SARASWATI DEVI LOHIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) I agree with the answers proposed by my learned brother whose judgment I had the privilege to read.

(2.) THE argument that has been frequently advanced that a change of opinion cannot sustain the reopening of the assessment proceedings under section 34(1)(b) is hardly intelligible. If even after income has been proved to have escaped assessment it was necessary to consider whether the reopening of the assessment proceedings was legal or not, the question that will be considered by the court is whether there was information in the possession of the Income-tax Officer who reopened the proceedings. THE question is of his jurisdiction and the court will consider why he reopened the proceedings, rather, how he reopened the proceedings. It is, in my opinion, a mistake to proceed first by finding what had happened in the earlier assessment proceedings resulting in the escape of income from assessment. What is required for the validity of the reopening of the proceedings is : (1) escape of income from assessment, (2) belief that it has escaped assessment, and (3) information resulting in the belief. In considering none of the three requirements, is it relevant to see what had happened in the earlier proceedings. It is enough that the earlier proceedings resulted in escape of income from assessment, how and why it escaped is wholly irrelevant and an inquiry into it a waste of time and labour. In every case there is escape of income; otherwise the question of the applicability of section 34(1)(b) will not arise. If income had not escaped assessment, even if the assessment proceedings are reopened under section 34 they will end in nothing and if they wrongly end in an assessment order it will be set aside on merits. So in every case one starts with the fundamental facts that income has escaped assessment and that the assessment proceedings are reopened. THE very fact that the reopening is justified by the result will normally show that the reopening was done on account of belief that income had escaped assessment. It is a question of fact why the proceedings are reopened and the fact is within the exclusive knowledge of the income-tax Officer, who reopens them. An inquiry into the reason for the reopening should be addressed to him and there should not be any occasion for inference. But since it is the assessee who generally challenges the order of assessment or reassessment passed under section 34, it is for him to show, at least prima facie, that the reopening of the proceedings was illegal. It cannot be assumed that the reopening was done without any belief formed in the mind of the Income-tax Officer that income had escaped assessment; if any presumption is to be made it must be as I said above, that the reopening was done on the basis of the belief. THEn there remains the last and troublesome question of how the belief was formed. This again is a question of fact, to be answered by the Income-tax Officer, who alone knows how he believed that income had escaped assessment. No question of fact can be dealt with by this court in a reference under section 66. No question of fact can be referred at all by the Appellate Tribunal to this court and even if some question of fact is illegally referred, it would be entitled to refuse to answer it. THErefore, this court should not go into the question how the Income-tax Officer formed the belief. It is appears from the record that he formed the belief on the basis of a certain thing, a question of law arises whether it amounts to the forming of the belief on the basis of information in his possession or not. But no such question will arise if the record does not disclose how or why he formed the belief. THE record before us does not disclose how or why the Income-tax Officer formed the belief and, therefore, no question whether he had formed the belief on the basis of information in his possession or not arises before, or can be answered by, us. It will not be possible for us to assume that he had no information in his possession and that, consequently, he did not form the belief in the only manner contemplated by the law. For all we know he might have received some information on the basis of which he formed the belief and reopened the proceedings by issuing a notice to the assessee. If the assessee challenged his Jurisdiction to do so she should have done so at the earliest opportunity when she appeared before him in response to the notice and asked him how he had formed the belief. It is too late for her now to seek to have the assessment order made under section 34 quashed on the assumed ground that he had no information to justify the belief. If she had challenged his jurisdiction while the assessment proceedings were going on, he might have been under an obligation to explain how he had assumed jurisdiction but once he was allowed to complete the assessment on her without protest and she filed an appeal from the assessment order, he ceased to be under any onus and the onus lay upon her to satisfy the Appellate Assistant Commissioner that the assessment order was vitiated by lack of jurisdiction on his part. It is well known that an appellant has the onus of satisfying the appellate authority that the order of the inferior authority was wrong. For discharging this onus he must rely only upon the record and he cannot assume facts though he may resort to presumptions which can reasonably be drawn from the facts on the record.

(3.) THE stock argument, which did not fail to be advanced before us also, that there was no fresh information in the Income-tax Officers possession has three replies, each one of which is sufficient. One is that it is a question of fact. Another is that it is not supported by any material that there is generally no evidence that the Income-tax Officer did not receive any fresh information. THE assessee usually assumes that he had no fresh information. I have not come across any case in which he was ever questioned either by the assessee during the proceedings under section 34 or by the Appellate Assistant Commissioner or the Appellate Tribunal hearing an appeal from his assessment order about the information in his possession. Lastly, the argument proceeds on the fallacy that existence of a fact is the same thing as knowledge of its existence and the fallacy that information that a certain view either of facts or of law taken previously was erroneous is no information within the meaning of section 34(1)(b).