Case: Commissioner Of Wealth Tax West Bengal Vs. Imperial Tobacco Co. Of India Ltd

Income-tax Appellate Tribunal Bombay v. B. P. Byramji and Co. 1946-14 ITR 174: (AIR 1946 Nag 188) where it was again emphasised that a mere change of opinion by the Income-tax Officer is no ground for taking action under S. 34.8. Further in Bhimraj Panalal v. Commissioner of Income-tax B and O,1957-32 ITR 289 : (AIR 1957 Pat 638 ), it was held by the Patna High Court that "an order of assessment made after investigation by a particular officer should not at his sweet will and pleasure be allowed to be revised merely because he changed his opinion and that there must exist something either suppressed by the assessee or a fact or a point of law which was inadvertently or otherwise omitted to be considered by the Income-tax Officer, before he can proceed to act under .S. 34;and a mere change of opinion on the same facts and law is not covered by that section."9. The appellant on the other hand relies on some recent decisions which show that there some divergence of opinion in the High Courts on this question. In Salem Provident Fund Society Ltd. v. Commissioner of Income-tax Madras, 1961-42 ITR 547 (Mad) the Madras High Court held that "information for the purpose of section 34 need not be wholly extraneous to the record of the original assessment. A mistake apparent on the face of the order of assessment would itself constitute information whether someone else gave that information to the Income-tax Officer or whether he informed himself was immaterial."10. In Commissioner of Income-tax Madras v. Rathinasabhapathy Mudaliar, 1964-51 ITR 204 (Mad), the Madras High Court again held that "the discovery of the Income-tax Officer after he had made the assessments that he had committed an error in not including the minors income in the father" assessment was information obtained after the assessment, and even though all the facts were in the original records, the case was covered by Section 34 (1) (b) of the Income-tax Act and the re-assessment was not invalid, and this was not a case of mere change of opinion on the same facts but a case of getting information that income had escaped assessment."11. In Canara Industrial and Banking Syndicate Ltd. v. Commissioner of Income-tax, Mysore, 1964-51 ITR 479 (Mys), the Mysore High Court held that "if income had escaped assessment owing to the failure of the Income-tax Officer to understand the true implication of a notification, and the Income-tax Officer later on finds that on a correct interpretation of the notification the income was liable to be assessed, he can take proceedings under S. 34 for assessment of such income; the word information in S. 34 is wide enough to apply to such a case."12. The last case to which reference is made is Asghar Ali Mohammad Ali v. Commissioner of Income-tax. 1964-52 ITR 962 (All), wherein the Allahabad High Court held that "the word information used in the provision covers all kinds of information received from any person whatsoever or in any manner whatsoever ; all that is required is that the Income-tax Officer should learn something i.e., he should know something which he did not know previously." It was further held that "if there is information leading to the belief that income has escaped assessment, the mere that fact this information has resulted in a change of opinion will not make S. 34 inapplicable. A change of opinion is not sufficient for initiating proceedings under. S. E34, only when such change of opinion is the result of a different method of reasoning and not based on information.13. It does appeal that some High Courts at any rate are taking the view that a change of opinion by the Income-tax Officer in certain circumstance will be sufficient for the purpose of S. 34 (1) (b) and will justify the issue of a notice thereunder. It may be added that after the decision of this Court in Kamal Singhs case, (1959) Supp 1 SCR 10 : 1959-35 1TR 1: (AIR 1959 SCR 257), it is now settled that information in S. 34 (1) (b) included information as to the true and correct state of law, and so would cover information as to relevant judicial decisions and that such information for the purpose of S. 34 (1) (b) of the income-tax Act need not be confined only to cases where the Income-tax Officer discovers as a fact that income has escaped assessment. To that extent the decision of the Bombay High Court in Mohamed Yusuf Ismali, 1944-12 ITR 8 : (AIR 1944 Bom 160 ), has been overruled. That is why the Appellate Tribunal stated if its decision that if the notices in the present case had been issued after the decisions of the Appellate Assistant Commissioner in the appeal from the assessment for the year 1959-60, there would have been information in possession of the Wealth-tax Officer to justify him in issuing notices under S. 17 (b) of the Act. But in the present case the Wealth-tax Officer issued notices before that decision was known to him and the question is whether in their circumstances in view of the later decisions of the High Courts to which we have referred a Question of law arose or not. The language of S. 17 (b) of the Act is pari materia with the language of Section 34 (1) (b) of the Income-tax Act and therefore the decisions under S.34 (1) (b) ibid would be relevant in construing the scope and effect of S. 17 (b) of the Act. There does appear to be divergence of opinion among the High Courts as to the meaning of the word "information" in Section 34 (1) (b) of the Income-tax Act, and in view of that divergence we are of opinion that a question of law did arise in the present case as to the interpretation of the word "information" in S. 17 (b) of the Act and should have been referred by the Tribunal.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]13. It does appeal that some High Courts at any rate are taking the view that a change of opinion by the Income-tax Officer in certain circumstance will be sufficient for the purpose of S. 34 (1) (b) and will justify the issue of a notice thereunder. It may be added that after the decision of this Court in Kamal Singhs case, (1959) Supp 1 SCR 10 : 1959-35 1TR 1: (AIR 1959 SCR 257), it is now settled that information in S. 34 (1) (b) included information as to the true and correct state of law, and so would cover information as to relevant judicial decisions and that such information for the purpose of S. 34 (1) (b) of the income-tax Act need not be confined only to cases where the Income-tax Officer discovers as a fact that income has escaped assessment. To that extent the decision of the Bombay High Court in Mohamed Yusuf Ismali, 1944-12 ITR 8  : (AIR 1944 Bom 160  ), has been overruled. That is why the Appellate Tribunal stated if its decision that if the notices in the present case had been issued after the decisions of the Appellate Assistant Commissioner in the appeal from the assessment for the year 1959-60, there would have been information in possession of the Wealth-tax Officer to justify him in issuing notices under S. 17 (b) of the Act. But in the present case the Wealth-tax Officer issued notices before that decision was known to him and the question is whether in their circumstances in view of the later decisions of the High Courts to which we have referred a Question of law arose or not. The language of S. 17 (b) of the Act is pari materia with the language of Section 34 (1) (b) of the Income-tax Act and therefore the decisions under S.34 (1) (b) ibid would be relevant in construing the scope and effect of S. 17 (b) of the Act. There does appear to be divergence of opinion among the High Courts as to the meaning of the word "information" in Section 34 (1) (b) of the Income-tax Act, and in view of that divergence we are of opinion that a question of law did arise in the present case as to the interpretation of the word "information" in S. 17 (b) of the Act and should have been referred by the Tribunal.