TMI Blog1971 (8) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... he questions of law referred are : " 1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the two firms were different and were not to be treated as one firm for the purpose of income-tax assessment ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the Income-tax Officer was not justified in reopening the proceedings under section 147(b) ?" The assessment year is 1960-61. The accounting period is the 12 months ended with December 31, 1959. The assessee is a registered firm constituted under a partnership deed dated July 15, 1959 (annexure B). The assessee carried on business till the end of the accounting year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner and contended that on the death of Kelukutty the firm stood dissolved, that the business carried on by that firm ceased to exist, that a new firm was constituted on July 15, 1959, and so the Income-tax Officer was not justified in clubbing together the income of the two periods. The Appellate Assistant Commissioner rejected the contention holding that there had been no dissolution of the old firm, but that the firm was only reconstituted under the deed dated July 15, 1959. He also held that no business was carried on from July 9, 1959, to July 14, 1959, but that would not amount to discontinuance of the old business. The assessee filed an appeal from the order to the Appellate, Tribunal and reiterated its contentions. The conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under the deed dated July 15, 1959. A mere change in the constitution of the partnership does not necessarily bring into existence any new assessable unit or distinct assessable entity. In other words, a mere change in the personnel of the partners and in their respective shares, without a dissolution of the firm or division of its assets and liabilities, would not be sufficient to bring into being a totally different assessable unit. Since there was no dissolution of the partnership on the death of Kelukutty, but only a reconstitution of the firm, the assessment on the reconstituted firm must be for the entire period from January 1, 1959, to December 31, 1959. The second question is whether the Income-tax Officer has jurisdiction to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. If either condition is not satisfied the action would be without jurisdiction. Commenting on the second condition Shah J., speaking for the Supreme Court in Commissioner of Income-tax v. A. Raman Co., said : " Jurisdiction of the Income-tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information must, it is true, have come into the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke itself is not extraneous to the record and the informant gathered the information from the record, the immediate source of information to the Income-tax Officer in such circumstances is in one sense extraneous to the record. It is difficult to accept the position that while what is seen by another in the record is 'information' what is seen by the Income-tax Officer himself is not 'information' to him. In the latter case he just informs himself. It 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an appellate authority, for instance, under the Income-tax Act on the question as to which assessable entity is chargeable in respect of a particular income is an information on the strength of which the Income-tax Officer can act. The note put up by the audit to the effect that the assessment ought to have been made on the reconstituted firm for the entire income of the two periods, and, therefore, the Income-tax Officer committed an error, was instruction or knowledge derived from an external source and so it would constitute "information" within the meaning of the term in section 147(b). It was only when the audit pointed out this circumstance that the Income-tax Officer came to realise the mistake he has committed. He committed the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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