) of the Income-tax Act. It may be noticed that this objection was not raised before the Income-tax Officer by the assessee and, therefore, he had no occasion to deal with it. The Appellate Assistant Commissioner rejected both the contentions. As the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uccessor had merely changed the method of computation. In the circumstances, they held that the Income-tax Officer could not be allowed to change his mind and reopen and rake up what is purported to be a settled assessment. We are, however, not inclined to agree that this is a case of merely a change of opinion on the part of the Income-tax Officer. From the facts set out earlier, it is clear that the Income-tax Officer had arrived at the proportionate overhead expenses which had to be deducted under the impression that the overhead expenses were attributable only to the business of the company consisting of purchase and sale of tobacco. Later on, the returns submitted for the year 1962-63 by the assessee made it clear that the overhead expenses shown in the balance-sheet and profit and loss account were not only attributable to their business of purchase and sale of tobacco, but also to their business as commission agents. No doubt, those returns and the accounts submitted in connection therewith related to the particular year 1962-63, but from this information it was obvious to the Income-tax Officer that the overhead expenses for the years in question were also attributable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. They further held that the fact that the information in consequence of which proceedings for reassessment were intended to be started could have been gathered by the Income-tax Officer in charge of the assessment in the previous years is wholly irrelevant. It is sufficient if the information has come into possession of the Income-tax Officer after the previous assessment. But even if information be such that it could have been obtained during the previous assesement from an investigation of the materials on the record, or the facts disclosed thereby, or from other enquiry but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. In this case also it was sought to be argued that the Income-tax Officer could have, by applying due diligence, come to know, even at the stage of the original assessment, that the overhead expenses shown by the assessee were attributable to the entire business including their business as commission agents and not merely to their business of sale and purchase and, therefore, it could not be said that he received that information subsequently. This contention has to be negatived, in view of the above observations of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act of 1922 and section 147(b) of the Act of 1961. The Supreme Court observed : " When the expression 'information' is understood in the sense of instruction or knowledge derived from an external source concerning facts or particulars or as to law relating to a matter bearing on the assessment, it is difficult to see how determination of valuation for the purpose of assessment of estate duty would not squarely fall within the meaning of the expression 'information' in the context in which it occurs in section 59 of the Act. " This court had to consider a similar question in V. S. L. Narasimha Rao v. Assistant Controller of Estate Duty. That case also related to section 59 of the Estate Duty Act. The two pieces of information which led to the reassessment were : (1) deposition of the deceased in which he had given the details of cost incurred in constructing two houses, and (2) the order of the Appellate Assistant Commissioner made subsequently dealing with the question in regard to the property. It was held that these two pieces of information came within section 59(b) of the Act. It was observed that the test is to see whether the Controller is really acting in pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o deem the investment and the income derived therefrom as that of the petitioner which had escaped assessment. We do not think that this decision is of any assistance to the petitioner, as in that case the court held that there was no information apart from the petitioner's wife's own return, but that information was to the effect that the house was constructed out of her own income, which did not entitle the officer to reopen the assessment of the husband. Another decision that was relied on is that of the Gujarat High Court in Kasturbhai Lalbhai v. R. K. Malhotra, Income-tax Officer. In that case it was held that " information " as to the correct law derived from the audit department which audits the work of the income-tax department is not " information " as it is not competent to declare the correct state of law. The High Court observed that the " information " must mean " instruction " or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment ". Mere change of opinion on the part of the Income-tax Officer cannot constitute information. If the information is as to any fact, it may be received fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be information in his possession within the meaning of section 34. In such cases of obvious mistakes apparent on the face of the record of assessment, that record itself can be a source of information, if that information leads to a discovery or belief that there has been an escape of assessment or under-assessment. " This extreme view, in our opinion, runs somewhat contrary to the view expressed by the Supreme Court and other High Courts that the " information " must be from an extraneous source. We are anyhow not concerned with that question in this case, as we have held that the " information " which the Income-tax Officer got was not merely from the record relating to the assessment which he sought to re-open, but from the record of the subsequent years. In a later decision, namely, Sankaralinga Nadar v. Commissioner of Income-tax, it was held that it was well settled that an action under section 34 of the Act cannot be justified on the ground of a mere change of opinion regarding chargeability of income on the part of the reassessing officer different from his own previous opinion or from that of his predecessor in office. It was observed : " There can be no doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re change of opinion. We, therefore, answer the first question of the Tribunal, that the Tribunal was not right in stating that the reassessment proceedings were not justified. Question No. 2 : The contention of the assessee is that the original assessment for each of the years having been made on the statutory agent, the reassessment proceedings could not be initiated against the assessee direct. Under section 161 read with section 163 the statutory agent of a nonresident is a representative assessee within the meaning of section 160 and he is subject to the same duties, responsibilities and liabilities as if the income in respect of which he is a representative, were income received by or accruing to or in favour of him beneficially and shall be liable to assessment in his own name in respect of that income. Section 160(2) provides that every representative assessee shall be deemed to be an assessee for the purpose of the Act and the second part of section 161(1) says that any assessment shall be deemed to have been made in his representative capacity only and the tax shall be levied upon and recovered from him in like manner and to the same extent as it would be leviabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 166 states that nothing in the foregoing sections in the chapter shall prevent either the direct assessment of the person on whose behalf or for whose benefit income therein referred to is receivable, or the recovery from such person of the tax payable in respect of such income. It follows from a reading of all these sections together that, at the time of reassessment, again there is an option on the part of the department either to proceed against the agent or against the principal. The department, therefore, in this case chose to initiate reassessment proceedings against the principal. It is true that the remedy against the agent became barred on the lapse of two years by reason of section 149(3), but that does not in any way prevent the authorities from initiating proceedings for reassessment against the principal. No decision dealing with this question has been brought to our notice. Sri Dasaratharama Reddy, however, drew our attention to the decision in Commissioner of Income-tax v. Murlidhar Jhawar and Purna Ginning and Pressing Factory, in which it was held that the partners of an unregistered firm might be assessed individually or they might be assessed collectively in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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