1968 (8) TMI 52 - SC - Income Tax

Whether the expression information in the context of section 147(b) of the Income-tax Act, 1961, must mean instruction or knowledge derived from extraneous sources concerning facts or particulars or as to law relating to a matter bearing on the assessment? Held that - When the expression information is understood in the sense of 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 is difficult to see how determination of valuation for the purpose of assessment of estate duty would not squarely fall within the meaning of the expression information in the context in which it occurs in section 59 of the Act. It has not been disputed, and can indeed not be disputed, that the provisions of section 59 are in pari materia with section 34 of the Income-tax Act, 1922, and section 147 of the Income-tax Act, 1961. The opinion expressed by the Board of Revenue, in the present case, as to valuation, was clearly information in the sense in which that expres. sion has been held to have been used in these enactments. The view of the High Court on this point cannot be sustained for the aforesaid reasons. The Division Bench did not decide the first point which related to the applicability of section 59 to assessments completed before the amendment Act came into force. This matter will have to go back for decision of that question. The appeal is allowed and the order of the High Court is set aside.

Summary

Issues:
1. Applicability of section 59 of the Amendment Act to assessments completed before its enforcement.
2. Definition of "information" under section 59(b) of the Act.

Analysis:
The case involved an appeal from a judgment of the High Court of Andhra Pradesh regarding the valuation of a trust fund under the Estate Duty Act, 1953. The dispute arose when the Assistant Controller of Estate Duty assessed the estate of a deceased beneficiary, valuing a loan at Rs. 2,01,30,000. The Central Board of Revenue later opined that the correct valuation should be Rs. 3,06,83,760. Subsequently, the Assistant Controller issued a notice under section 59 of the Amendment Act, stating that the property had been undervalued. The High Court was petitioned, challenging the validity of the notice. The main contentions were the applicability of section 59 to finalized assessments and the definition of "information" under the Act.

The High Court, in its initial judgment, held that the Assistant Controller lacked jurisdiction to reopen a finalized assessment under section 59. It also ruled that the opinion of the Central Board of Revenue did not constitute "information" as required by the Act. The Division Bench, on appeal, did not address the applicability of section 59 but upheld the decision based on the definition of "information." The appellant argued that any post-assessment knowledge, including opinions from higher authorities, should be considered "information" under section 59.

Citing precedents from tax laws, the appellant contended that information encompassed both factual and legal knowledge derived externally. The Supreme Court agreed, emphasizing that the determination of valuation for estate duty assessment fell within the scope of "information" under section 59. The Court clarified that the term "information" should be broadly construed, aligning with interpretations in similar tax statutes. Therefore, the opinion of the Central Board of Revenue regarding valuation constituted valid information for reassessment purposes.

As the Division Bench did not address the applicability of section 59 to completed assessments, the Supreme Court remanded the case to the High Court for a decision on this issue. The Court allowed the appeal, setting aside the High Court's order and directing a reconsideration in accordance with the law. Costs were to be borne as per the High Court's decision.

In conclusion, the Supreme Court clarified the definition of "information" under section 59 of the Act, emphasizing its broad interpretation to include external knowledge relevant to assessments. The case was remanded for a decision on the applicability of section 59 to finalized assessments, ensuring a comprehensive resolution in line with legal principles.