TMI Blog1997 (7) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... nly half of the estate of the deceased. The late Joginder Singh was the karta and sole surviving male coparcener of his Hindu undivided family (HUF). He was survived by his widow and a married daughter. He had left behind 19 acres of agricultural land valued at Rs. 3,12,645 and foodgrains, milch cattle, agricultural implements, etc., valued at Rs. 10,000. The value of half share of the deceased in the agricultural land, milch cattle, etc., was taken at Rs. 1,61,323 on the ground that the deceased was entitled to only half of the estate and was actually not an absolute owner of the property belonging to the Hindu undivided family. The Assistant Controller of Estate Duty, on an audit objection, reopened the case subsequently by issuing a notice to the accountable person under section 59 of the Act. A view was taken that the deceased, being the sole surviving male coparcener, was competent to dispose of the entire Hindu undivided family property in whatever manner he liked. The entire property thus belonged to him as an individual as well as karta of the Hindu undivided family. The Assistant Controller then proceeded to assess the entire value of the Hindu undivided family property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said to have any reason to believe, on the basis of the information, that any property chargeable to estate duty has escaped assessment. Since the validity of the audit note was under challenge, this court directed the Department to produce the original order of assessment framed by the Assistant Controller on February 19, 1983, and also the audit note recorded by the Comptroller and Auditor-General of India. An attested copy of the assessment framed by the Assistant Controller was thereupon placed on the record by the Department. Regarding the second, namely, the audit note recorded by the Comptroller and Auditor-General of India, it was reported that the original audit note was not available in the records of the office. However, counsel for the Department placed on record an extract of the audit note recorded by the Comptroller and Auditor-General of India, which had been supplied to him by the Department from its file. Another opportunity was afforded to the Department to produce the original file from which the note of the Comptroller and Auditor-General of India, had been extracted for the consideration of this court. The original audit note was, however, not available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the basic requirements to assume jurisdiction for reassessment under section 59 were satisfied. A question about the validity of the reopening of assessment under section 147(b) of the Income-tax Act, 1961, was examined by the Allahabad High Court in Sterling Machine Tools v. CIT [1980] 122 ITR 926. In that case, the assessee had been assessed for the assessment year 1965-66. During the course of assessment for the next year, the Income-tax Officer found that on enquiry by the Vigilance Bureau and the board of experts, the actual cost of a centering machine was Rs. 7,331, whereas the assessee had claimed the same at Rs. 9,432. The partner of the firm was confronted with that report and, thereupon the partner gave a note in writing to the Income-tax Officer, stating that the cost was much more and that he was willing to have the income being worked out on the basis. It was held that the submission was the best evidence and did constitute "information" within the meaning of section 147(b) of the Income-tax Act, 1961. A question of reopening of assessment under section 59(b) of the Act was examined by the Madras High Court in V. Pugalagiri v. Asst. CED [1981] 132 ITR 847. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. ITO [1984] 146 ITR 437, has also taken a view that the word "information" meant not only facts or factual material but included "information" as to the true and correct state of the law. The information as to law must be from a formal source, namely, a competent Legislature or a competent judicial or quasi-judicial authority. The Calcutta High Court in Dey's Medical Stores Mfg. (P.) Ltd. v. CIT [1986] 162 ITR 630, has upheld the reopening of assessment proceedings under section 147(b) of the Income-tax Act, 1961, where certain facts had not been brought to the notice of the Income-tax Officer in the course of the assessment proceedings. The fact came to the knowledge of the Income-tax Officer only in the course of the assessment for the subsequent year. It was not a case of reconsideration of the same material already on record. The Patna High Court in CIT v. Soh Kisan Cold Storage [1994] 209 ITR 700, has observed that "information" need not necessarily spring from a source external or extraneous to the original record. However, having second thoughts or a mere change of opinion by the prescribed authority on the same set of facts and materials on the record would not consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the contents of the report as "information" in his possession for the purpose of section 147(b) of the Income-tax Act, 1961, and reassessed the income on that basis. It was held that the opinion of the audit party on a point of law could not be regarded as "information" enabling the Income-tax Officer to initiate reassessment proceedings under section 147(b). The Income-tax Officer had, when he made the original assessment, considered the provisions of sections 9 and 10 of the Indian Income-tax Act, 1922. Any different view taken by him afterwards on the application of those provisions would amount to a change of opinion on material already considered by him. It was further observed as under : "But although an audit party does not possess the power to so pronounce on the law, it nevertheless may draw the attention of the Income-tax Officer to it. Law is one thing, and its communication another. If the distinction between the source of the law and the communicator of the law is carefully maintained, the confusion which often results in applying section 147(b) may be avoided. While the law may be enacted or laid down only by a person or body with authority in that behalf, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the law mentioned in the audit note. In the light of this observation of the Supreme Court, the audit note in the present case, does not constitute an "information". As has been seen earlier, the Assistant Controller had initially accepted the audit objection but, later on, he took the view that the objection was not acceptable. However, the Inspecting Assistant Commissioner insisted upon the reopening of the assessment and then the Assistant Controller proceeded to reopen the case. In these circumstances, the reopening of the assessment is found to be not based on noticing a provision of law but on an advice/instruction from the audit party/Inspecting Assistant Commissioner. The Assistant Controller had, in the original assessment order, discussed the question of share of the deceased in the agricultural land. Thereafter, one half share was treated to belong to the deceased and the value of that share was brought under the levy of estate duty. Therefore, the Assistant Controller had taken notice of the right of the deceased in the Hindu undivided family property and a change of opinion would not enable the Assistant Controller to reopen the assessment. The audit note, as al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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