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TMI Blog1983 (10) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 1969-70 was completed on July 24, 1970, determining the net chargeable profit at Rs. 20,091 and surtax of Rs. 5,023 was levied. The ITO computed the capital as Rs. 30,03,329 comprised of Rs. 6,03,329 being the general reserve as on April 1, 1967, after rejecting the assessee's claim that Rs. 1,30,083 appropriated towards general reserve by the board of directors of the company from out of the profits of the year ending March 31, 1968, should also be taken as part of the general reserve, as such appropriation became effective after the approval by the shareholders on September 27, 1968. Aggrieved by this, the assessee preferred an appeal to the AAC who confirmed the assessment rejecting the contention of the assessee that Rs. 1,30,083 appropriated by the board of directors to the general reserve should be taken into consideration in computing the capital. On further appeal to the Tribunal, by its order dated February 21, 1972, the Tribunal accepted the claim of the assessee and held that Rs. 1,30,083 appropriated by the board of directors out of the profits of the assessee-company for the year ending March 31, 1968, should also be reckoned as forming part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended to be distributed as dividend by the directors could be considered as forming part of the general reserve for the purpose of computation of the capital was not the subject-matter of the appeal before the Tribunal and, therefore, the Tribunal cannot be taken to have adjudicated on that question, and further contending that the reopening was also made for the reason that a portion of the capital proportionate to the dividend income not included in the assessment should be excluded under rule 4 of the Second Schedule to the Act and that was also not decided by the Tribunal earlier. On the other hand, the assessee contended that the original order of assessment had become merged in the order of the Tribunal and, therefore, there was no question of the revision of the assessment already made by the ITO. Considering these rival contentions, the Tribunal concluded that the subject-matter for consideration in the appeal before the Tribunal was whether Rs. 1,30,083 transferred by the board of directors to the general reserve out of the profits for the year ending March 31, 1968, should be treated as forming part of the reserve as on April 1, 1968, and that question only was decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that chargeable profits assessable for any assessment year have escaped assessment or have been underassessed or assessed at too low a rate or have been the subject of excessive relief under this Act...... " This provision is more or less identical with s. 147(b) of the I.T. Act, 1961, which again embodies the principles of s. 34(1)(b) of the Indian I.T. Act, 1922. These are enabling provisions intended to reopen assessments and for levying back duty. A feature prominently discernible in these provisions is that the ITO must have some information subsequent to the passing of the assessment order on the basis of which he must have reason to believe that chargeable profits assessable for any assessment year have escaped assessment or have been underassessed or assessed at too low a rate or subjected to excessive relief. The vital requirement is that the ITO must have information in his possession. In this case, the Tribunal, in paragraph II of its order, has referred to the absence of the recording of any reason by the ITO for reopening the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rials. Equally, the other noting under the initials of the ITO dated February 3, 1973, refers only to a proposal for revision of the original assessment by the Commissioner and we are unable to understand how such a proposal can be characterised as information. Further, the note states that there are other details requiring consideration like reserves, application of rule 4, etc. This also, in our view, is very vague, indefinite, remote and farfetched and cannot be stated to be information for purposes of s. 8(b) of the Act. We have already pointed out that what is important is possession of information by the ITO. From a reading of the notings referred to earlier, we are of the view that they could not constitute information " for purposes of s. 8(b) of the Act at all. We may state that these enabling provisions for reopening of assessments for the purposes of back duty have contributed to a considerable abundance of case-law and we now proceed to refer to a few cases. In Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1(SC), in dealing with s. 34(1)(b) of the Indian I.T. Act, 1922, the Supreme Court pointed out that where an assessment for a particular year is completed on a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a reconsideration of the same materials and no more, would not give the ITO the power to reopen the assessment. We find that all these cases and the related aspects have been exhaustively dealt with in Tax Case Nos. 870 to 876 of 1976 dated August 26, 1980 (United India Fire and General Insurance Co. Ltd. v. CIT). The position is thus clear that a mere change of opinion on the part of the ITO without anything more, cannot provide a basis for reopening an assessment. The information in this case is not a matter of law. Merely proceeding to reopen an assessment on no material not leading to the formation of a belief relating to the escapement of chargeable profits, as in this case, is not at all contemplated under s. 8(b) of the Act. The sufficiency or the adequacy of the material, if any, is not the concern of this court, but on the point whether any action should be initiated by way of reopening of the assessment already completed, the court has to consider whether the material would be such as to constitute " information ". Earlier, we have pointed out that there is no information at all. The attempted reopening is, therefore, attributable only to the entertaining of second though ..... X X X X Extracts X X X X X X X X Extracts X X X X
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