Case: Commissioner of Income Tax, West Bengal Ii Vs. Dinesh Chandra H. Shah &amp; Others

2. The assessee was H. K. Shah who is now dead and is represented by the present respondents. The assessment year with which we are concerned isthe previous year being that ending on March 31, 1955. H. K. Shah deceased, hereinafter referred to as the "assessee". Had a share of profit from the Mysore Premier Metal Factory Madras of which he was a partner. He was also carrying on other business and was being assessed at Calcutta. In his return which he filed before theOfficer at Calcutta he specifically disclosed his share in the income of the Madras firm. The profit allocation report of the share of profit from the Madras firm had been received in the office of theOfficer in September 1955 and an order was recorded on the order sheet of the proceedings to that effect. The assessment for the year in question was completed some time in November 1958. TheOfficer failed to include in the total income the share of profit from the Madras firm. On March, 22, 1960 theOfficer issued a notice under Section 34 (1) (b) of theAct, 1922, hereinafter called the "Act", calling upon the assessee to show cause why the profits from the Madras firm which had escaped assessment should not be included in the income. The assessee wrote a letter saying that he had fully disclosed the details of his income from all sources in his original return and nothing had escaped assessment. In fact he had indicated that he had a share in the profits of the Madras firm and was also entitled to interest on the capital invested therein. TheOfficer, however, completed the assessment for the aforesaid year as also the subsequent assessment year in which also the share of the income from the Madras firm had not been included. The assessee went up in appeal to the Appellate Assistant Commissioner which was allowed on the ground that theOfficer had no additional information either externally or internally which came into his possession subsequent to the making of the assessment to justify the action taken under Section 34 (1) (b). The Revenue appealed to the Appellate Tribunal which reversed the decision of the Appellate Assistant Commissioner in respect of the assessment yearThe view of the Tribunal was that the information on the record in respect of the share of profit assessable to tax had escaped the notice of theOfficer and therefore he was justified in taking action under Section 34 (1) (b).

Reasoning: 5. It is not disputed that the facts in the above case were altogether different from those of the present case. But on behalf of the Revenue assistance has been sought to support the contention that even if there has been an omission to include a particular item of income in an assessment by inadvertence it is open to theOfficer to invoke the provisions of Section 34 (1) (b) when he discovers subsequently that, that particular item of income has escaped assessment. In our judgment it is wholly unnecessary to go into the question whether an inadvertent omission can justify the reopening of the assessment on its subsequent discovery by theOfficer. No such position was adopted by theOfficer when he was called upon by the Appellate Assistant Commissioner to state the reason for not including the income of the Madras firm about the factum and existence of which full disclosure had been made in the return filed by the assessee and with regard to the income of which a note had been made on the file when the share allocation report was received from theOfficer, Madras on September 21, 1955. It appears that theOfficer clearly sought to justify the reopening of the assessment under Section 34 (1) (b) merely on the ground of change of opinion. It is well settled by now and Mr. Desai quite rightly does not dispute the proposition that mere change of opinion could not be a valid ground for reopening the assessment under Section 34 (1) (b) of the Act. We would accordingly uphold the answer returned by the High Court on the short ground that the reassessment for the year in question was sought to be reopened for the reason that the successor of theOfficer who had made the original assessment had changed his opinion which did not furnish a justifiable reason for taking action under Sec. 34 (1) (b).