TMI Blog1972 (7) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner had not escaped assessment. In answer to the rule nisi, affidavit-in-opposition has been filed by one Mandayam Nayaka Krishnaswamy, Income-tax Officer, " I " Ward, Companies District IV, Calcutta. In paragraph 12 of the said affidavit he has stated as follows : " (a) At the time of original assessment of the petitioner for the assessment year 1969-70 along with various papers and documents produced by and/or on behalf of the petitioner before the assessing Income-tax Officer was a document described as 'depreciation schedule' and a document described as 'interest and discount account'. (b) The said depreciation schedule contained various items of properties and/or assets as well as plant and machinery, both new and second-hand. One of such items in the said depreciation schedule was a second-hand centrifugal pump valued at Rs. 3,500. Development rebate was allowed in the original assessment also on this second-hand centrifugal pump and as such development rebate was allowed in excess of the amount allowable to the petitioner. (c) In the said details of interest and discount account various items of interest and discount alleged to have been paid by the petitioner were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action under clause (b) of section 147 of the Income-tax Act, 1961. The expression " information " under section 34 of the Indian Income-tax Act, 1922, and section 147 of Income-tax Act, 1961, has been the subject of judicial scrutiny and interpretation in several decisions. In the case of Commissioner of Income-tax v. A. Raman. and Co., the Supreme Court observed that the expression " information " in the context in which it occurred in section 147(b) of the Income-tax Act, 1961, must mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. At page 16 of the report the Supreme Court further observed that the jurisdiction of the Income-tax Officer to reassess income arose if he had in consequence of information in his possession reason to believe that income chargeable to tax had escaped assessment. That information must, it was true, 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 disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt found that if the facts had been properly considered at the time of the first assessment, the Income-tax Officer might have discovered the correct position and might have come to the conclusion that the assessee-firm in that case was not receiving interest as a partner, but the circumstance that such a decision could have been arrived at did not mean that, at the time when the Income-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. The Supreme Court further held that that 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 had changed his opinion and come to a different conclusion. The Supreme Court found the correct conclusion was brought to the notice of the Income-tax Officer by the decision of the Tribunal and the High Court and that was information as a consequence of which he came to believe that the provisions of section 34(1)(b) were attracted. In those circumstances it was held that the Income-tax Officer had, therefore, jurisdicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one decision of the Delhi High Court, namely, the decision in the case of Commissioner of Income-tax v. H. H. Smt. Chand Kanwarji. There what had happened was that for the assessment years 1960-61 and 1961-62 the original assessments of the assessee had been made by the Income-tax Officer treating the assessee's income from bank deposits as earned income and accepting her claim for deduction of salary paid to her daughter-in-law as expenditure. Thereafter, 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 had wrongly allowed the assessee's claim with regard to the salary paid to her daughter-in-law. Acting upon the scrutiny note of the Revenue Audit, the Inspecting Assistant Commissioner wrote to the Income-tax Officer to rectify the defects by reopening the assessment under section 147(b) of the Income-tax Act, 1961. Thereupon, the Income-tax Officer issued notices under section 147(b) and made reassessments. It was held by the Division Bench of the Delhi High Court that the scrut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no knowledge derived from any external source ; the knowledge was sought to be derived from a new look at the old facts of the assessment. That would be mere change of opinion and not acting on " information " in terms of the section. In the aforesaid view of the matter the conditions precedent for the issue of notice under section 148 of the Income-tax Act have not been fulfilled. The notice is, therefore, without jurisdiction and the same is hereby quashed and set aside and the respondents are restrained from giving any effect to the same. Let writs in the nature of certiorari and mandamus issue accordingly. If any assessment has been made pursuant to the said notice, the same is quashed and set aside and the respondents are restrained from proceeding in pursuance thereof. Let writs in the nature of certiorari and mandamus issue accordingly. This, however, will not prevent the respondents from proceeding afresh in respect of the self-same year under section 148 of the Income-tax Act, 1961, either under clause (a) of section 147 or if there is any fresh instruction under clause (b) of section 147 of the Act. The rule is made absolute to the extent indicated above. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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