TMI Blog1996 (1) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for the assessment year 1974-75 was made on October 30, 1975, by the Income-tax Officer, A-Ward, Katni. As against returned income of Rs. 38,680, the income was assessed at Rs. 39,830 after making some sundry additions. Earlier, the jurisdiction over the assessee's case was with the Income-tax Officer, C-Ward, Katni, who, on receipt of some information, had authorised survey under section 133A of the Act by the inspectors deputed by him on January 15, 1974, who had found some loose sheets pertaining to the period October 28, 1973, to January 15, 1974 (falling in Diwali year 1973-74 relevant for the assessment year 1975-76). The inspectors had prepared a list of the said loose sheets and had also prepared copies of important loose sheets, and called the Income-tax Officer, C-Ward, Katni, to the shop as they apprehended that the said loose sheets would be snatched from them by the partners of the assessee-firm. The Income-tax Officer, C-Ward, Katni, had then visited the shop and recorded the statement of one of the partners, namely, Badri Prasad. The inventory prepared by the two inspectors was also signed by the two partners of the assessee-firm. Thereafter, the partners of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the loose sheets were genuinely found in the assessee's premises and the income of the assessee assessable under section 69 of the Act was Rs. 2 lakhs. Aggrieved by this order, the assessee moved an application for reference before the Tribunal and, accordingly, the Tribunal has referred the aforesaid questions for answer of this court. We have heard learned counsel for the parties and perused the records. Shri Shrivastava, learned counsel for the assessee, has strenuously urged before us that reopening of the assessment under section 147(b) is. without jurisdiction as the assessing authority had no jurisdiction to reopen the assessment already made on the changed opinion. Therefore, learned counsel submits that the assessment could not be reopened on changed opinion. In support of that contention, learned counsel has invited our attention to Ram Kishan Oil Mills v. CIT [1965] 56 ITR 186 (MP); Kamalchand v. ITO [1981] 128 ITR 290 (MP) ; Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC) and Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 (SC). As against this, Shri Tankha, learned counsel for the Revenue, has invited our attention to CIT v. A. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon that and passed the assessment order that with the same material the assessment cannot be reopened on account of change of opinion. If some material has not been acted upon by the assessing authority and it was not brought to the notice of the assessing authority, it cannot be said that the assessing authority had assessed the income on that basis. Change of opinion will only mean that opinion was formed and it is being sought to be changed by the exercise of the power under sections 147 and 148 of the Act. Where the assessing authority has not used the material and has not applied his mind and expressed the opinion, till that time, it cannot be said that there was a change of opinion formed by the assessing authority on the basis of material which was there. In the present case, the raid was conducted at the premises of the assessee and certain loose sheets were found, but the fate of those loose sheets remained in the fluid stage and it was not finalised till a final report was submitted by the inspectors after verifying the detailed accounts in 1978. By that time the assessment for 1974-75 was already done on October 30, 1975. Therefore, fully verified material was not in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his possession, he had reason to believe that income chargeable to tax had escaped assessment for the two assessment years. From the material before us it appears that the Income-tax Officer came to realise that income had escaped assessment for the two assessment years when he was in the process of making assessment for a subsequent assessment year. While making that assessment, he came to know from the documents pertaining to that assessment that the overhead expenses related to the entire business including the business as commission agents and were not confined to the business of purchase and sale. It is true, as the High Court has observed, that this information could have been acquired by the Income-tax Officer if he had exercised due diligence at the time of the original assessment itself. It does not appear, however, that the attention of the Income-tax Officer was directed by anything before him to the fact that the overhead expenses related to the entire business. The information derived by the Income-tax Officer evidently came into his possession when taking assessment proceedings for the subsequent year. In the circumstances, it cannot be doubted that the case falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions. We need not refer to those cases because the cases which are relevant for our purpose have already been discussed above and after adverting to those decisions we are satisfied that in the present case, the Income-tax Officer has rightly reopened the assessment in the exercise of the power under section 147(b) of the Act. Hence, we answer the first question in favour of the Revenue and against the assessee. The next question which arises is whether the amount of Rs. 2 lakhs which had been found on the loose sheets can be treated to be investment assessable under section 69 of the Act. In this connection, it is sufficient to say that it has been observed by the Tribunal that this income was attributed to each of the partners, i.e., Rs. 1 lakh each, and the partners went in appeal against addition of this Rs. 1 lakh and they were successful in the appeal and they got the additions deleted. Therefore, once they have successfully got this addition of one lakh rupees in the share of each partner deleted in the appeal from the higher authorities under the Income-tax Act, then it follows, that the amount of Rs. 2 lakhs can only be treated to be the investment of the assessee-fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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