TMI Blog1977 (8) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... levant particulars with regard to the amounts of interest paid to each partner and allowed as permissible deductions in the course of assessment proceedings are set out in paragraph 2 of the order of the Tribunal as well as in paragraph 3 of the statement of the case. Since nothing turns on the amounts so allowed we do not set out those facts in this judgment. After the completion of the assessments, it appears that the audit department pointed out to the Income-tax Officer that by virtue of the provisions contained in section 40(b) of the Act, the claim for deduction of the amounts of interest paid to the partners during the relevant account years ought not to have been allowed. The Income-tax Officer thereupon issued notices under section 148 of the Act in respect of each year of assessment and called upon the assessee to show cause why the assessment should not be reopened with a view to adding back the amounts of interest which were wrongly allowed as deduction. The assessee showed cause and, inter alia, contended that the assessments having been completed on merits, no proceedings for reassessment could be initiated. The income-tax Officer negatived the objections raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment ". Mere change of opinion on the part of the Income-tax Officer cannot constitute " information " so as to entitle the Income-tax Officer to initiate proceedings under section 147(b). " Information " may be as to facts or particulars or it may be as to the correct state of the law but it must be " from an external source " as distinguished from a mere change of opinion. In Kasturbhai Lalbbai's case [1971] 80 ITR 188 (Guj), this court examined the ratio of the decision in A. Raman and Co.'s case [1968] 67 ITR 11 (SC) and more particularly the question as to what would constitute " information " derived from " an external source ". This court held that if " information " is as to any fact, it may be derived from any person who knows the fact. An external source in case of information as to fact cannot be limited to any particular person, body or authority, since such fact may be within the knowledge or in the possession of anyone and it may be received by the Income-tax Officer from any source. But, so far as information as to the correct state of law is concerned, the external source from which it may be received must necessarily be of a limited character. It must be a state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be precise and certain and must have relation to the taxable gift which is alleged to have escaped assessment. Any wayside gossip, any inference or surmise drawn by a person from certain facts which are assumed to exist and not supported by any data or any general opinion expressed by a person not qualified, experienced or acquainted with the subject-matter, cannot amount to "information" on which the Gift-tax Officer might act for reopening a completed assessment. This decision, though rendered in the context of the provisions of the Gift-tax Act, has its bearing on the question arising under section 147(b) as well, for, as earlier stated, the language of both the provisions is in pari materia. Then came the decision in Kalyanji Mavji Co. v. Commissioner of Income-tax [1976] 102 ITR 287 (SC). The Supreme Court there considered the language of section 34(1)(b) of the Indian Income-tax Act, 1922, which is in pari materia with the language of section 147(b) of the present Act as also the decision in A. Raman and Co.'s case [1968] 67 ITR 11 (SC) and other decided cases. On a review of the statutory language and the authorities, the Supreme Court laid down the following test a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist of oversight or inadvertent mistake committed by the Income-tax Officer or he may discover an error on the face of the record from further enquiry or research into facts and law. The Division Bench in terms observed in [1977] 108 ITR 783 (Guj) : "The expression 'information' is of wider amplitude than construed by this court in Kasturbhai Lalbhai's case [1971] 80 ITR 188 (Guj), the only limitation or restriction on the authority of the Income-tax Officer being that he must have reason to believe that it is a case of escaped assessment." Last in the series of decisions is the one rendered by my learned brother in this very session in Income-tax Reference No. 82 of 1974 decided by us on June 21, 1977 [Commissioner of Income-tax v. Jyoti Ltd. [1978] 112 ITR 973 (Guj)]. In that case, the question arose in the context of the Super Profits Tax Act, 1965. Under section 9(b) of the said Act, reassessment proceedings were initiated and it was there pointed out that the provisions of section 9(b) were in pari materia with the provisions of section 147(b) of the Act as also of section 16(1)(b) of the Gift-tax Act, 1958. Reference was then made to the decision in A. Raman Co.'s case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derstood as definite information which informs the mind of the officer concerned for the first time as explained by my learned brother in Karaka's case [1975] 99 ITR 257 (Guj), it is obvious that while applying the Raman [1968] 67 ITR 11 (SC) ratio this distinction of external source when applied to matters of facts or particulars and matters as to the correct state of law would have a great bearing to distinguish the case of the mere change of opinion. The concerned officer is not entitled to proceed on mere second thoughts on the same materials when he had already applied his mind and he does not rely on any subsequent information falling within the aforesaid test." My learned brother then proceeded to point out the distinction made in Kasturbhai Lalbhai's case [1971] 80 ITR 188 (Guj) between " information " as to the correct state of law and " information " as to the matters of facts and particulars and observed that it is only when the " information which was relied upon was as to the matters of facts and particulars, that " information" could be from any source as explained in Kasturbhai Lalbhai's case [1971] 80 ITR 188 (Guj) and it could be even from the same record. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable income ; (3) that such " information " must be capable of arousing or suggesting ideas or notions not before existent in the mind of the Income-tax Officer ; (4) that it must be of such a nature as to acquaint, enlighten or instruct the mind of the Income-tax Officer for the first time concerning a matter pertaining to the taxable income so that he could form a reasonable belief that there has been an escapement of assessment of tax which requires to be set right by taking steps for reopening the assessment ; (5) that mere change of opinion on the part of the Income-tax Officer would not be sufficient and it would not constitute " information " ; (6) that " information " as to any fact bearing on the assessment may be received from any external source, that is to say, from any person who knows the fact or it may be obtained even from the record of the original assessment proceedings ; and (7) that " information " not amounting to change of opinion as to the correct state of law may be received from research of law made by the Income-tax Officer or it may be received from an external source ; if, however, "information " as to the correct state of law is received f ..... 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