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TMI Blog1967 (11) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... following question : " Whether, under the facts and circumstances of the case, there was any information before the Income-tax Officer seeking to reopen the assessment so as to invest him with jurisdiction to issue notice under section 34(1)(b) of the Income-tax Act ? " The assessee-firm consisted of four partners, who were all brothers belonging to the Daga family, and three minor sons of one late Narsingdas Daga were also admitted to the benefits of the partnership. This firm was financing another firm known as Bisesar House in which an 8-anna share belonged to one late Shri Manekji Dadabhoy, an outsider, while the remaining 8-anna share belonged to the four Daga brothers. Bisesar House used to pay interest on advances made to it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bisesar House and had been receiving interest in the capacity of a banker, the Income-tax Officer decided to take action under section 34(1)(b) of the Income-tax Act in order to include this amount of interest in calculating the taxable profits and losses of the assessee-firm. The assessee objected on the ground that all the facts, on the basis of which the Income-tax Officer was reopening the assessment under section 34(1)(b), were already in the possession of the Income-tax Officer when he first made the assessment and, consequently, it could not be held that there was any information in his possession at the time of issuing the notice under section 34(1)(b) in consequence of which he could have reason to believe that income, profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er might have discovered the correct position and might have come to the conclusion that the assessee-firm was not receiving interest as a partner, but this circumstance that such a decision could have been arrived at does not mean that, at the time when the Income-tax Officer started proceedings under section 34(1)(b), he was not acting on information received from the decisions of the Tribunal and the High Court in the assessment proceedings of Bisesar House. It was not a case where the Income-tax Officer on his own initiative and on the material which was before him at the time of the first assessment changed his opinion and came to a different conclusion. The correct conclusion was brought to his notice by the decision of the Tribunal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the assessment proceedings of Bisesar House. Mr. S. T. Desai, counsel for the assessee, relying on the decision of the Allahabad High Court in New Victoria Mills Co. Ltd. v. Commissioner of Income-tax, urged that the Income-tax Officer cannot have jurisdiction to proceed under section 34, unless it can be said that new facts came to his knowledge which were not in his possession at the time when he made the assessment. If the Income-tax Officer had made a mistake with full knowledge of the facts, the mistake could not be rectified by him by issuing a notice under section 34 of the Income-tax Act. That case, however, was concerned with the provisions of section 34 as they stood before the amendment of that section by the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een made. " It was urged that, in the present case, no fresh facts were brought to the notice of the Income-tax Officer to justify his proceeding under section 34(1)(b). In that case also, reliance was placed on the language which existed in section 34(1) before its amendment in 1948, when the words containe required that " in consequence of definite information which has come into his possession, the Income-tax Officer discovers ". It may also be mentioned that that case came up before this court in Bhimraj Pannalal v. Commissioner of Income-tax. In this court, the counsel for the assessee frankly stated that he was not in a position to contend that the proceedings under section 34 were ab initio void. The court further noticed the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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