1975 (1) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Whether the Expenditure-tax Officer could reopen the assessment under section 16(b) of the Expenditure-tax Act.
2. The finality attached to the Tribunal's order and its impact on reopening the assessment.
3. The applicability of section 4(i) versus section 4(ii) of the Expenditure-tax Act.
4. The validity of the information received by the Expenditure-tax Officer as a basis for reopening the assessment.

Detailed Analysis:

1. Reopening the Assessment under Section 16(b):
The primary issue is whether the Expenditure-tax Officer had the jurisdiction to reopen the assessment under section 16(b) of the Expenditure-tax Act. The court held that the jurisdiction to reassess arises if the Expenditure-tax Officer has information that leads him to believe that expenditure chargeable to tax has escaped assessment. The information must come into possession after the previous assessment. The court referenced the Supreme Court's decision in Commissioner of Income-tax v. A. Raman and Co., which clarified that even if the information could have been obtained during the original assessment but was not, the jurisdiction to reopen is not affected. Therefore, the Expenditure-tax Officer's action to reopen the assessment was within his jurisdiction.

2. Finality of the Tribunal's Order:
The appellant argued that the finality of the Tribunal's order for the same assessment year could not be disturbed. The court examined Commissioner of Income-tax v. Rao Thakur Narayan Singh, where the Supreme Court held that the Tribunal's decision on the subject matter under appeal is final and cannot be reopened by the department. However, the court distinguished this case by noting that the finality attached to the Tribunal's order only ensures that the Expenditure-tax Officer cannot reopen the proceedings for the same reasons considered earlier. The finality would only attach to findings related to section 4(i) of the Act, not section 4(ii), which was not previously considered.

3. Applicability of Section 4(i) vs. Section 4(ii):
The court noted that the initial assessment included expenses under section 4(i) of the Expenditure-tax Act. However, the Commissioner later directed the Expenditure-tax Officer to consider section 4(ii) after a decision by the Andhra Pradesh High Court in His Highness Prince Azam Jah v. Expenditure-tax Officer. The court emphasized that the factual requirements for applying sections 4(i) and 4(ii) are different. The Tribunal's decision related to section 4(i) did not preclude the Expenditure-tax Officer from considering section 4(ii) based on new information.

4. Validity of Information for Reopening:
The court examined whether the Expenditure-tax Officer had valid information to justify reopening the assessment. The information in question was the Commissioner's memorandum, which referenced a relevant legal decision. The court cited Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, where the Supreme Court held that "information" includes information as to law. The court concluded that the memorandum constituted valid information, justifying the reopening under section 16(b). The court also noted that the Expenditure-tax Officer treated the memorandum as a piece of information rather than a directive, which is permissible under the Act.

Conclusion:
The court held that there was no lack of jurisdiction for the Expenditure-tax Officer to issue the notice under section 16(b) of the Expenditure-tax Act. The finality of the Tribunal's order did not preclude reopening the assessment based on new information. The appeal was dismissed, and the writ petition was declined. The decision emphasized that the Expenditure-tax Officer's action to reopen the assessment was justified and within the scope of his legal authority.