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TMI Blog1971 (7) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income-tax Act, 1961? " The relevant facts may be briefly stated. The assessee in the case is Her Highness Smt. Chand Kanwarji, the Maharani of Alwar (hereinafter referred to as the assessee). Her assessment for the year 1960-61 was completed on 26th October, 1962, on a total income of Rs. 48,394 under section 23(3) of the Indian Income-tax Act, 1922 (hereinafter referred to as the old Act) Similarly, the original assessment on the assessee for the assessment year 1961-62 was completed on 3, 1963 (sic) on a total income of Rs. 55,930 under section 143(3) of the new Act. For these two assessments, the income derived by the assessee by way of interest from bank deposits was treated as " earned income " and the Income-tax Officer had also accepted the assessee's claim of expenditure on the salary paid to her daughter-in-law. Subsequently, the revenue audit staff working under the Comptroller and Auditor-General of India, while scrutinising these assessments, brought to the notice of the department that the Income-tax Officer had wrongly treated the " interest income " as " business income " and also that the Income-tax Officer had wrongly allowed the assessee's claim with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Officer had no information in his possession which would justify the reopening of the original assessments under section 147(b) of the new Act. The Tribunal, therefore, dismissed the appeals filed by the department. But, at the latter's instance, the Tribunal has referred the question, as already stated to this court. Before answering the question, it would be necessary to state the scope of the question referred to us. From the order of the Appellate Assistant Commissioner it would appear that the only contention which was urged before him on behalf of the assessee and which was in the nature of a preliminary objection was that the reopening of the original assessments under section 147(b) of the hew Act was illegal in view of the fact that the entire material relevant to the two assessments was before the Income-tax Officer making the original assessments, that the latter had applied his mind to the material and duly considered that material and had come to certain conclusions which were incorporated in the assessment orders and that there was no new information which had come to his notice subsequently on the basis of which action under section 147(b) of the new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to our notice by Shri G. C. Sharma, learned counsel for the revenue, which indicate that the divergence has not yet been reconciled. But, it is really not necessary for the purpose of this case to traverse the entire ground of what constitutes information within the meaning of section 147(b) of the new Act, because the question before us lies within an arrow compass. It is admitted that all the relevant facts regarding the two questions, namely, interest income and salary paid to the assessee's daughter-in-law, were available before the Income-tax Officer at the time of the original assessment and that it was only on a consideration of these facts that the Income-tax Officer had come to the conclusion that the interest income was in the nature of earned income and also that the salary paid by the assessee to her daughter-in-law was in the nature of allowable expenditure. The Income-tax Officer, however, on a consideration of the same facts subsequently, came to a different conclusion. In a way, this may amount to a change of opinion on the part of the Incometax Officer. Does such a change of opinion under the circumstances of this case entitle the Income-tax Officer to reopen t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the " external source " must either be a judgment of a court or the judgment of an appellate authority under the Income-tax Act. Although in the case of Nawab Sir Mir Osman Ali Khan Bahadur, the " external source " which was held to be information was the opinion expressed by the Central Board of Revenue in appeal under the Estate Duty Act, the Supreme Court has not held that the view expressed by the Central Board of Revenue was information only because the view was expressed in an appeal under the Estate Duty Act. The opinion of the Central Board of Revenue was held to be information from an external source, because the Income-tax Officer had not acted on his own initiative or on a change of his own opinion but because the correct position was brought to his notice by the decision of the Central Board of Revenue. In R. B. Bansilal Abirchand Firm v. Commissioner of Income-tax, the Supreme Court has held that the Income tax Officer had not acted on his own initiative or on the change of his own opinion when be took proceedings under section 34(1)(b) of the old Act and that the correct position had been brought to his notice by the decision of the Tribunal and the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act. It is not necessary for us for the purpose of this case to define the exact scope of the words " external source ". We are concerned in this case only with the question whether the scrutiny note of the revenue audit and the letter of the Inspecting Assistant Commissioner would come within the scope of " external source " ? The Comptroller and Auditor. General of India has the statutory right to scrutinise the proceedings of all departments of the Government including the income-tax department and to point out any defects or mistakes in such proceedings which adversely affect the revenues of the State. It is in the exercise of this statutory power that the Comptroller and Auditor-General of India, acting through his revenue audit staff, pointed out what he considered to be the errors committed by the Income-tax Officer in the original assessments. On the basis of this scrutiny note by the revenue audit, the Inspecting Assistant Commissioner, who had the authority under the Income-tax Act to supervise the work of the Income-tax Officer, including the assessments made by them, brought these errors pointed out by the revenue staff to the notice of the Income-tax Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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