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TMI Blog1971 (7) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,394 under section 23(3) of the Indian Income-tax Act, 1922 (hereinafter referred to as the old Act) Similarly, the original assessment on the assessee for the assessment year 1961-62 was completed on 3, 1963 (sic) on a total income of Rs. 55,930 under section 143(3) of the new Act. For these two assessments, the income derived by the assessee by way of interest from bank deposits was treated as " earned income " and the Income-tax Officer had also 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. Acting upon this scrutiny note of the revenue audit, the Inspecting Assistant Commissioner wrote to the Income-tax Officer asking him to rectify these defects by reopening the assessments under section 147(b) of the new Act. The Income-tax Officer, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready stated to this court. Before answering the question, it would be necessary to state the scope of the question referred to us. From the order of the Appellate Assistant Commissioner it would appear that the only contention which was urged before him on behalf of the assessee and which was in the nature of a preliminary objection was that the reopening of the original assessments under section 147(b) of the hew Act was illegal in view of the fact that the entire material relevant to the two assessments was before the Income-tax Officer making the original assessments, that the latter had applied his mind to the material and duly considered that material and had come to certain conclusions which were incorporated in the assessment orders and that there was no new information which had come to his notice subsequently on the basis of which action under section 147(b) of the new Act could be taken. The learned Appellate Assistant Commissioner considered only this preliminary objection and decided it in favour of the assessee and cancelled the reassessments under section 147(b) of the new Act. He did not go into the merits of the assessee's appeals and did not record any findings o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , because the question before us lies within an arrow compass. It is admitted that all the relevant facts regarding the two questions, namely, interest income and salary paid to the assessee's daughter-in-law, were available before the Income-tax Officer at the time of the original assessment and that it was only on a consideration of these facts that the Income-tax Officer had come to the conclusion that the interest income was in the nature of earned income and also that the salary paid by the assessee to her daughter-in-law was in the nature of allowable expenditure. The Income-tax Officer, however, on a consideration of the same facts subsequently, came to a different conclusion. In a way, this may amount to a change of opinion on the part of the Incometax Officer. Does such a change of opinion under the circumstances of this case entitle the Income-tax Officer to reopen the original assessments under section 147(b) of the new Act? There can be no doubt that even a change of opinion under certain circumstances would entitle the Income-tax Officer to reopen the assessments under section 147(b) of the new Act. Change of opinion based on instruction or knowledge obtained by the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in appeal under the Estate Duty Act, the Supreme Court has not held that the view expressed by the Central Board of Revenue was information only because the view was expressed in an appeal under the Estate Duty Act. The opinion of the Central Board of Revenue was held to be information from an external source, because the Income-tax Officer had not acted on his own initiative or on a change of his own opinion but because the correct position was brought to his notice by the decision of the Central Board of Revenue. In R. B. Bansilal Abirchand Firm v. Commissioner of Income-tax, the Supreme Court has held that the Income tax Officer had not acted on his own initiative or on the change of his own opinion when be took proceedings under section 34(1)(b) of the old Act and that the correct position had been 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) of the old Act were attracted. In our view, the emphasis laid by the Supreme Court in these two cases does not appear to be on the character of the external source as a court or a tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of " external source " ? The Comptroller and Auditor. General of India has the statutory right to scrutinise the proceedings of all departments of the Government including the income-tax department and to point out any defects or mistakes in such proceedings which adversely affect the revenues of the State. It is in the exercise of this statutory power that the Comptroller and Auditor-General of India, acting through his revenue audit staff, pointed out what he considered to be the errors committed by the Income-tax Officer in the original assessments. On the basis of this scrutiny note by the revenue audit, the Inspecting Assistant Commissioner, who had the authority under the Income-tax Act to supervise the work of the Income-tax Officer, including the assessments made by them, brought these errors pointed out by the revenue staff to the notice of the Income-tax Officer. It was only on the basis of the scrutiny note and the letter of the Inspecting Assistant Commissioner that the Income-tax Officer came to the conclusion that the interest income had been wrongly treated as earned income and that the full claim, of the assessee regarding the salary paid to her daughter-in-law had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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