TMI Blog1983 (10) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... termined at Rs. 14,750. While the assessment proceedings for the assessment year 1960-61 in the case of the firm, M/s. Makhan Singh Co., Hanumangarh, were being taken, the ITO noticed certain facts which led him to believe that the business run in the name and style of Makhan Singh Co. belonged to Makhan Singh in his individual capacity and was not that of a genuine partnership firm. He, therefore, refused to grant continuation of registration to the firm and completed the assessment for 1960-61 treating Makhan Singh as sole proprietor of the firm and, therefore, in the status of an individual. The assessment was upheld and confirmed by the Tribunal, vide its order in I.T.A. No. 13615 of 1965-67 dated March 25, 1960. The ITO while rejecting the prayer for registration and assessing the income of Makhan Singh as sole owner in his individual capacity, issued notice under s. 148 read with s. 147(b) of the I.T. Act, 1961, for the assessment year 1959-60, also with a view to assess the income of Makhan Singh Co., Hanumangarh, in the hands of the assessee. The assessee, Makhan Singh, filed a reply and denied that he was carrying on Makhan Singh Co., Hanumangarh business, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment is an information within the meaning of s. 147(b) and hence the ITO was competent to reopen the assessment. Reliance was placed on Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1. The Tribunal accepted the first contention of the assessee and allowed the appeal of the assessee, vide order dated June 14, 1968. In view of the above decision of the Tribunal, the second question regarding the quantum of the amount to be assessed was not gone into. Now, on the application of the Revenue, this reference has been made. The assessee's case is that the proceedings under s. 147(b) Are unwarranted. It was also pointed out that it was a case of a mere change of opinion. It was further submitted that there was a genuine firm in existence and the conclusions drawn by the ITO that it was not a genuine firm was based on conjectures and surmises and not supported by any fact. Mr. Joshi, learned counsel for the Department, has submitted that the ITO was justified in reopening the assessment and giving a notice for the same because while conducting the assessment for the year 1960-61, he got the following information: (i) There was no bank account in the name of the firm; (ii) Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciple is supported by the decision in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC). Their Lordships of the Supreme Court observed as under (p. 14): " Mr. Rajagopala Sastri, for the respondent, suggested that under the provisions of section 34 as amended in 1948, it would be open to the Income-tax Officer to act under the said section even if he merely changed his mind without any information from an external source and came to the conclusion that, in a particular case, he had erroneously allowed an assessee's income to escape assessment. We do not propose to express any opinion on this point in the present appeal." In CWT v. Imperial Tobacco Co. of India Ltd. [1966] 61 ITR 461 (SC), it has been held that information in s. 34(1)(b) includes information as to the true and correct state of the law and so will cover information as to the judicial decisions. The altered situation in which the ITO discovered that the partnership firm was a fake one and Makhan Singh was the sole proprietor, an order which was confirmed in appeal would certainly constitute information also within the meaning of s. 34(1)(b). Reference may be made to Jawahar Lal Maniram v. CIT [1963] 48 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court, after discussing the various cases, observed as under (p. 612): " We are not inclined to accept this submission. It is no doubt true that the assessee had claimed the income as his own in the original assessment. The Income-tax Officer, however, had not accepted the said claim and contrary to the said claim had come to the conclusion that the income was not of the assessee but of Mehta. In other words, the facts accepted by the Income-tax Officer on which he proceeded, were not the facts as alleged by the assessee, but as found by him and, according to him, the true factual position was that the income belonged to Mehta and not to the assessee. On that basis, he had assessed the income in the hands of Mehta and had not assessed it in the hands of the assessee. The Tribunal in the appeal preferred by Mehta, on the facts which had already been considered by the Income-tax Officer, held that the income truly belonged to the assessee and did not belong to Mehta and could not, therefore, be assessed in the hands of Mehta. In other words, according to the Tribunal, the Income-tax Officer had committed in error in holding that the income belonged to Mehta and not to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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