TMI Blog1981 (9) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... he accounting year under consideration the paid-up share capital of the assessee-company was Rs. 37,70,000. In the previous year ending 31st December, 1958 (assessment year 1959-60), the assessee had filed a return showing a loss of Rs. 1,73,542. It was assessed for the said assessment year 1959-60, under s. 23(3) of the Indian I.T. Act, 1922, on 26th September, 1960, when its loss was determined at Rs. 2,20,016. In the calendar year 1958 the assessee-company had declared a dividend of Rs. 7,51,020. By an order dated 22nd November, 1960, made under s. 35 of the Indian I.T. Act, 1922, the said quantum of loss was reduced to Rs. 1,99,829. The assessment in respect of the assessment year under consideration, namely, 1960-61, was completed on 14th February, 1961, and the taxable income was computed at Rs. 9,17,729, after an adjustment of the brought forward loss of Rs. 1,99,829 for the previous assessment year. On appeal to the AAC, the said income of Rs. 9,17,729 was reduced to Rs. 9,06,816. The ITO by his letter dated 11th October, 1961, informed the assessee that a mistake had occurred in the calculation of the corporation tax rebate in the assessment order for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to the legality of the proceedings. However, on merits, he set aside the order of the ITO holding that there could not be any deduction in the rebate granted to the assessee. Against the said order the Revenue filed an appeal to the Tribunal. The assessee also filed cross-objections on the question of the legality of the proceeding. The assessee's contention was that the proceedings under s. 147(b) of the I.T. Act, 1961, were misconceived as the ITO had not come into possession of any information so as to justify the action under that section. The Tribunal by its order allowed the appeal of the department and dismissed the cross-objections. While dismissing the cross-objections of the assessee as regards the validity of the proceedings under s. 147(b), the Tribunal, relying on the decision of the Supreme Court in the case of CIT v. A. Raman and Co. [1968] 67 ITR 11, observed "The Income-tax Officer had no occasion to consider this question of reduction in the rebate in the course of the original proceedings. There is nothing to show that the Income-tax Officer had considered the point and had come to any definite opinion. Therefore, it cannot be said that the reopening was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the said wide proposition, observed at p. 1004 of the report " Reliance is placed on Kalyanji Mavji Co v. CIT [1976] 102 ITR 287 (SC), where a Bench of two learned judges of this court observed that a case where income had escaped assessment due to the 'oversight, inadvertence or mistake' of the ITO must fall within s. 34(1)(b) of the Indian I.T. Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants in so far as it can be said to lay down that if, on reapprising the material considered by him during the original assessment, the ITO discovers that he has committed an error in consequence of which income has escaped assessment, it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power. " The court also further negatived the contention made by the Revenue that the expression "information" in s. 147(b) of the I.T. Act, 1961, referred to the realisation by the ITO that he has committed an error when making the original assessment. As we will presently point out, orders passed by the tax autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 147(b) of the I.T. Act, 1961, had observed that the ITO came to know that the corporation tax rebate had been allowed excessively was clearly a piece of information which justified the reopening of the assessment. However, the Tribunal in its order dated 22nd July, 1970, has sought to support the said proceedings under s. 147(b) not on the reasoning given by the ITO but on altogether different grounds. According to the Tribunal, the ITO had no occasion to consider this question of reduction in rebate in the course of the original proceedings, that there was nothing to show that the ITO had considered the point and had come to any definite conclusion, that, therefore, it could not be said that the reopening was caused by any change of opinion and, therefore, it could be said that the ITO came by information subsequent to the completion of the assessment that certain deductions from the rebate had not been made. However, in our view, on the facts of this case, none of the said reasonings can be sustained to bring the case within the provisions of s. 147(b) of the I.T. Act, 1961. If, on the same material which was before the ITO while making the original assessment, the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961, were taken to rectify that mistake, in neither case there being a plea that it was done by reason of any material other than the one that was already before the ITO. That, as the Supreme Court in its aforecited decision in the Indian and Eastern Newspaper Society's case [1979] 119 ITR 996, has pointed out, was not permissible for the proceedings under s. 147(b). To support the validity of the proceedings under s. 147(b) of the I.T. Act, 1961, in this case the learned counsel for the Revenue has relied upon the decision of this court in the case of CIT v. H. Holck Larsen [1972] 85 ITR 467, which had taken the view, while interpreting s. 34(1)(b) of the Indian I.T. Act, 1922 (present s. 147(b)), that information which the ITO was required to have under that provision could be also on the material that was already before the ITO, and for that purpose it was not necessary to have any further material. That was a decision given when there was an apparent conflict among various High Courts about the interpretation of s. 34(1)(b), some courts having taken the view that the information which the ITO was required to have under that section was to be from some material other th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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