1971 (7) TMI 43 - HC - Income Tax

Petitioner contention that the ITO acted without jurisdiction in reopening the assessment in purported exercise of his powers under section 147(b) - It is argued that no new materials which will constitute information has come to the possession of the Income-tax Officer - knowledge that the amount was actually payments towards arrears of provident fund contributions relating to earlier years constituted information on the basis of which the reassessment proceedings could be validly initiated

Summary

Issues:
Jurisdiction of the Income-tax Officer under section 147(b) of the Income-tax Act for reopening assessment based on new information regarding deduction claimed for provident fund contributions.

Analysis:
The petitioner, a tea plantation company, was assessed to income tax for the year 1964-65, with a net loss of Rs. 1,585. Subsequently, the Income-tax Officer initiated proceedings under section 147(b) to reopen the assessment upon discovering that the company had claimed a deduction of Rs. 20,336 for provident fund contributions, which were actually arrears from previous years. The company challenged the reassessment through a writ petition, arguing that the officer lacked jurisdiction as no new information was available for reopening. However, the court held that the officer's actions were within the scope of section 147(b) based on the principle that even if the information could have been obtained earlier, its subsequent discovery justifies reassessment.

In support of the decision, the court referred to previous judgments such as Commissioner of Income-tax v. A. Raman & Co., emphasizing that the jurisdiction of the Income-tax Officer is not affected if the information could have been obtained earlier but was not. Additionally, the court cited Anandji Haridas and Co. (P.) Ltd. v. S.P. Khushare, which clarified that "information" for reassessment need not come from external sources but can be derived from the assessing authority's own records. The court highlighted that the officer's discovery of the arrears in provident fund contributions constituted valid information for reopening the assessment under section 147(b).

The court acknowledged that the deduction claimed by the company was erroneous as it pertained to arrears from previous years, leading to an escape of taxable income assessment. Consequently, the orders for reassessment (exhibits P-2 and P-4) were upheld, and the writ petition was dismissed. The court directed each party to bear their respective costs, concluding that there was no basis for interference under article 226 of the Constitution.