TMI Blog1977 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... upied properties. The respondent claimed that a sum of Rs. 4,052 being the municipal taxes be deducted in determining the annual valuation of the properties under section 23(2) of the Income-tax Act. The Income-tax Officer allowed the claim. The order of assessment was made by the Income-tax Officer on March 14, 1966. Subsequently, after a lapse of over 3 years, the Income-tax Officer by a letter dated July 15, 1969, called upon the respondent- assessee to show cause why the amount of municipal taxes allowed as deduction should not be added back on the ground that it was wrongly allowed. The respondent on July 18, 1969, replied that the Income-tax Officer was not competent to reopen the assessment under section 147 and that the municipal taxes were validly allowed as a deduction in computing the income from self-occupied properties. Not satisfied with the explanation, the Income-tax Officer issued a notice dated September 12, 1969, to the respondent under section 148 stating that whereas he had reason to believe that the income of the respondent chargeable to tax for the assessment year 1965-66 had escaped assessment within the meaning of section 147, he proposed to reassess the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in his 'possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may....... assess or reassess such income...... for the assessment year concerned ......... Clause (b) of section 147 enables the Income-tax Officer to assess or reassess the income if in consequence of information in his possession he has reason to believe that income chargeable to tax has escaped assessment. Two conditions are necessary for invoking the sub-section : (1) the officer should receive information after the original assessment ; (2) in consequence of such information he should have reason to believe that income has escaped assessment. The " information " may be of facts or of law. The " information " of a fact may be from external source. The fact that the Income-tax Officer with diligence could have obtained the information during the previous assessment on a proper investigation of the materials on the record or the facts disclosed thereby, would not make it any the less information if the fact was not in fact obtained and came to his knowledge only subsequently. So also the fact that on a research as to the state of law the Income-tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the interest was not received by the appellant in the capacity of a partner but in its capacity of financier. In the circumstances, this court held that the information received from the decision of the Tribunal and the High Court in assessment proceedings would be " information ". In Assistant Controller of Estate Duty v. Nawab Sir Mir Osman Ali Khan Bahadur [1969] 72 ITR 376 (SC), this court was considering the question whether the opinion of the Central Board of Revenue would amount to "information " within section 59(b) of the Estate Duty Act. After citing the decision in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax (1959] 35 ITR 1 (SC) under section 34(1)(b) of the Income-tax Act, this court reiterated the view taken in that case and observed that the opinion expressed by the Board of Revenue as to valuation was clearly " information ". The authorities cited above make it clear that a subsequent decision of the Privy Council (Maharaj Kumar Kamal Singh v. Commissioner of Income- tax [1959] 35 ITR 1 (SC)), the Income-tax Appellate Tribunal (R. B. Bansilal Abirchand Firm v. Commissioner of Income-tax [ 1968] 70 ITR 74 (SC)) and the opinion of the Central Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now be referred to. In Commissioner of Income-tax v. H. H. Smt. Chand Kanwarji [1972] 84 ITR 584 (Delhi) the Delhi High Court held that the scrutiny note of the revenue audit and the letter of the Inspecting Assistant Commissioner constituted " information " within the meaning of section 147(b) from an " external source " and the assessments were, therefore, valid. The Income-tax Officer treated the income derived by way of interest from bank deposits as " earned income " and accepted the assessee's claim of expenditure on the salary paid to her daughter-in- law. Subsequently, the revenue audit staff working under the Comptroller and Auditor-General of India, while scrutinising these assessments, brought to the notice of the department that the Income-tax Officer had wrongly treated the " interest income " as " business income " and also that the Income-tax Officer had wrongly allowed the assessee's claim with regard to the salary paid to her daughter-in-law. The Income-tax Officer acted upon this note and reopened the original assessment. A Bench of the Delhi High Court, relying on the reasoning of this court in Assistant Controller of Estate Duty v. Nawab Sir Mir Osman Ali Khan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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