Case: R. B. Bansilal Abirchand Firm Vs. Commissioner of Income Tax, M. P

and on the material which was before him at the time of the first assessment changed his opinion and came to a different conclusion. The correct conclusion was brought to his notice by the decision of the Tribunal and the High Court and that must be held to be information, as a consequence of which he came to believe that the provisions of section 34(1)(b) were attracted. In a recent decision of this court in Commissioner of Income-tax v. A. Raman & Co., dealing with the corresponding provision contained in section 147(1)(b) of the Income-tax Act, 1961, the court held" The expression information in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment." It was further held" That information must, it is true, have come into the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. "3. These principles clearly support our view that in this case the Income-tax Officer had jurisdiction to proceed under section 34(1)(b), because he had reason to believe that income chargeable to tax had escaped assessment, or had been under-assessed or excessive relief had been granted as a consequence of the information which came to him from the external source, of the decisions of the Tribunal and the High Court in the assesssment proceedings of Bisesar House4. Mr. S. T. Desai, counsel for the assessee, relying on the decision of the Allahabad High Court in New Victoria Mills Co. Ltd. v. Commissioner of Income-tax, urged that the Income-tax Officer cannot have jurisdiction to proceed under section 34, unless it can be said that new facts came to his knowledge which were not in his possession at the time when he made the assessment. If the Income-tax Officer had made a mistake with full knowledge of the facts, the mistake could not be rectified by him by issuing a notice under section 34 of the Income-tax Act. That case, however, was concerned with the provisions of section 34 as they stood before the arnendment of that section by the Income-tax Amendment Act, 1948 (48 of 1948), which gave the right to an Income-tax Officer to reopen an assessment only if, as a result of definite information, he discovered that income chargeable to tax had escaped assessment or had been under-assessed. All that was held by the Allahabad High Court was that section 34 could not be applied because in that case it was not possible to hold that, as a result of information received in the assessment proceedings of another company, the income-tax Officer had discovered that the income of the assessee concerned had escaped assessment. The emphasis was on the fact that, though some information came into the possession of the Income-tax Officer as a result of assessment proceedings of another company, the discovery that the income of the assessee had escaped assessment was not the result of that information. Reference was also made to a decision of the Patna High Court in Bhimraj Panna Lal v. Commissioner of Income-tax, where it was held" In my judgment, in order to hold that income may have escaped assessment , there must have been either some fresh facts brought to the notice of the income-tax authorities, or some change in law which were in existence during the chargeable accounting period, but which were not brought to the notice of, or taken notice of, by the income-tax authorities, during the chargeable accounting period, but which arose subsequent to it having relation to the facts on which the original assessment had been made. "5. It was urged that, in the present case, no fresh facts were brought to the notice of the Income-tax Officer to justify his proceeding under section 34(1)(b). In that case also, reliance was placed on the language which existed in section 34(1) before its amendment in 1948, when the words containe required that " in consequence of definite information which has come into his possession, the Income-tax Officer discovers ". It may also be mentioned that that case came up before this court in Bhimraj Pannalal v. Commissioner of Income-tax. In this court, the counsel for the assessee frankly stated that he was not in a position to contend that the proceedings under section 34 were ab initio void. The court further noticed the fact that the High Court had rightly pointed out that there were enough materials on which the Income-tax Officer could initiate proceedings under section 34 for the three assessment years in question. In that case, therefore, the information which came into the possession of the Income-tax Officer was held to justify resort to section 346. The case of K. T. Kubal & Co. Pvt. Ltd. v. Commissioner of Income-tax is also, in our opinion, of no assistance to the assessee. In that case, after considering the facts, the Bombay High Court held that it could " hardly be stated that any additional information has come in the possession of the Income-tax Officer which was not in his possession when the assessment orders were made. " It was in view of this finding of fact that it was that section 34(1)(b) was not applicable. In the present case, we have already indicated that the judgments of the Tribunal and the High Court in the assessment proceedings of Bisesar House did result in the Income-tax Officer coming into possession of information on the basis of which he could initiate proceedings under section 34(1)(b)We, consequently, hold that the decision given by the High Court was correct. The appeal is dismissed with costs

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

Explanation:
0[ds]3. These principles clearly support our view that in this case theOfficer had jurisdiction to proceed under section 34(1)(b), because he had reason to believe that income chargeable to tax had escaped assessment, or had beenor excessive relief had been granted as a consequence of the information which came to him from the external source, of the decisions of the Tribunal and the High Court in the assesssment proceedings of Bisesarthat case, therefore, the information which came into the possession of theOfficer was held to justify resort to sectionwas in view of this finding of fact that it was that section 34(1)(b) was not applicable. In the present case, we have already indicated that the judgments of the Tribunal and the High Court in the assessment proceedings of Bisesar House did result in theOfficer coming into possession of information on the basis of which he could initiate proceedings under section 34(1)(b)We, consequently, hold that the decision given by the High Court was correct. The appeal is dismissed with costs