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TMI Blog1973 (4) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... n the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 13,157 claimed by the assessee under the head 'Rights, Concessions and Privileges' was not allowable under section 10(2)(xv) of the Indian Income-tax Act, 1922, the same being an item of expenditure of a capital nature ? " The facts will appear from the statement of the case. The assessee-company is a public limited company. The assessment year is 1959-60 and the relevant accounting period ends on June 30, 1958. The assessment of the company was completed by the Income-tax Officer under section 23(3) of the Act by the order dated December 14, 1959. Some time thereafter, a notice under section 34(1)(b) of the Act was issued by the Income-tax Officer in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. The Income-tax Officer, however, held that the said amount was not exclusively paid for the use of the water and could not be said to be an annual charge with reference to the use of water or services taken in connection with the business of the company. According to the Income-tax Officer the amount was clearly of a capital nature and he disallowed the same. An appeal was preferred to the Appellate Assistant Commissioner against the same and the reopening of the assessment under section 34(1)(b) by the Income-tax Officer was also challenged. The Appellate Assistant Commissioner, however, confirmed the action of the Income-tax Officer in taking recourse to section 34(1)(b) of the Income-tax Act. In his opinion, the Income-tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the Income-tax Officer was justified in reopening the assessment under section 34 of the Act. Mr. K. Ray, the learned advocate for the assessee-applicant, invited our attention to ground No. 1 taken by the assessee before the Appellate Assistant Commissioner, viz., that the Income-tax Officer erred in law in holding that the assessment in question could be reopened and a revised assessment made under section 34 and that the notice issued under section 34(1)(b) was bad in law as no income had been under-assessed. Mr. Ray contended before us that the jurisdiction of the Income-tax Officer to reassess income arises if he had in consequence of information in his possession reason to believe that the income chargeable to tax has es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany was assessed by a former Income-tax Officer and another Income-tax Officer sought to reopen the assessment made by his predecessor in office under section 34(1)(b). He can give notice under section 34(1)(b) if in consequence of information in his possession, he has reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under this Act. Now, what is the information in his possession ? What is the basis of his reason to believe that income has escaped assessment ? The Income-tax Officer cannot seek to justify the reopening of the assessment under section 34(1)(b) merely on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot satisfied that there was any material before us to show that in consequence of any information in his possession, the Income-tax Officer had any reason to believe that the income, profits or gains of the assessee chargeable to income-tax had escaped assessment. Under the circumstances, I answer question No. 1 in the negative and against the revenue. In view of answer to question No. 1 as above, question No. 2 need not be answered as, in our view, the assessment was not rightly reopened under section 34(1)(b). There will be no order as to costs. SABYASACHI MUKHARJI J.--I agree with the answers given by my learned brother. The main question in this case is whether the sum of Rs. 13,157 which was shown by the assessee under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came with an explanation that the amount was paid on account of securing "rights, concessions, facilities and privileges", that explanation was as a result of the enquiries made after the reopening and not prior to the reopening. It is necessary that for reopening under clause (b) there must be information before the reopening is made. Such information must come into the possession of the department subsequent to the original assessment and the information may be of law or fact. It is not necessary for us to go into the question whether the information should be derived from external sources and to what extent. The principles under which the reopening can be done under clause (b) of section 34(1) of the Indian Income-tax Act, 1922, are wel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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