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TMI Blog1967 (11) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act ? " The assessee-firm consisted of four partners, who were all brothers belonging to the Daga family, and three minor sons of one late Narsingdas Daga were also admitted to the benefits of the partnership. This firm was financing another firm known as Bisesar House in which an 8-anna share belonged to one late Shri Manekji Dadabhoy, an outsider, while the remaining 8-anna share belonged to the four Daga brothers. Bisesar House used to pay interest on advances made to it by the assessee-firm and the assessee-firm was assessed in the relevant assessment year 1947-48, on the amount of interest received from Bisesar House, treating it as income accruing to the assessee-firm in the capacity of a partner in Bisesar House. There were th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee-firm. The assessee objected on the ground that all the facts, on the basis of which the Income-tax Officer was reopening the assessment under section 34(1)(b), were already in the possession of the Income-tax Officer when he first made the assessment and, consequently, it could not be held that there was any information in his possession at the time of issuing the notice under section 34(1)(b) in consequence of which he could have reason to believe that income, profits and gains chargeable to income-tax had escaped assessment or were under-assessed or had been made the subject of excessive relief. The Tribunal and the High Court both held that the Income-tax Officer was justified in resorting to section 34(1)(b), because of the info ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Officer started proceedings under section 34(1)(b), he was not acting on information received from the decisions of the Tribunal and the High Court in the assessment proceedings of Bisesar House. It was not a case where the Income-tax Officer on his own initiative and on the material which was before him at the time of the first assessment changed his opinion and came to a different conclusion. The correct conclusion was brought to his notice by the decision of the Tribunal and the High Court and that must be held to be information, as a consequence of which he came to believe that the provisions of section 34(1)(b) were attracted. In a recent decision of this court in Commissioner of Income-tax v. A. Raman & Co., dealing with the corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction to proceed under section 34, unless it can be said that new facts came to his knowledge which were not in his possession at the time when he made the assessment. If the Income-tax Officer had made a mistake with full knowledge of the facts, the mistake could not be rectified by him by issuing a notice under section 34 of the Income-tax Act. That case, however, was concerned with the provisions of section 34 as they stood before the amendment of that section by the Income-tax Amendment Act, 1948 (48 of 1948), which gave the right to an Income-tax Officer to reopen an assessment only if, as a result of definite information, he discovered that income chargeable to tax had escaped assessment or had been under-assessed. All that was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment in 1948, when the words containe required that " in consequence of definite information which has come into his possession, the Income-tax Officer discovers ". It may also be mentioned that that case came up before this court in Bhimraj Pannalal v. Commissioner of Income-tax. In this court, the counsel for the assessee frankly stated that he was not in a position to contend that the proceedings under section 34 were ab initio void. The court further noticed the fact that the High Court had rightly pointed out that there were enough materials on which the Income-tax Officer could initiate proceedings under section 34 for the three assessment years in question. In that case, therefore, the information which came into the possession o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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