ORDER
S.V. Maruthi, J.
1. Before the Supreme Court, in Civil Appeal No.3098 of 1990, two questions were raised for consideration at the instance of the Commissioner of Income Tax, Andhra Pradesh. The two questions read as follows:
“1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is justified in upholding Commissioner of Income
Tax (Appeals) Orders that the reassessment proceedings are not valid?
2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is justified in holding that the interest on the short-term Bank deposits cannot be considered as assessee’s income?”
The Supreme Court answered Question No.2 in favour of the Revenue on the ground that the said question is concluded by a judgment of the Supreme Court in Tuticorin Alkali Chemicals and Fertilisers Ltd. v. Commissioner of Income Tax, 227 ITR 172. Accordingly, the appeal was allowed and the matter was remanded by the Supreme Court directing this Court to consider Question No. 1. That is how this matter is posted before us.
2. The facts out of which Question No.1
was referred are as follows:
The Income Tax Officer, in the original assessment, brought Rs.80,000/- to tax. This amount was by way of interest on short-term deposits out of assessee’s own funds. The Commissioner of Income Tax, by his order dated 1-9-1981, gave relief to the assessee. However, the department had not accepted the decision. Meanwhile, the Income Tax Officer felt that even the original assessment was an underassessment, inasmuch as the interest from short-term deposits in the bank out of borrowed funds, has not been taxed by the Income Tax Officer at the time of original assessment. Following the decisions of the Bombay High Court in C1T v. United Wire Ropes Ltd., 121 ITR 762, and of the Madras High Court in Addl. CIT v. Madras Fertilisers Ltd., 122 ITR 139, he re-opened the assessment under Section 147(b) of the Income Tax Act. On appeal, the Commissioner of Income tax allowed the appeal filed by the assessee following the order of the Tribunal in Nagarjuna Steels Ltd. On a further appeal, the Tribunal set aside the re-assessment on the ground that the judgments of the Bombay
High Court (121 ITR 762 supra) and Madras High Court (122 ITR 139 supra) are not applicable to the facts of the case and that there was no information before the Income Tax Officer warranting re-opening of assessment under Section 147(b) of the Income Tax Act. At the instance of the Revenue, the two questions were referred to for the opinion of this Court. This Court, by a judgment dated 21-3-1988, held that the 2nd question was covered by the judgment of this Court in RC No.315 of 1982, dated 18-11-1987. Following the same the said question was answered in favour of the assessee and against the Revenue. The learned Judges observed that in view of the answer to the 2nd question, the 1st question does not arise. Aggrieved by the said judgment of this Court in RC No.36 of 1986 dated 21-3-1988, the Commissioner of Income Tax filed the Civil Appeal before the Supreme Court. The Supreme Court, by its judgment dated 11-12-1997, while answering Question No.2 in favour of the Revenue, remanded the matter to this Court for the purpose of considering the 1st question.
3. The main argument of the learned Counsel for the Revenue is that in view of the judgment of the Supreme Court in Tuticorin A/kali Chemicals and fertilizers Ltd case (supra), the interest earned by the assessee on deposits in bank is income and, therefore, assessable to tax under the Income Tax Act. Since the Income Tax Officer did not include the income thus earned by the assessee in the original assessment, he reopened the assessment following the judgment of the Madras High Court in Madras Fertilizers Ltd case (supra). The said judgment is information within the meaning of Section 147(b) of the Income Tax Act. Therefore, the re-assessment proceedings initiated by the Income Tax Officer under Section 147(b) are within his jurisdiction and in accordance with law. The Tribunal committed a mistake of law in holding that the judgment of the Madras High Court is not relevant to the facts of the case and, therefore.
there was no information warranting reopening of assessment under Section 147(b). The learned Counsel, in support of his contention that a judicial decision is information within the meaning of Section 147(b), relied on a decision of the Supreme Court in Maharaj Kumar Kamal Singh v. Commr. of Income Tax, 35 ITR 1, and ALA Firm v. CIT, 189 ITR 285.
4. On the other hand, Sri C. Kodanda Ram, the learned Counsel for the assessee vehemently contended that there was no information before the Income Tax Officer for re-opening the assessment and, therefore, he could not have invoked the jurisdiction under Section 147(b). The learned Counsel submitted that for the assessment year 1977-78, the matter was carried in appeal before the Tribunal and the Tribunal considered the judgment of the Madras High Court in Madras Fertilizers Ltd. case (supra) and, therefore, the very same material was before him and on the basis of the very same material, he could not have exercised the power under Section 147(a). It is a case where there is a change of opinion and, therefore, the Tribunal was right in holding that the re-assessment was not in accordance with Section 147(b).
5. At this stage, it is necessary to refer to the re-assessment order:
“According to the decisions of the Bombay High Court in CIT v. United Ropes Ltd., (1960) 121 ITR 762 (Bom), and the decision of the Madras High Court in the case of Addl. CIT v. Madras Fertilizers Ltd., (1980) 122 ITR 139 (Mad), the entire interest earned during pre-production period is assessable to tax under the head ‘Other Sources’ without any set-off of interest paid by the assessee on borrowed funds.”
In other words, from the order of the Income Tax Officer, it is clear that he has re-opened the assessment relying on the judgments of the Bombay High Court and Madras High Court.
The Tribunal says that these two judgments arc not relevant and, therefore, there is no information before the Income Tax Officer for re-opening the assessment. If these two judgments are relevant and if they were not considered by the Income Tax Officer at the time when he made the original assessment, then these two judgments would constitute information within the meaning of Section 147(b) of the Income Tax Act. If these two judgments were considered by the Income Tax Officer and expressed an opinion after considering these two judgments, then it amounts to change of opinion and the Income Tax Officer cannot exercise jurisdiction under Section 147(b).
6. The original order of assessment is not before us. Neither before the Tribunal nor before the Appellate Commissioner of Income Tax, it was argued that the judgment in Madras Fertilizers case (supra) was not available before the Income Tax Officer at the time of making the- original assessment. Therefore, we proceed on the basis that these two judgments namely the judgments of the Bombay High Court and Madras High Court were not before the Income Tax Officer.
7. The next question is whether the said two judgments arc relevant for the purpose of considering the issue that arose for consideration.
8. In the judgment of the Madras High Court in Madras Fertilizers Ltd. case (supra), the question that was referred by the Tribunal reads as follows:
“Whether the Tribunal was right in law in holding that the interest on the dollar deposits was income from any source other than business so that the total interest paid by the assessce during the year was not a permissible deduction against such income?”
Answering that question, the Madras High Court held in the affirmative and against the assessee. In other words, the Madras High
Court held that the interest earned on deposits is income from other source and is taxable under Income Tax Act. Therefore, the judgment of the Madras High Court is relevant and the finding of the Tribunal that the judgment of the Madras High Court is not relevant is not correct.
9. We are not referring to the judgment of the Bombay High Court, as in our view, the said judgment is not relevant to the facts of the present case, since the judgment of the Madras High Court in Madras Fertilizers case (supra) is relevant and since this judgment was not available at the time of original assessment, the Income Tax Officer is justified in re-opening the assessment under Section 147(b). In this context, we may refer to the observations made by the Supreme Court in Maharaj Kumar Kamal Singh’s case (supra):
“….. we would accordingly hold that
the word “information” in Section 34(1)(b) includes information as to the true and correct state of the law and so would cover information as to relevant judicial decisions. If that be the true position, the argument that the Income-Tax Officer was not justified in treating the Privy Council decision in question as information within Section 34(1)(b) cannot be accepted.”
The same view is reiterated in ALA Firm’s case (supra), wherein the Supreme Court held:
“…….on further research into law, he finds
that there was a direct decision holding that category of receipt to be an income receipt. He would be entitled to reopen the assessment under Section 147(b) by virtue of proposition (4) of Katyanji Mavji, . The feet that the details of sales of house properties were already in the file or that the decision subsequently come across by him was already there, would not affect the position because the information that such facts or
decision existed, comes to him only much later.”
In the light of the said decisions, the decision which came to the knowledge of the Income Tax Officer after the assessment is made, is information within the meaning of Section 147(b), The argument of the learned Counsel is that for the assessment years 1977-78 and 1979-80, the Tribunal, while considering the appeal filed by the Revenue, referred to the two judgments namely the judgment of the Bombay High Court in United Wire Ropes Ltd case (supra) and the judgment of the Madras High Court in Madras Fertilizers Ltd case (supra); that the Income Tax Officer is bound by the orders of the jurisdictional Tribunal and consequently, its order is binding on them. Therefore, the judgment of the Madras High Court in Madras Fertilizers Ltd case (supra) was before the Income Tax Officer. In other words, the Income Tax Officer reopened the assessment on the very same material which was before him. It is difficult to accept the argument of the learned Counsel for the asscssee, as the Tribunal’s Order for the assessment years 1977-78 and 1979-80, wherein they have referred to the judgment of the Madras High Court in Madras Fertilizers Ltd. case (supra), was dated 19-1-1984, whereas the original assessment order was dated 30-9-1980 and the re-asessment order was dated 26-3-1983. Therefore, we are of the view that the Madras High Court Judgment in Madras Fertilizers Ltd. case was not before the Income Tax Officer at the time when he made the original assessment. In the light of the above, we answer the question in the negative and in favour of the Revenue.
10. The Reference is accordingly answered.
