{"id":121869,"date":"1975-12-10T00:00:00","date_gmt":"1975-12-09T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975"},"modified":"2017-08-29T01:19:41","modified_gmt":"2017-08-28T19:49:41","slug":"kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975","title":{"rendered":"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975<\/div>\n
Equivalent citations: 1976 AIR 203, \t\t 1976 SCR (2) 966<\/div>\n
Author: S M Fazalali<\/div>\n
Bench: Fazalali, Syed Murtaza<\/div>\n
           PETITIONER:\nKALYANJI MAVJI & CO\n\n\tVs.\n\nRESPONDENT:\nC.I.T., WEST BENGAL-II\n\nDATE OF JUDGMENT10\/12\/1975\n\nBENCH:\nFAZALALI, SYED MURTAZA\nBENCH:\nFAZALALI, SYED MURTAZA\nMATHEW, KUTTYIL KURIEN\n\nCITATION:\n 1976 AIR  203\t\t  1976 SCR  (2) 966\n 1976 SCC  (1) 985\n CITATOR INFO :\n O\t    1979 SC1960\t (14)\n\n\nACT:\n     Income Tax Act, 1922-Section 34(1)(b)-Scope, extent and\nambit of, with,\t particular reference to the connotation and\nimport of the word \"information\" used in s. 34(1)(b)-Escaped\nassessment-Reopening the original assessment on the basis of\nsubsequent facts  as also  on the  materials of the original\nassessment   revealed\t by   more    careful\tand   closer\ncircumspection is  \"information\" within\t the meaning  of  s.\n34(1) (b)  of the  Act and  not a  case of  mere  change  of\nopinion.\n\n\n\nHEADNOTE:\n     The appellant  company, a\tregistered partnership firm,\nfiled its  income tax returns for the years 1956-57 and also\nfor 1957-58  respectively showing  a total  income  of'\t Rs.\n7,44,551\/-, after  claiming a  deduction of  a\tsum  of\t Rs.\n43,116\/-, being\t the amount of interest paid by the assessee\non the\tdebts incurred\tfor the\t partnership business  along\nwith the  balance sheet\t in support  of the said deductions.\nThe Income  Tax officer\t accepted the  claim on the basis of\nthe balance  sheet. When  the assessee\tfiled his return for\nthe year 1958-59, the Income Tax officer discovered that the\ndeduction claimed  by the  appellant  was  not\tcorrect\t and\ncalled upon  the  assessee  to\tprove  its  plea.  But,\t the\nassessee did  not lead\tany evidence  before him. The Income\nTax officer  finding that  the deduction of interest claimed\nwas utilised  for giving interest free loans to the partners\nfor clearing  their income-tax\tdues and,  as such, it could\nnot be\tsaid to\t be a  loan incurred for the expenses of the\npartnership firm,  not only disallowed the deduction claimed\nfor that  assessment year, but also issued a notice under s.\n34 (1)\t(b) for the re-opening of the original assessment of\nthe previous  years on\tthe ground that the deduction having\nbeen wrongly  allowed, taxable\tincome\tescaped\t assessment.\nAccordingly, the  Income  Tax  officer\tre-assessed  him  by\nincluding Rs.  43,116 to the total income. The appeal to the\nAppellate Assistant  Commissioner failed. However, on second\nappeal,\t the   Income  Tax  Appellate  Tribunal\t \"B\"  Bench,\nCalcutta, set  aside the  order of  the reassessment opining\nthat the  information resulting\t in the\t reassessment notice\nunder s.  34(1)(b) was not based on any fresh facts, but was\nderived from  the materials  on the  record of\tthe original\nassessment amounting  to a  change of  opinion and, as such,\nwas not sufficient to attract the provisions of s. 34(1)(b).\nOn the\tapplication of\tthe respondent-Revenue, the Tribunal\nmade a\treference under\t s.  66(1)  of\tthe  Act  framing  a\nquestion, namely,\n     \"Whether on  the facts  and in the circumstances of the\n     case  the\tTribunal  was  right  in  holding  that\t the\n     reassessment made\tby the\tIncome Tax  officer under s.\n     34(1)(b) of  the  Indian  Income  Tax  Act\t (1922)\t was\n     incompetent ?\"\nto the\tHigh Court,  which answered  it in  the negative and\nheld that  the case  squarely fell  within the\tambit of  s.\n34(1)(b) of the Act inasmuch as the information on the basis\nof which  the  Income  Tax  officer  sought  to\t reopen\t the\noriginal assessment,  was based on subsequent facts' as also\non the materials of the original assessment revealed by more\ncareful and closer circumspection of these materials.\n     Negativing\t the  following\t three\tcontentions  of\t the\nassessee appellant, namely,\n     (i) The  information relied  upon\tby  the\t Income\t Tax\nofficer not  having been  derived from\texternal sources, it\namounted to  a mere  change of opinion on the very facts and\nmaterials that\twere present  on the  record of the original\nassessment not\tattracting the\tprovisions of s. 34(1)(b) of\nthe Act.\n967\n     (ii) It  was not open to the Income Tax officer to have\nreopened the  original assessment  merely because  he took a\ndifferent view of the matter in the assessment year 1958-59.\n     (iii) That the High Court has not appreciated the ratio\nlaid down  by the  Supreme Court  in Commissioner of Income-\ntax, Gujarat  v. A.  Raman and\tCompany,<\/a> 67  I.T.R. 11,\t and\ndismissing the appeal by special leave, the Court\n^\n     HELD: (1) S. 34(1) contemplates two categories of cases\nfor reopening  the previous  assessment-(1) where  there has\nbeen an\t omission or  failure on the part of the assessee to\nmake a return of his income under s. 22 or to disclose fully\nand truly  all materials facts necessary for his assessment;\nand (ii)  where there  has been no such omission on the part\nof the\tassessee but the Income Tax officer, on the basis of\nthe  information   in  his  possession,\t finds\tthat  income\nchargeable to  tax has\tescaped assessment for any year. The\nfirst category deals with cases where an assessee is himself\nin default  and the  second category  deals with cases where\nthere is  an default  on the  part of the assessee but where\nthe income chargeable to tax has actually escaped assessment\nfor one reason or the other and the Income Tax officer comes\nto know about the same[1971  E-F]\n     (2) The  word \"information\"  which has not been defined\nin the\tAct is\tof the\twidest amplitude  and comprehends  a\nvariety\t of   factors.\tNevertheless,  the  power  under  s.\n34(1)(b), however,  wide it  may be,  is not plenary because\nthe discretion\tof the\tIncome Tax  officer is controlled by\nthe words \"reason to believe\". [973 C & E]\n     Bhimraj Pannalal  v. Commissioner\tof Income-tax, Bihar\nand  Orissa,   41  I.T.R.   221\t an  Bhimraj  Panna  Lal  v.\nCommissioner of\t Income-tax, Bihar  & Orissa, 32 I.T.R. 289,\nfollowed.\n     (3) Since\tthe Income  Tax officer\t was to see that the\ntax collecting machinery is made as perfect and effective as\npossible so  that the  tax-payer is  not allowed to get away\nwith escaped income-tax, in view of the difficulty in laying\ndown any  rule of universal application, the following tests\nand principles would apply to determine the applicability of\ns. 34(1)(b) to the following categories of cases:\n     (i) Where the information is as to the true and correct\nstate of law derived from relevant judicial decisions;\n     (ii) Where in the original assessment the income liable\nto  tax\t  has  escaped\t assessment   duel   to\t  oversight,\ninadvertence or\t a  mistake  committed\tby  the\t Income\t Tax\nofficer on  the principle  that the  tax-payer would  not be\nallowed\t to  take  advantage  of  an  oversight\t or  mistake\ncommitted by the taxing authority;\n     (iii) Where the information is derived from an external\nsource of  any kind.  Such  external  source  would  include\ndiscovery of  new and  important  matters  or  knowledge  of\nfresh, facts  which were  not present  at the  time  of\t the\noriginal assessment; and\n     (iv) Where\t the information  may be  obtained even from\nthe record  of the original assessment from an investigation\nof the\tmaterials on  the  record  or  the  facts  disclosed\nthereby or from other enquiry or research into facts of law.\n     If these  conditions are satisfied, then the Income Tax\nofficer would  have  complete  jurisdiction  to\t reopen\t the\noriginal assessment. It is obvious that where the Income Tax\nofficer gets  no subsequent information, but merely proceeds\nto reopen the original assessment without any fresh facts or\nmaterials or  without any  enquiry into\t the materials which\nfrom part of the original assessment, s. 34(1)(b) would have\nno application. [973 C, D, 976 A-E]\n     Maharaj  Kumar  Kamal  Singh  v.  The  Commissioner  of\nIncome-tax, Bihar  &<\/a> orissa  [1959]  Supp.  (1)\t S.C.R.\t 10;\nCommissioner of\t Wealth-tax, West Bengal v. Imperial Tobacco\nCompany of  India Ltd.<\/a> [1966] Supp. S.C.R. 174; Commissioner\nof Income-tax. Excess Profits Tax. Hyderabad, Andhra Pradesh\nv. V.  Jagan Mohan  Rao and  ors.<\/a> [1970]  1 S.C.R.  726\t and\nCommissioner of\t Income tax Gujarat v. A. Raman and Company,<\/a>\n67 I.T.R. 11, discussed.\n968\n     (4) In  the instant case the subsequent information was\nthe discovery  by the\tIncome Tax officer the deduction was\nwrongly claimed\t and the  consequent  disallowance  of\tthat\ndeduction and  the conduct  of the  assessee itself  in\t not\nadducing any  evidence or  materials to prove its stand that\nthe claim  was validly\tmade which  led to  the issue of the\nnotice under  s. 34(1)(b)  for reopening the assessment [978\nH]\n     (5)  The\tcase  really   fell  within  the  tests\t and\nprinciples laid\t down in  A. Raman Company's case and within\nthe ambit  of s. 34(1)(b) inasmuch as the Income Tax officer\nproceeded on  the basis of the information which came to him\nafter the  original assessment,\t by fresh  facts revealed in\nthe assessment\tfor the\t year 1958-59  and consisted  of the\nconduct of  the assessee  in not  adducing any\tevidence  to\nsupport its  plea. It  was not\ta case\tof a  mere change of\nopinion by  the Income\tTax officer  on the  materials which\nwere already on record. [1979 B-C]\n     Commissioner of  Income-tax, Gujarat  v. A.  Raman\t and\nCompany,<\/a> 67 I.T.R. 11, applied.\n     Bankipur Club Ltd. v. Commissioner of Income-tax, Bihar\nand Orissa,<\/a> 82 I.T.R. 831, 834, distinguished.\n     [On the  question \"Whether\t it is open to the I.T.O. to\nchange his  opinion subsequently  on the  same materials and\nreopen the  original assessment\" which arose in the decision\nin Commissioner\t of Income  Tax, Bombay\t City-2 v.  H. Holck\nLarsen,<\/a> 85  I.T.R. 467,\t 479, relied  on  by  the  appellant\nassessee and  also on the contention that in fact the amount\nsought to  be  deducted\t was  paid  towards  the  income-tax\nliabilities of the partners, the Court applied \"Non liquet\"]\n\n\n\nJUDGMENT:\n<\/pre>\n
     CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 522 of
\n1971. Appeal  by special  leave from  the judgment and order
\ndated the  26th April, 1968 of the Calcutta High Court in I.
\nT. Reference No. 50 of 1965.\n<\/p>\n
     N. N. Goswamy and Arvind Minocha for the Appellant.
\n     B. B. Ahuja and S. P. Nayar for the Respondent.
\n     The Judgment of the Court was delivered by
\n     FAZAL ALI, J. This appeal by special leave involves the
\ninterpretation of  the scope,  extent and  ambit of s. 34(1)\n<\/p>\n
(b) of the Income-tax Act, 1922 with particular reference to
\nthe connotation and import of the word `information’ used in
\ns. 34(1)  (b). Although\t the question  appears to  have been
\nsettled in  one form  or the  other by the decisions of this
\nCourt, the  changing  and  diverse  society  such  as  ours’
\ndealing\t in   complex  commercial  activities  continues  to
\nproduce multifarious  facts  of\t taxable  income  which\t has
\nescaped assessment  cloaked under difficult propositions and
\nknotty legal  problems. It is the onerous task of this Court
\nto dispel the doubts and resolve and reconcile the differing
\nviews taken  by the  High Courts in various situations which
\nevery time poses a new problem.\n<\/p>\n
     The points\t involved in  the instant  case have baffled
\nmany a\tlegal brain  so much  so that  the High\t Court\talso
\nappears to  have been  in two  minds whether  to  place\t the
\ninformation in\tthe instant  case as  based on the materials
\nalready on  the record of the original assessment of 1956-57
\nrevealed by  closer circumspection  or\tto  the\t information
\nderived from  subsequent or  fresh facts.  Before,  however,
\nexamining the  legal incidents\tof s.  34 of  the Income-tax
\nAct, 1922,  it may  be necessary  for us  to travel into the
\ndomain of  the facts of the present case which are short and
\nsimple.\n<\/p>\n
969<\/span><\/p>\n
     The assessee  appellant M\/s Kalyanji Mavji & Company is
\na registered  partnership firm dealing in various commercial
\nactivities. The\t said firm  filed its  return for  the\tyear
\n1956-57 corresponding to the accounting Gujarati Diwali Year
\n2001 showing a total income of Rs. 7,44,551\/- after claiming
\na deduction  of a  sum of  Rs. 43,116\/-being  the amount  of
\ninterest paid  by the assessee on the debts incurred for the
\npartnership business.  The Income-tax  officer accepted\t the
\nreturn but on appeal to the Appellate Assistant Commissioner
\nthe assessment\twas reduced  by a  sum of Rs. 9,200\/- by his
\norder dated  July 3,  1958. For\t the assessment year 1957-58
\nthe assessee  showed  the  same\t income\t and  the  deduction
\nclaimed\t was   allowed.\t The  next  year  1958-59,  however,
\npresented quite\t a different  complexion. While the assessee
\nfiled his return in the year 1958-59, the Income-tax officer
\nconcerned  suspected   the   correctness   of\tthe   return
\nparticularly the deduction of interest and found that as the
\namount of  the deduction  claimed was  utilised\t for  giving
\ninterest-free loans  to the  partners for  clearing up their
\nincome-tax dues\t it could  not be said to be a loan incurred
\nfor  the   expenses  of\t the  partnership  business  and  he
\naccordingly  disallowed\t  the  deduction   claimed  by\t the
\nappellant. This\t discovery led\tthe  Income-tax\t officer  to
\nissue notice  to the  appellant under  s. 34(1)\t (b) of\t the
\nIncome-tax Act,\t 1922-hereinafter referred  to as `the Act’-
\nfor reopening  the assessment  of the year 1956-57-hereafter
\nto be referred to as `the original assessment’-on the ground
\nthat the  deduction having  been  wrongly  allowed,  taxable
\nincome and  escaped assessment.\t After hearing the appellant
\nthe Income-tax officer completed the assessment and included
\nthe sum\t of Rs.\t 43,116\/- to  the total income shown, by the
\nassessee. Thereafter  the appellant  filed an  appeal before
\nthe Appellate  Assistant Commissioner  against the  order of
\nthe Income-tax\tofficer but  the appeal was dismissed by the
\nAppellate authority which confirmed the order of the Income-
\ntax officer.  It may  be pertinent to note here, that in his
\norder the  Appellate Assistant Commissioner pointed out that
\nin the\tassessment years  1958-59 and 1959-60 the Income-tax
\nofficer found that the appellant had no evidence with him to
\nshow that  the funds borrowed on which the interest was paid
\nwere utilised  for the\tpurpose\t of  the  business  and\t not
\ndiverted to  the partners.  Thereafter the appellant filed a
\nsecond appeal  to the  Income-tax Appellate  Tribunal,\t“B”,
\nBench Calcutta. The Tribunal after having accepted the facts
\nculminating  in\t  the  order   of  the\tAppellate  Assistant
\nCommissioner was  of the opinion that the information of the
\nIncome-tax officer  resulting in  the notice  under s. 34(1)\n<\/p>\n
(b) of\tthe Act\t to the\t assessee was not based on any fresh
\nfacts but  was derived\tfrom the materials on the records of
\nthe original  assessment. The Tribunal further found that if
\nthe  Income-tax\t  officer  while   completing  the  original
\nassessment would  have been careful enough to scrutinise the
\nbalance-sheet he  would have  at once detected the infirmity
\non the\tbasis of  which the  subsequent\t Income-tax  officer
\nissued the  notice under  s. 34(1)  (b)` of  the` Act to the
\nappellant. The\tTribunal further was of the opinion that the
\nsubsequent Income-tax  officer merely changed his opinion on
\nthe basis  of the  very materials  that were before him when
\nthe original assessment was made and that was not sufficient
\nto attract  the provisions  of s.  34(1) (b) of the Act. The
\nTribunal accordingly  allowed the  appeal and  set aside the
\norder of  the  Income-tax  officer  issuing  notice  to\t the
\nassessee under s. 34(1) (b)
\n970<\/span>
\nfor  reopening\t the  original\tassessment.  Thereafter\t the
\nrespondent,   namely,\tthe   Commissioner   of\t  Income-tax
\napproached the\tTribunal for  making a reference to the High
\nCourt under  s. 66(1)  of the  Act as  a result of which the
\nTribunal referred  the case  to the  High Court\t at Calcutta
\nafter framing the following question:\n<\/p>\n
\t  “Whether on  the facts and in the circumstances of
\n     the case,\tthe Tribunal,  was right in holding that the
\n     re-assessment made\t by the\t Income-tax officer under s.
\n     34(1) (b)\tof  the\t Indian\t Income-tax  Act,  1922\t was
\n     incompetent ?”\n<\/p><\/blockquote>\n
The High Court, after hearing the parties, differed from the
\nview taken  by the  Tribunal and  held that the present case
\nsquarely fell  within the  ambit of  s. 34(1) (b) of the Act
\ninasmuch as  the information  on  the  basis  of  which\t the
\nIncome-tax officer sought to re-open the original assessment
\nwas based  on subsequent  facts as  also on the materials of
\nthe original  assessment revealed by more careful and closer
\ncircumspection of  those materials.  The High Court referred
\nto a  number of\t decisions of  this Court  as  also  to\t the
\ndecisions of  the Calcutta  High Court. The appellant sought
\nleave to  appeal to this Court against the order of the High
\nCourt, which  having been  refused, the\t appellant  obtained
\nspecial leave from this Court, and hence this appeal.\n<\/p>\n
     In support\t of the\t appeal\t it  was  contended  by\t Mr.
\nBanerjee that  the view\t taken by  the High Court is legally
\nerroneous inasmuch  as the admitted facts of this case would
\ndisclose that  the information relied upon by the Income-tax
\nofficer in  order to re-open the original assessment was not
\nderive from  external sources  but amounted to a mere change
\nof opinion on the very facts and materials that were present
\non the\trecord of  the\toriginal  assessment.  It  was\talso
\nsubmitted that\tit was not open to the Income-tax officer to
\nhave re-opened\tthe original  assessment merely\t because  he
\ntook a\tdifferent view\tof the matter in the assessment year
\n1958-59. Lastly\t it was\t argued that  the High Court had not
\ncorrectly applied  the ratio  laid down\t by  this  Court  in
\nCommissioner  of   Income-tax,\tGujarat\t  v.  A.  Raman\t and
\nCompany<\/a>(1).\n<\/p>\n
     Mr. Ahuja\tappearing for the Revenue submitted that the
\norder of  the Income-tax officer was fully justified and the
\nHigh Court had taken the correct view of the law.\n<\/p>\n
     In order  to appreciate  the  contentions\tadvanced  by
\ncounsel for  the parties,  it is  necessary to\tmake a brief
\nsurvey of  the provisions of s. 34(1) of the Income-tax Act,
\n1922. The section runs thus:\n<\/p>\n
\t  “34. (1) If-\n<\/p><\/blockquote>\n
\t  (a)  the Income-tax  officer has reason to believe
\n\t       that by\treason of the omission or failure on
\n\t       the part\t of an\tassessee to make a return of
\n\t       his income  under section  22 for any year or
\n\t       to disclose  fully  and\ttruly  all  material
\n\t       facts necessary\tfor his\t assessment for that
\n\t       year, income,  profits or gains chargeable to
\n\t       income-tax have\tescaped assessment  for that
\n\t       year, or have been under-assessed or assessed
\n\t       at too low a rate, or
\n971<\/span>
\n\t       have  been  made\t the  subject  of  excessive
\n\t       relief under  the Act,  or excessive  loss or
\n\t       depreciation allowance has been computed, or\n<\/p><\/blockquote>\n
\t  (b)  notwithstanding\tthat   there  has   been  no
\n\t       omission or  failure as\tmentioned in  clause\n<\/p><\/blockquote>\n
\t       (a) on  the part of the assessee, the Income-
\n\t       tax officer has in consequence of information
\n\t       in his  possession  reason  to  believe\tthat
\n\t       income,\tprofits\t  or  gains   chargeable  to
\n\t       income-tax have\tescaped assessment  for\t any
\n\t       year,  or   have\t been\tunder-assessed,\t  or
\n\t       assessed at too low a rate, or have been made
\n\t       the subject  of excessive  relief under\tthis
\n\t       Act, or\tthat excessive\tloss or depreciation
\n\t       allowance has been computed,
\n     he may  in cases  falling under  clause (a) at any time
\n     and in  cases falling  under clause  (b)  at  any\ttime
\n     within four years of the end of that year, serve on the
\n     assessee, or,  if the  assessee is\t a company,  on\t the
\n     principal officer\tthereof, a  notice containing all or
\n     any of  the requirements  which may  be included  in  a
\n     notice under  sub-section (2)  of section\t22  and\t may
\n     proceed to\t assess or  reassess such  income profits or
\n     gains or  recompute the loss or depreciation allowance;
\n     and the provisions of this Act shall, so far as may be,
\n     apply accordingly as if the notice were a notice issued
\n     under that sub-section
\n\t  Provided  *\t *    *\t   *”\n<\/p><\/blockquote>\n
It would  be seen  that s. 34(1) contemplates two categories
\nof cases  for re-opening  the previous\tassessment-(1) where
\nthere has  been an  omission or\t failure on  the part of the
\nassessee to  make a  return of\this income under s. 22 or to
\ndisclose fully\tand truly  all material\t facts necessary for
\nhis assessment;\t and  (2)  where  there\t has  been  no\tsuch
\nomission on  the part  of the  assessee but  the  Income-tax
\nofficer on  the basis of information in his possession finds
\nthat income chargeable to tax has escaped assessment for any
\nyear. It  is, therefore,  manifest that\t the first  category
\ndeals with cases where an assessee is himself in default and
\nthe second category deals with cases where there is no fault
\non the\tpart of\t an assessee but where the income chargeable
\nto tax has actually escaped assessment for one reason or the
\nother and  the Income-tax  officer comes  to know  about the
\nsame. In  the instant  case, however,  we are concerned with
\nclause (b)  of s.  34(1)  extracted  supra.  Before  however
\nproceeding to interpret the ambit and import of s. 34(1) (b)
\nit may\tbe necessary to consider the history of s. 34 of the
\nAct which  appears to  have passed  through different phases
\nwith amendments\t and additions made to the section from time
\nto time.\n<\/p>\n
     Section 34 as it stood in 1922 was as follows:
\n\t  “34. If  for any  reason income  profits or  gains
\n     chargeable to  income-tax has escaped assessment in any
\n     year, or  has been\t assessed at  too low  a  rate,\t the
\n     Income-tax officer\t may, at any time within one year of
\n     the end of that year, serve on
\n972<\/span>
\n     the person liable to pay tax on such income, profits or
\n     gains, or\tin the\tcase of\t a company  on the principal
\n     officer thereof,  a notice containing all or any of the
\n     requirements which\t may be\t included in  a notice under
\n     sub-section (2) of section 22 and may proceed to assess
\n     or reassess  such income,\tprofits or  gains,  and\t the
\n     provisions of  this Act  shall, so\t far as may be apply
\n     accordingly as if the notice were a notice issued under
\n     that sub-section:\n<\/p>\n
\t  Provided that\t the tax  shall be  charged  at\t the
\n     rates at  which it\t would have  been  charged  had\t the
\n     income, profits or gains not escaped assessment or full
\n     assessment, as the case may be.”\n<\/p>\n
It would be seen that in the section as it stood in 1922 the
\nword `information’  was not  there at  all and\tthe  section
\nmerely\tempowered  the\tIncome-tax  officer  to\t reopen\t the
\nassessment of  any year\t where income  chargeable to tax had
\nescaped assessment.  No conditions  or\tlimitations  on\t the
\npower of  the Income-tax officer were at all laid down under
\nthe section.  It appears that the appropriate Legislature in
\nits wisdom thought that this would be too wide a power to be
\ngiven to  the Income-tax officer and may not be workable. In
\nthese circumstances,  by the  Indian Income-tax\t (Amendment)
\nAct, 1939, this section was recast as under:\n<\/p>\n
\t  “34 (1)  If in consequence of definite information
\n     which has\tcome  into  his\t possession  the  Income-tax
\n     Officer,  discovers  that\tincome,\t profits  and  gains
\n     chargeable, to  income tax\t have escaped  assessment in
\n     any year,\tor have\t been under-assessed,  or have\tbeen
\n     assessed at  too low,  a rate, or have been the subject
\n     of excessive  relief  under  this\tAct  the  Income-tax
\n     officer may,  in any  case in  which he  has reason  to
\n     believe that the assessee has concealed the particulars
\n     of his  income  or\t deliberately  furnished  inaccurate
\n     particulars 1, thereof, at any time within eight years,
\n     and in  any other case at any time within four years of
\n     the end of that year, serve on the person liable to pay
\n     tax on  such income,  profits or gains, or, in the case
\n     of a  company, on\tthe  principle\tofficer\t thereof,  a
\n     notice containing\tall or any of the requirements which
\n     may be  included in  a notice  under sub-section (2) of
\n     section 22, and may proceed to assess or re-assess such
\n     income, profits  or gains,\t and the  provisions of this
\n     Act shall,\t so far\t as may\t be, apply accordingly as if
\n     the notice were a notice issued under that sub-section:\n<\/p><\/blockquote>\n
\t  Provided  *\t *    *\t   ”<\/p>\n
     It may  be pertinent  to note  that by  virtue of\tthis
\namendment the  concept of  the Income-tax  officer  deriving
\ndefinite information  was introduced for the first time. The
\nword  ‘information’  was  qualified  by\t `definite’  and  an
\nadditional  condition\twas  incorporated  namely  that\t the
\nIncome-tax officer  discovers that  income chargeable to tax
\nhad
\n973<\/span>
\nescaped\t assessment.   This  provision\tled  the  Courts  to
\napproach  the\tprovisions  of\t the  section  with  greater
\ncircumspection and  stricter scrutiny  as a  result of which
\nmany cases of escaped assessments had to be set at naught by
\nsome decisions\tof the\tCourts. This  led the  Parliament to
\ntake a\tfresh view  of the  situation.\tAccordingly  by\t the
\nIncome-tax and\tBusiness Profits  Tax (Amendment) Act, 1948,
\nthe section was re-cast in the present form as quoted above.
\nThere were further amendments in 1954 and 1956 with which we
\nare not\t concerned. Ultimately\tby the Income-tax Act, 1961,
\nthe section underwent a complete transformation and even the
\nsetting of the section was changed which now forms s. 147(a)
\n& (b)  of the Income-tax, 1961. We are now concerned in this
\ncase only  with s. 34(1) (b) as it stood after the amendment
\nof 1948.\n<\/p>\n
     Another pertinent\tfact which  may be mentioned here is
\nthat although  s. 34  was the subject of several amendments,
\nyet the\t word `information’ which was introduced in 1939 has
\nnot been  defined at  all. Since  the word `information’ has
\nnot been  defined, it  is difficult  to lay down any rule of
\nuniversal  application.\t At  the  same\ttime  it  cannot  be
\ndisputed that  the object of the Act was to see that the tax
\ncollecting machinery  is made  as perfect  and effective  as
\npossible so  that the  tax-payer is  not allowed to get away
\nwith  escaped\tIncome-tax.  The  fact\tthat  the  adjective
\n`definite’ qualified  the word\t`information’ and  the\tword
\n`discovers’  which   were  introduced\tin  the\t  Income-tax
\n(Amendment) Act,  1939 were  deleted by the Amendment Act of
\n1948 would  lead to the irresistible inference that the word
\n`information’ is  of the  widest amplitude and comprehends a
\nvariety of  factors. Nevertheless  the power  under s. 34(1)\n<\/p>\n
(b), however  wide it  may be,\tis not\tplenary because\t the
\ndiscretion of  the Income-tax  officer is  controlled by the
\nword “reason  to believe”.  It was  so held by this Court in
\nBhimraj Pannalal  v. Commissioner  of Income-tax  Bihar\t and
\nOrissa(1), while  affirming the\t decision of  the Patna High
\nCourt in  Bhimraj Panna\t Lal v.\t Commissioner of Income-tax,
\nBihar and Orissa(1). This legal proposition, however, is not
\ndisputed. It,  therefore, follows  that information may come
\nfrom external  sources or even from materials already on the
\nrecord or  may be  derived from\t the discovery\tof  new\t and
\nimportant matter or fresh facts. The word `information” will
\nalso include  true and correct state of the law derived from
\nrelevant  judicial   decisions\teither\t of  the  Income-tax
\nauthorities or\tother courts  of law which decide income-tax
\nmatters. Where\tthe ground  on which the original assessment
\nis based is held to be erroneous by a superior court in some
\nother case,  that will\talso amount  to a  fresh information
\nwhich  comes  into  existence  subsequent  to  the  original
\nassessment. A  subsequent Privy\t Council  decision  is\talso
\nincluded  in   the  word  `information’.  Thus\tit  is\tvery
\ndifficult to lay down any hard and fast rule. But this Court
\nhas in\ttwo leading cases laid down some objective tests and
\nprinciples to determine the applicability of s. 34(1) (b) of
\nthe Act which we shall now discuss.\n<\/p>\n
974<\/span><\/p>\n
     In Maharaj\t Kumar Kamal  Singh v.\tThe Commissioner  of
\nIncome-tax, Bihar  & Orissa<\/a>(1)\tthe word  “information” fell
\nfor interpretation  by this  Court, where  it  was  observed
\nthus:\n<\/p>\n
\t  “We  would   accordingly  hold   that\t  the\tword
\n     “information” in  s. 34(1)\t (b) includes information as
\n     to the  true and  correct state of the law and so would
\n     cover information as to relevant judicial decisions. If
\n     that be  the  true\t position,  the\t argument  that\t the
\n     Income-tax officer\t was not  justified in\ttreating the
\n     Privy  Council  decision  in  question  as\t information
\n     within s. 34   (1) (b) cannot be accepted.\n<\/p><\/blockquote>\n
\t  *    *    *\t *    *
\n\t  In our  opinion, even in a case where a return has
\n     been submitted,  if the  Income-tax officer erroneously
\n     fails to  tax a part of assessable income, it is a case
\n     where  the\t  said\tpart   of  the\tincome\thas  escaped
\n     assessment. The  appellant’s  attempt  to\tput  a\tvery
\n     narrow and\t artificial limitation on the meaning of the
\n     word “escape” in s. 34(1)(b) cannot therefore succeed.”\n<\/p><\/blockquote>\n
It will be seen that this Court was in favour of placing not
\na narrow  but a\t liberal interpretation on the provisions of
\ns. 34(1)  (b) of  the Act.  This decision  was considered by
\nthis Court  in Commissioner  of Wealth\tTax, West  Bengal v.
\nImperial Tobacco Company of India Ltd.<\/a>(2) where Wanchoo, J.,
\nspeaking for this Court observed as follows:\n<\/p>\n
\t  “It may  be added  that after the decision of this
\n     Court in  Maharaj Kumar  Kamal Singh’s  case it  is now
\n     settled that  “information in  s.\t34(1)  (b)  included
\n     information as  to the  true and  correct state of law,
\n     and so  would cover information as to relevant judicial
\n     decisions” and that such information for the purpose of
\n     s. 34(1) (b) of the Income-tax Act need not be confined
\n     only to cases where the Income-tax officer discovers as
\n     a fact that income has escaped assessment.”<\/p><\/blockquote>\n
     Similarly in Commissioner of Income-tax, Excess Profits
\nTax, Hyderabad,\t Andhra Pradesh\t v. V.\tJagan Mohan  Rao and
\nors.<\/a>(3), while\tfollowing the  decision\t of  this  Court  in
\nMaharaj Kumar  Kamal Singh’s case (supra) it was observed as
\nfollows:\n<\/p>\n
\t  “In these  circumstances it was held by this Court
\n     firstly that  the word  information  in  s.  34(1)\t (b)
\n     included information  as to  the true and correct state
\n     of the  law, and  so  would  cover\t information  as  to
\n     relevant judicial\tdecisions, secondly that `escape’ in
\n     s. 34(1)  was not confined to cases where no return had
\n     been submitted  by the assessee or where income had not
\n     been assessed  owing to  inadvertence or  oversight  or
\n     other lacuna attributable to the assessing authorities.
\n     But even  in a  case where a return had been submitted,
\n     if the Income-tax officer had erroneously failed to tax
\n     a part of the assessa-\n<\/p><\/blockquote>\n
975<\/span><\/p>\n
     ble income, it was a case where that part of the income
\n     had escaped  assessment.  The  decision  of  the  Privy
\n     Council, therefore,  was held  to be information within
\n     the meaning  of s. 34(1)(b) and the proceedings for re-
\n     assessment were validly initiated.”<\/p><\/blockquote>\n
     The matter\t was again fully considered by this Court in
\nA.  Raman  and\tCompany’s  case\t (supra),  where  Shah,\t J.,
\nspeaking for  the Court extended the connotation of the word
\n`information’ to  two  different  categories  of  cases\t and
\nobserved as follows:\n<\/p>\n
\t  “The expression  “information” in  the context  in
\n     which it occurs must, in our judgment, mean instruction
\n     or knowledge derived from an external source concerning
\n     facts or  particulars, as\tto law\trelating to a matter
\n     bearing on the assessment.\n<\/p><\/blockquote>\n
\t  *    *    *\t *    *
\n\t  Jurisdiction of the Income-tax officer to reassess
\n     income arises  if he  has in consequence of information
\n     in\t his   possession  reason  to  believe\tthat  income
\n     chargeable\t to   tax  has\t escaped  assessment.\tThat
\n     information, must,\t it is\ttrue,  have  come  into\t the
\n     possession of the Income-tax officer after the previous
\n     assessment,`but even if the information be such that it
\n     could have been obtained during the previous assessment
\n     from an  investigation of\tthe materials on the record,
\n     or the facts disclosed thereby or from other enquiry or
\n     research into  facts  or  law,  but  was  not  in\tfact
\n     obtained, the jurisdiction of the Income-tax officer is
\n     not affected.”\n<\/p><\/blockquote>\n
An analysis  of\t this  case  would  clearly  show  that\t the
\ninformation as\tcontained in  s. 34(1)\t(b) must  fulfil the
\nfollowing conditions:\n<\/p>\n
\t  (1)  The  information\t  may  be  derived  from  an
\n\t       external\t  source    concerning\t facts\t  or
\n\t       particulars as  to  law\trelating  to  matter
\n\t       bearing on the assessment;\n<\/p><\/blockquote>\n
\t  (2)  That the\t information  must  come  after\t the
\n\t       previous or the original assessment was made.
\n\t       In  fact\t  the  words   “in  consequence\t  of
\n\t       information” as\tused in s. 34(1) (b) clearly
\n\t       postulate  that\t the  information   must  be
\n\t       subsequent to  the original assessment sought
\n\t       to be reopened; and
\n\t  (3)  That the\t information may be obtained even on
\n\t       the basis  of  the  record  of  the  previous
\n\t       assessment  from\t  an  investigation  of\t the
\n\t       materials  on   the  record,  or\t the  facts-
\n\t       disclosed thereby  or from  other enquiry  or
\n\t       research into facts or law.\n<\/p><\/blockquote>\n
These categories are in addition to the categories laid down
\nby this\t Court in Maharaj Kumar Kamal Singh’s case which has
\nbeen consistently  followed in\tseveral\t decisions  of\tthis
\nCourt as shown above.\n<\/p>\n
976<\/span><\/p>\n
     On a combined review of the decisions of this Court the
\nfollowing tests\t and principles would apply to determine the
\napplicability of s. 34(1) (b) to the following categories of
\ncases:\n<\/p>\n
\t  (1)  Where the  information is  as to the true and
\n\t       correct\tstate\tof  the\t  law  derived\tfrom
\n\t       relevant judicial decisions;\n<\/p><\/blockquote>\n
\t  (2)  Where in\t the original  assessment the income
\n\t       liable to  tax has  escaped assessment due to
\n\t       oversight,  in\tadvertence  or\t a   mistake
\n\t       committed by  the Income-tax officer. This is
\n\t       obviously based\ton the\tprinciple  that\t the
\n\t       tax-payer  would\t  not  be  allowed  to\ttake
\n\t       advantage  of   an   oversight\tor   mistake
\n\t       committed by the Taxing Authority;\n<\/p><\/blockquote>\n
\t  (3)  Where the  information  is  derived  from  an
\n\t       external source\tof any\tkind. Such  external
\n\t       source would  include discovery\tof  new\t and
\n\t       important matters or knowledge of fresh facts
\n\t       which were  not present\tat the\ttime of\t the
\n\t       original assessment;\n<\/p><\/blockquote>\n
\t  (4)  Where the  information may  be obtained\teven
\n\t       from the\t record of  the original  assessment
\n\t       from an investigation of the materials on the
\n\t       record, or  the facts  disclosed\t thereby  or
\n\t       from other  enquiry or research into facts or
\n\t       law.\n<\/p><\/blockquote>\n
If  these  conditions  are  satisfied  then  the  Income-tax
\nofficer would  have complete  jurisdiction  to\tre-open\t the
\noriginal assessment. It is obvious that where the Income-tax
\nofficer gets  no subsequent information, but merely proceeds
\nto re-open  the original  assessment without any fresh facts
\nor materials or without any enquiry into the materials which
\nform part  of the  original assessment,\t s. 34(1)  (b) would
\nhave no application.\n<\/p>\n
     Learned counsel for the appellant heavily relied on the
\ndecision of this Court in Bankipur Club Ltd. v. Commissioner
\nof  Income-tax,\t Bihar\tand  Orissa<\/a>(1)\tin  support  of\t the
\nproposition that  in the instant case the Income-tax officer
\nhas proceeded  to re-open the assessment on the basis of the
\nvery materials\twhich formed  the subject  of  the  original
\nassessment. It was submitted that in the original assessment
\nthe assessee  had claimed  a deduction\tand had produced the
\nbalance-sheet and  these very factors were also present when
\nthe Income-tax officer sought to make the assessment for the
\nyear 1958-59  and 1959-60,  and since  no fresh\t facts\twere
\nbrought to  his notice it was not open to him to re-open the
\noriginal assessment.  The facts\t of the\t case relied upon by
\nthe appellant  are clearly distinguishable from the facts of
\nthe present case. In Bankipur Club Ltd.’s(1) case it appears
\nthat the  Club had  in its  return placed  all the materials
\nwith full  details. The\t facts placed  before the Income-tax
\nofficer were self-evident and no calculation or scrutiny was
\nnecessary to find out the effect of the materials
\n977<\/span>
\nplaced before  the  Income-tax\tofficer.  In  view  of\tthis
\npeculiar  situation,  Hegde,  J.,  speaking  for  the  Court
\nobserved:\n<\/p>\n
\t  “The fact  that  the\tclub  had  received  certain
\n     amounts as\t guests charges\t from its  members had\tbeen
\n     placed before  the Income-tax  officer. It\t is not\t the
\n     case of  the Income-tax officer that he did not come to
\n     know all  the relevant  facts when he made the original
\n     orders of\tassessment. It\tis also not his case that at
\n     the time  he made\tthose orders he was not aware of the
\n     true legal\t position. It was for the Income-tax officer
\n     to\t show\tthat  he   had\treceived   some\t information
\n     subsequent\t to  his  passing  the\toriginal  orders  of
\n     assessment. No  such material  was\t placed\t before\t the
\n     Tribunal. That  being so, the Tribunal, in our opinion,
\n     was right\tin holding  that the  Income-tax officer was
\n     incompetent to initiate proceedings under section 34(1)\n<\/p><\/blockquote>\n
     (b).”\n<\/p><\/blockquote>\n
In the\tinstant case  it would\tappear that three additional
\nfacts had  come into existence after the original assessment
\nfor the\t year 1956-57  was made\t by the\t Income-tax officer.
\nThese were-(i)\tthat for  the assessment  year\t1958-59\t the
\nIncome-tax officer  did not  accept the assessee’s plea that
\nhe should  be allowed  deduction for  a sum of Rs. 43,116\/-;
\n(2) that  the Income-tax  officer came to a finding that the
\nassessee had not proved that the amount of deduction claimed
\nwas really  in connection  with the partnership business but
\nheld that  this was  on account\t of interest-free advance to
\nthe partners  to pay  their income-tax\tdues;  and  (3)\t the
\nconduct of  the appellant  in not clearing the doubts of the
\nIncome-tax officer  when the  appellant was given the notice
\nto contest the assessment merely on the question of law also
\nspoke  volumes\t against  the\tassessee  and  was  also  an
\nadditional factor which weighed with the Income-tax officer.
\nIt would  be seen  that the Income-tax officer in his order,
\nwhich is  Annexure-A to\t the statement\tof case filed by the
\nTribunal, observed as follows:\n<\/p>\n
\t  “In the  course of  the assessment proceedings for
\n     1958-59 however  it was  discovered that the assessee’s
\n     claim of  payment of interest on money borrowed was not
\n     proper. Inasmuch  as the entire money borrowed had been
\n     utilised not  for the purpose of business but in giving
\n     interest  free   advance  to   the\t partners   of\t the
\n     firm……………………. In  fact no\targument  as
\n     regards the  allowance or\tdisallowance of the interest
\n     amount in\tquestion was  placed but the entire argument
\n     of the  representative proceeded  on the basis that the
\n     action\t   u\/s\t       34\t  itself\t was
\n     illegal……………………….
\n\t  There is  no\tdoubt  that  there  has\t been  under
\n     assessment in this case and there is also no doubt that
\n     the fact  of under\t assessment has\t been brought to the
\n     notice of\tthe Income-tax officer only in the course of
\n     the income-tax proceedings for 1958-59.”\n<\/p><\/blockquote>\n
Similarly the appellate Assistant Commissioner in his order,
\nwhich is  Annexure-B to\t the statement of the case, observed
\nas follows:\n<\/p>\n
\t  “At  the  time  of  the  original  assessment\t the
\n     appellant claimed an interest of Rs. 43,116\/- which was
\n     allowed by
\n978<\/span>
\n     the I.T.O. in full. However, later on, while making the
\n     assessment for  the assessment  years 1958-59 and 1959-
\n     60, the I.T.O. found that the appellant had no evidence
\n     with him  to show\tthat the funds borrowed on which the
\n     interest was  paid, in  fact,  were  utilised  for\t the
\n     purpose  of  the  business\t and  not  diverted  to\t the
\n     partners.”\n<\/p><\/blockquote>\n
These findings\tby the\ttwo authorities\t have  been  clearly
\nmentioned  in  the  order  of  the  Tribunal,  which,  while
\nnarrating the facts, observed as follows:\n<\/p>\n
\t  “Subsequently,  however,   when   the\t  Income-tax
\n     officer was  making the  assessment for  the assessment
\n     year 1958-59,  he discovered  that the assessee did not
\n     utilise the  borrowed money  for  the  purpose  of\t the
\n     business but  for giving  interest free advances to its
\n     partners.\tThe   Income-tax  officer,   therefore,\t had
\n     reasons to\t believe that  income to  the extent  of Rs.
\n     43,116\/- had  been under-assessed\tand he issued notice
\n     under section, 34.”\n<\/p><\/blockquote>\n
Thus in\t view  of  the\tfindings  given\t by  the  Income-tax
\nauthorities the following facts emerge:-\n<\/p>\n
\t  (1)  that at\tthe time  of the original assessment
\n\t       the appellant had filed his return claiming a
\n\t       deduction  of  Rs.  43,116\/-  and  filed\t the
\n\t       balance sheet in support of his plea;
\n\t  (2)  that  the   balance-sheet  showed   that\t the
\n\t       capital of the firm was Rs. 8,70,000\/-, total
\n\t       drawings\t by   the  partners   stood  at\t Rs.
\n\t       29,31,998\/- and the loans were Rs. 6,63,292\/-
\n\t       The  Income-tax\tofficer\t who  completed\t the
\n\t       original assessment  appears to have accepted
\n\t       the  claim   of\tthe  appellant\tbecause\t the
\n\t       balance-sheet without  any  further  scrutiny
\n\t       and  a\tclose  calculation  would  not\thave
\n\t       revealed that the amount of deduction claimed
\n\t       was really  in the  nature of  interest\tfree
\n\t       loans given  to the  partners to\t meet  their
\n\t       income-tax liabilities:\n<\/p><\/blockquote>\n
\t  (3)  that  in\t  1958-59  the\t Income-tax  officer
\n\t       discovered that\tthe deduction claimed by the
\n\t       appellant was  not correct and he accordingly
\n\t       called upon  it to  prove its  plea  but\t the
\n\t       appellant led  no evidence  before the Income
\n\t       tax officer. From this the Income-tax officer
\n\t       concluded  that\t the  amount  sought  to  be
\n\t       claimed as deduction was not incurred for the
\n\t       purpose of the partnership business.\n<\/p><\/blockquote>\n
Thus, therefore,  the  subsequent  information\twas-(1)\t the
\ndiscovery by  the Income-tax  officer that the deduction was
\nwrongly claimed\t and his disallowance of that deduction; and\n<\/p>\n
(ii) the conduct of the appellant itself in not adducing any
\nevidence or  materials to prove its stand that the deduction
\nwas validly claimed.\n<\/p>\n
979<\/span><\/p>\n
     We might  mention that it was submitted by Mr. Banerjee
\nthat in\t fact the  amount sought  to be\t deducted  was\tpaid
\ntowards the  income-tax liability  of the  partners and this
\nwas done  to protect  the business itself and to improve the
\ncredit of  the partners.  Even this  specific plea  does not
\nappear to  have been taken before the Income-tax officer. We
\nare,  however,\tnot  concerned\twith  this  particular\tplea
\nbecause we  are given  to understand  by the counsel for the
\nappellant that the appeals against the assessment orders for
\nthe years 1958-59 and 1959-60 are pending before the Income-
\ntax authorities.  In these  circumstances we  are clearly of
\nthe opinion  that the facts of the present case clearly fall
\nwithin the  tests and  principles laid down by this Court in
\nA. Raman  and Company’s case (supra) inasmuch as the Income-
\ntax officer  proceeded on the basis of the information which
\ncame to\t him after  the original  assessment by\t fresh facts
\nrevealed  in   the  assessment\tfor  the  year\t1958-59\t and
\nconsisted of  the conduct  of the  appellant itself  in\t not
\nadducing  any\tevidence  to   support\tits  plea.  We\tare,
\ntherefore, unable  to agree  with the  view of\tthe Tribunal
\nthat this  was a  case of  a mere  change of  opinion by the
\nIncome-tax officer  on the  materials which  were already on
\nthe record.\n<\/p>\n
     our attention was also drawn by the learned counsel for
\nthe appellant  to the  decision of  the Bombay High Court in
\nCommissioner of\t Income-tax, Bombay  City  II  v.  H.  Holck
\nLarsen<\/a>(1). In  this case,  Chandrachud, J.,  as he then was,
\nspeaking for  the Court\t after review  of the authorities of
\nthis Court and other High Courts, observed as follows:\n<\/p>\n
\t  “What is  obligatory in  order  to  apply  section
\n     34(1)(b) is  that he  must have  “information”  in\t his
\n     possession in  consequence of  which he  has reason  to
\n     believe that  the income  has escaped  assessment or is
\n     under-assessed, etc. The distinction really consists in
\n     a\tchange\t of  opinion   unsupported   by\t  subsequent
\n     information on  the one  hand and\ta change  of opinion
\n     based on  information  subsequently  obtained,  on\t the
\n     other. In\tthe former  class of  cases, the  assessment
\n     proceedings are  attempted to  be re-opened without the
\n     discovery\tof   an\t error\tand  without  receiving\t any
\n     information\tas\t   to\t     fact\t  or
\n     law……………………….  Such  a  reopening  is
\n     based on  a “mere”\t change of  opinion and\t is  without
\n     jurisdiction…..\t……..  In  the  latter  class  of
\n     cases, the reopening is based on information leading to
\n     the  requisite  belief  and  is  therefore\t within\t the
\n     jurisdiction of the officer.”\n<\/p><\/blockquote>\n
This decision  is really based on the question whether it is
\nopen  to  the  Income-tax  officer  to\tchange\this  opinion
\nsubsequently on\t the same  materials and reopen the original
\nassessment. We\tare no doubt inclined to agree with the view
\nexpressed by  Chandrachud, J., in the aforesaid case, but as
\nthis question  is not  free from difficulty as there is some
\ndivergence of  judicial opinion\t on the\t subject,  we  would
\nrefrain from  giving any  definite decision  on this  point,
\nparticularly when in
\n980<\/span>
\nthe view  we take  in the  instant case, this point does not
\nreally arise for determination in this case, which is really
\nbased on another principle, namely, that the information was
\nderived by  the Income-tax  officer from  fresh facts and is
\nclearly covered\t by the principles laid down in A. raman and
\nCompany’s case (supra).\n<\/p>\n
     For the  reasons given  above,  we\t find  ourselves  in
\ncomplete agreement  with the  view taken  by the High Court.
\nAccordingly the\t appeal fails  and is  dismissed but without
\nany order as to costs.\n<\/p>\n
S.R.\t\t\t\t\t   Appeal dismissed.\n981<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975 Equivalent citations: 1976 AIR 203, 1976 SCR (2) 966 Author: S M Fazalali Bench: Fazalali, Syed Murtaza PETITIONER: KALYANJI MAVJI & CO Vs. RESPONDENT: C.I.T., WEST BENGAL-II DATE OF JUDGMENT10\/12\/1975 BENCH: FAZALALI, SYED MURTAZA BENCH: FAZALALI, SYED MURTAZA MATHEW, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-121869","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nKalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975 - Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975\" \/>\n<meta property=\"og:site_name\" content=\"Free Judgements of Supreme Court & High Court | Legal India\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/LegalindiaCom\/\" \/>\n<meta property=\"article:published_time\" content=\"1975-12-09T18:30:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2017-08-28T19:49:41+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1\" \/>\n\t<meta property=\"og:image:width\" content=\"512\" \/>\n\t<meta property=\"og:image:height\" content=\"512\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Legal India Admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@legaliadmin\" \/>\n<meta name=\"twitter:site\" content=\"@Legal_india\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Legal India Admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"36 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975\"},\"author\":{\"name\":\"Legal India Admin\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\"},\"headline\":\"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975\",\"datePublished\":\"1975-12-09T18:30:00+00:00\",\"dateModified\":\"2017-08-28T19:49:41+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975\"},\"wordCount\":5602,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"articleSection\":[\"Supreme Court of India\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975\",\"name\":\"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975 - Free Judgements of Supreme Court & High Court | Legal India\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\"},\"datePublished\":\"1975-12-09T18:30:00+00:00\",\"dateModified\":\"2017-08-28T19:49:41+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#website\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"name\":\"Free Judgements of Supreme Court & High Court | Legal India\",\"description\":\"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\"},\"alternateName\":\"Free judgements of Supreme Court & High Court of India | Legal India\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#organization\",\"name\":\"Judgements of Supreme Court & High Court | Legal India\",\"alternateName\":\"Legal India\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"contentUrl\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/wp-content\\\/uploads\\\/sites\\\/5\\\/2025\\\/09\\\/legal-india-icon.jpg\",\"width\":512,\"height\":512,\"caption\":\"Judgements of Supreme Court & High Court | Legal India\"},\"image\":{\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/LegalindiaCom\\\/\",\"https:\\\/\\\/x.com\\\/Legal_india\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/#\\\/schema\\\/person\\\/0bfdffe9059fb8bb24a86d094609c5ea\",\"name\":\"Legal India Admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g\",\"caption\":\"Legal India Admin\"},\"sameAs\":[\"https:\\\/\\\/www.legalindia.com\",\"https:\\\/\\\/x.com\\\/legaliadmin\"],\"url\":\"https:\\\/\\\/www.legalindia.com\\\/judgments\\\/author\\\/legal-india-admin\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975 - Free Judgements of Supreme Court & High Court | Legal India","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975","og_locale":"en_US","og_type":"article","og_title":"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975 - Free Judgements of Supreme Court & High Court | Legal India","og_url":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975","og_site_name":"Free Judgements of Supreme Court & High Court | Legal India","article_publisher":"https:\/\/www.facebook.com\/LegalindiaCom\/","article_published_time":"1975-12-09T18:30:00+00:00","article_modified_time":"2017-08-28T19:49:41+00:00","og_image":[{"width":512,"height":512,"url":"https:\/\/i0.wp.com\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg?fit=512%2C512&ssl=1","type":"image\/jpeg"}],"author":"Legal India Admin","twitter_card":"summary_large_image","twitter_creator":"@legaliadmin","twitter_site":"@Legal_india","twitter_misc":{"Written by":"Legal India Admin","Est. reading time":"36 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975#article","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975"},"author":{"name":"Legal India Admin","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea"},"headline":"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975","datePublished":"1975-12-09T18:30:00+00:00","dateModified":"2017-08-28T19:49:41+00:00","mainEntityOfPage":{"@id":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975"},"wordCount":5602,"commentCount":0,"publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"articleSection":["Supreme Court of India"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975","url":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975","name":"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975 - Free Judgements of Supreme Court & High Court | Legal India","isPartOf":{"@id":"https:\/\/www.legalindia.com\/judgments\/#website"},"datePublished":"1975-12-09T18:30:00+00:00","dateModified":"2017-08-28T19:49:41+00:00","breadcrumb":{"@id":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.legalindia.com\/judgments\/kalyanji-mavji-co-vs-c-i-t-west-bengal-ii-on-10-december-1975#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.legalindia.com\/judgments\/"},{"@type":"ListItem","position":2,"name":"Kalyanji Mavji & Co vs C.I.T., West Bengal-Ii on 10 December, 1975"}]},{"@type":"WebSite","@id":"https:\/\/www.legalindia.com\/judgments\/#website","url":"https:\/\/www.legalindia.com\/judgments\/","name":"Free Judgements of Supreme Court & High Court | Legal India","description":"Search and read the latest judgements, orders, and rulings from the Supreme Court of India and all High Courts. A comprehensive database for lawyers, advocates, and law students.","publisher":{"@id":"https:\/\/www.legalindia.com\/judgments\/#organization"},"alternateName":"Free judgements of Supreme Court & High Court of India | Legal India","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.legalindia.com\/judgments\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.legalindia.com\/judgments\/#organization","name":"Judgements of Supreme Court & High Court | Legal India","alternateName":"Legal India","url":"https:\/\/www.legalindia.com\/judgments\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/","url":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","contentUrl":"https:\/\/www.legalindia.com\/judgments\/wp-content\/uploads\/sites\/5\/2025\/09\/legal-india-icon.jpg","width":512,"height":512,"caption":"Judgements of Supreme Court & High Court | Legal India"},"image":{"@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/LegalindiaCom\/","https:\/\/x.com\/Legal_india"]},{"@type":"Person","@id":"https:\/\/www.legalindia.com\/judgments\/#\/schema\/person\/0bfdffe9059fb8bb24a86d094609c5ea","name":"Legal India Admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/4faa9d728ed1af3b73d52225c7f12901ac726fe6f7ea0a3348a1d51f3a930987?s=96&d=mm&r=g","caption":"Legal India Admin"},"sameAs":["https:\/\/www.legalindia.com","https:\/\/x.com\/legaliadmin"],"url":"https:\/\/www.legalindia.com\/judgments\/author\/legal-india-admin"}]}},"modified_by":null,"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/121869","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/comments?post=121869"}],"version-history":[{"count":0,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/posts\/121869\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/media?parent=121869"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/categories?post=121869"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalindia.com\/judgments\/wp-json\/wp\/v2\/tags?post=121869"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}