TMI Blog1967 (2) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... 57 is concerned, the Income-tax Officer accepted the assessee's contention and made an order on November 14, 1957, determining the income as "nil". Similarly, the Income-tax Officer accepted the assessee's contention with respect to the other three years also, namely, 1957-58, 1958-59 and 1959-60, and so far as these three years are concerned, he passed the following orders for each of the years. "Returns filed. The assessee has no business income and income from property during the year. The case is filed." Subsequently, on February 17, 1961, the Income-tax Officer issued separate notices for each of the aforesaid four years purporting to be under section 34(1)(b) of the Income-tax Act, 1922, proposing to reassess the income for the respective years on the ground that he had reason to believe that the same had been under-assessed. In the reassessment proceedings, which were taken up in pursuance of the aforesaid notices under section 34(1)(b) of the Income-tax Act, the only item of income which was taken into consideration, by the Income-tax Officer was the income derived by the assessee under the head "Guest charges". It was contended on behalf of the assessee that these char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal took up the appeal arising out of the assessment order relating to 1956-57 separately from the other three appeals, which arose out of the assessment orders relating to the remaining three years, that is 1957-58, 1958-59 and 1959-60. In the appeal arising out of the assessment year 1956-57, two contentions were raised on behalf of the assessee before the Tribunal, namely, that the reassessment under section 34(1)(b) was illegal and void and that the direction given by the Appellate Assistant Commissioner to the Income-tax Officer was ultra vires and ineffective. The second contention was negatived by the Tribunal, but so far as the first contention was concerned, the Tribunal referred to the decision of the Supreme Court in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, and held that "as the Income-tax Officer has failed to record that he had information subsequent to the making of the original assessment order which has led him to believe that this income had escaped assessment, the provisions of section 34(1)(b) had not been properly invoked and the reassessment proceedings commenced thereon were not valid." The appeal was accordingly allowed and the reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal was justified in holding that the reassessments for the years 1957-58, 1958-59 and 1959-60 under section 34 were invalid on the ground that the Income-tax Officer had passed no orders of assessment on the original returns ? 2. Whether, on the facts and circumstances of these cases, the Tribunal erred in holding that the provisions of section 34(1)(b) were not properly invoked and the reassessment proceedings for the assessment years 1957-58, 1958-59 and 1959-60 were invalid ?" It would thus appear that question No. 2, referred to in Cases Nos. 11, 14 and 15 is the same as the only question referred to in Case No. 10 and hence, this question is first taken up for consideration. It appears that section 34(1) of the Income-tax Act, 1922, has undergone amendments from time to time and it will be convenient to quote here the relevant portion of this section as it stood after the amendment as made by section 18 of the Finance Act, 1956, as we are concerned with the section as it stood after this amendment. "34. Income escaping assessment.--(1) If-- (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, however, provided that the Income-tax Officer shall not issue a notice under sub-section (1), that is, in cases covered by both clauses (a) and (b) unless he had recorded his reasons for doing so and the Central Board of Revenue was satisfied on such reasons recorded that it was a fit one for issue of such notice. It is important to note the above distinction between the proviso as it stood prior to the amendment made by the Finance Act, 1956, and the same as incorporated by this amendment. Turning now to the facts of the present case, it may be mentioned at the outset that it was conceded before us on behalf of the opposite party that the words "escaped assessment", as used in section 34(1)(b) include cases in which there has been no assessment of a particular income owing to inadvertence or oversight or other lacuna attributable to the assessing authority, although the return was duly filed by the assessee and there was no suppression of any facts by him. As held, however, by the Supreme Court in the case of Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, two conditions must be satisfied before the Income-tax Officer can act under section 34(1)(b). "He must have i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regardless of the source and manner of acquisition. Our attention was not drawn to any decision of the Patna High Court on this particular point. It is, however, not necessary to decide this particular question in the present case and it may only be pointed out that there may be various sources from which the Income-tax Officer may obtain the information, as referred to in section 34(1)(b). It may also be added that if, at the time of the passing of the original assessment order, the Income-tax Officer had duly taken into consideration all the relevant materials including the relevant legal aspects, a subsequent change only in his view as to the inference to be drawn from those materials cannot be considered as subsequent information, as this will merely amount to a change of opinion. The question as to whether the Income-tax Officer had jurisdiction to act under section 34(1)(b) in the present cases on the ground of absence of any subsequent information, as required under the above sub-clause, does not, however, arise for decision in the present references. As would appear from the points of reference, the question to be considered is whether, on the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either of the two clauses and this was subject to the further condition that the Central Board of Revenue or the Commissioner, as the case may be, was to be satisfied on such reasons recorded that it was a fit case for issue of such notice. It is thus apparent that, prior to the amendment, the Income-tax Officer had to record in writing his reasons for holding that notice under section 34(1) ought to be issued in cases covered by clause (a) as well as clause (b) and this necessarily involved recording by him the information on the basis of which he held the belief regarding the escape of income from assessment, etc. The amendment, however, as made in 1956, dispensed with this requirement in cases covered by clause (b) of section 34(1) while maintaining the same in connection with cases covered by clause (a). It is quite apparent that, in view of this change in the law, it was not necessary in the present cases for the Income-tax Officer to record any such reason for issuing the notices in question, as the same were issued under clause (b) and not under clause (a). It was, however, contended by Mr. Rajeshwari Prasad, appearing on behalf of the assessee, that even if it was not ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ground that there was no material on the record to show that the Income-tax Officer had any information as required under section 34(1)(b) but has based its finding merely on the ground that the Income-tax Officer had failed to record that he had the information as required and, as such, the provisions of section 34(1)(b) have not been properly invoked. It is not possible to accept the contention of Mr. Rajeshwari Prasad that this finding of the Tribunal is tantamount to a finding that there are no materials on the record to show that the Income-tax Officer had any subsequent information, as required under section 34(1)(b). Hence, in view of our finding that it was not incumbent upon the Income-tax Officer to record that he had information subsequent to the making of the original order which led him to believe that the income had escaped assessment, it follows that the Tribunal erred in holding that the provisions of section 34(1)(b) were not properly invoked and reassessment proceedings for the assessment years in question were invalid. It may be added that the facts as mentioned in the statements of case as recorded by the Tribunal in making these references and as stated in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate order of the Tribunal, a similar point arose in the case of Esthuri Aswathiah v. Income-tax Officer, in which the Income-tax Officer had passed an order "No proceeding" and it was held by the Supreme Court that such an order in the circumstances of the case meant that the Income-tax Officer accepted the return and assessed the income as "nil". In another case, namely, Commissioner of Income-tax v. Bidhu Bhusan Sarkar, an order passed by an Additional Income-tax Officer to the effect that the case is filed came up for consideration and it was held by the Supreme Court that on the facts of the case the intention of the Additional Income-tax Officer could have, in making the order that the case be filed, been that the proceedings should no longer remain in existence as being unnecessary and he clearly intended that they should be terminated as dropped and, in the circumstances, the word "filed" has to be interpreted as equivalent to "disposed of". In the present case, it is evident from what has been stated above that the Income-tax Officer had accepted the contention of the assessee that his income was nil and had thereon passed the aforesaid order to the effect that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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