1979 (11) TMI 83 - HC - Income Tax

Summary

Issues involved: Reopening of assessment u/s 147(b) of the Income-tax Act, 1961 based on information, validity of the note given by a partner, and the quantum of income assessed.

Relevant Details:
- The assessee, a partnership firm, filed a return for the assessment year 1965-66 showing income of Rs. 34,148.43. The Income Tax Officer (ITO) initiated proceedings under s. 147(b) based on information regarding the cost of centering machines.
- The ITO reassessed the income to Rs. 1,35,296 by adding the difference in machine cost based on a note from a partner and the report of experts.
- The Appellate Tribunal held the note by the partner was valid and constituted information under s. 147(b), justifying the reassessment.
- The Tribunal remanded the matter to the ITO for recomputing the income for the assessment year 1965-66 based on the partner's note.
- The question referred was whether the ITO had valid information u/s 147(b) to justify the reassessment.

Court's Analysis:
- The court examined the definition of "information" in s. 147(b) based on previous judgments. Information includes facts, law, or knowledge derived externally.
- The court held that the partner's note and the expert's report constituted valid information for the ITO to form a belief that income had escaped assessment.
- The court rejected the argument of a mere change of opinion and upheld the validity of the reassessment based on concrete facts and evidence.
- The court emphasized that the information must relate to the assessment year, and in this case, the partner's note and expert's report were relevant to the assessment year 1965-66.
- Relying on precedents, the court concluded that the ITO acted within the ambit of s. 147(b) by considering the partner's note and expert's report in reassessing the income.

Conclusion:
- The court answered the question in favor of the department, affirming the validity of the reassessment u/s 147(b) based on the information available to the ITO.
- The respondent-CIT was awarded costs and counsel's fee.