9911796707
TMI Blog1972 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... in yarn and also commission agency. The question for determination is confined to assessment years 1955-56, 1957-58 and 1958-59. The corresponding previous years are Samvat years 2010, 2012 and 2013. Up to and including S.Y. 2011, the assessee-firm had three partners, viz., Bhagwandas, Ramniklal and Vrajlal. For and from S.Y. 2012 the firm had six partners viz., Ramniklal, Vrajlal, Ishwarlal, Kumudchandra, Vinodchandra and Indulal. In the books of the assessee there was an account in the name of Bombay Import and Export Agency (hereinafter referred to as "the Agency firm"). During the relevant period, the partners of the assessee-firm were interested in the Agency firm as there were common partners. The account of the assessee-firm with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was issued under section 34(1)(b) of the Act to reopen assessment on the ground that certain income for the three years had escaped assessment. Before the Income-tax Officer on behalf of the assessee-firm, it was sought to be contended that the provisions of section 34(1)(b) were not attracted because there was no discovery of information on the basis of which such a notice to reopen assessment could be issued, That contention, however, was rejected by the Income-tax Officer and he passed supplemental assessment orders on the footing that the assessee-firm had, as part of its income, the interest payable by the Agency firm on the amount due by it to the assessee-firm. An appeal by the assessee-firm to the Appellate Assistant Commissioner w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that merely because the statement of account for the relevant year of the Agency firm was filed before the Income-tax Officer, it cannot be said that while passing the original assessment orders, the Income-tax Officer consciously applied his mind to the facts disclosed therebv and to the inference to be drawn therefrom. He submitted that the assessee-firm had borrowed large sums of money and in respect of the said sums so borrowed, interest paid to the creditors was permitted to be deducted in calculating the income of the assessee-firm A part of this borrowed amount was utilised for making payment to the Agency firm and no interest was chargecd on the amount due by the Agency firm. His submission was that the fact that no interest was cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment of the assessee for the assessment years 1957-58 and 1959-60, the Income-tax Officer had accepted, as in previous years, the assessee's case that he held the shares of the company, Larsen & Toubro, as investment and that the profits arising from the sale of the shares of that company were capital gains. The very same Income-tax Officer in his assessment proceeding of the assessee for the assessment years 1959-60 and 1960-61, scrutinized the entire course of transactions from the year 1946, and held that though the assessee was an investor till March 31, 1954, he has converted his investment shares into stock-in-trade on April 1, 1954, and had become a dealer in shares and brought to tax the profit made by the assessee by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the Income-tax Officer had was that in later assessments he had himself taken a different view of the same facts. It was held that that would not justify the case for re-opening an assessment. The facts on the basis of which the assessment is sought to be re-opened are that the assessee-firm paid interest to various parties on the funds borrowed from them. That a part of the fund so borrowed was utilised in investment of the Agency firm in which the assessee-firm had certain common partners; that no interest was charged during the three relevant years to the Agency firm in respect of the amount due by it to the assessee-firm. Each one of these facts was within the knowledge of the Income-tax Officer when he passed the original orders of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e knew very well then that no interest was charged to the Agency firm for each one of the three relevant years. Mere fact that in the subsequent year 1959-60 the Income-tax Officer took a different view for failure to charge interest to the Agency firm cannot result in discovery of information which would justify the issue of a notice under section 34(1)(b). All relevant facts and the inferences to be drawn therefrom were before and known to the Income-tax Officer when he passed the original assessment orders and a mere change or difference in opinion, while assessing for the subsequent years, could not justify an officer to issue a notice under section 34(1)(b) of the Act. In our opinion, the Tribunal was right in taking the view that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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