COMMISSIONER OF INCOME TAX Vs. RAGHUNATH PR PODDAR

JUDGEMENT

(1.) In this reference under Section 66(1) of the Indian Income-tax Act, 1922, the following question has been referred to this Court:

(2.) The assessment for 1956-57 was made on 30th November, 1960, after receipt of the reply of the assessee dated 29th November, 1960, referred to hereinbefore. The loss of Rs. 88,857 was allowed. The Income-tax Officer reopened the assessment made stating that the information was received subsequent to the assessment that the loss of Rs. 2,71,919 did not represent loss from ready business but from speculative transaction. The information relied on is set out in paragraph 7 of the order which runs as follows :

(3.) The question involved in this reference is whether the view taken by the Tribunal subsequently changing its previous stand on the effect of the delivery of pucca delivery order could constitute an information in terms of Section 34(1)(b) of the Indian Income-tax Act, 1922. Counsel for the assessee contended that a different view taken by the Tribunal subsequently on the same set of facts would be change of opinion and would not be knowledge about new set of facts or law coming from an extraneous source subsequent to the original assessment. In the premises it was contended that the same set of facts upon which this inference had been drawn were present before the Income-tax Officer at the time of the original assessment and upon those facts the previous decision of the Tribunal had drawn a particular inference and, therefore, where on the same set of facts when the Tribunal had drawn a different inference that would not constitute an information in terms of the section. Reliance was placed in sup port of this contention on a decision of the Bombay High Court in the case of K. T. Kubal & Co. Private Ltd. v. Commissioner of Income-tax, [1963] 49 I.T.R. 433 (Bom.). There, the assessee had paid certain amounts by way of commission to one of its employees and had claimed the same as business expenditure under Section 10(2)(xv) of the Indian Income-tax Act, 1922. Relying on the facts that the payment was not made to the employee for any service rendered by him and that the amount represented secret commission in the nature of illegal gratification which had to be passed on to others in the course of securing order, the Tribunal in 1948-49 had disallowed a major portion of the expenses and had allowed it to the extent of Rs. 3,000. In view of the Tribunal's decision, amounts of Rs. 3,000, Rs. 2,963, Rs. 2,887 and Rs. 2,939, respectively, were allowed in each year from 1949-50 to 1952-53 as business expenditure in respect of the similar payments. When appeals relating to these assessment years were heard by a different Bench of the Tribunal on the same facts as were found by the Tribunal in 1948-49, it was held that no deduction at all should have been allowed. Thereupon, the Income-tax Officer started reassessment proceedings in respect of the years 1949-50 to 1952-53 in order to assess the amounts allowed as business expenditure. It was held by the Division Bench of the Bombay High Court that the observations made in the order of the Tribunal relating to the assessment years 1949-50 to 1952-53 did not amount to information in the possession of the Income-tax Officer and did not entitle him to reopen the assessment for these years. It was observed that a mere change of opinion on the part of the Tribunal regarding the admissibility of certain amounts as business expenditure would not constitute information within the meaning of Section 34(1)(b) of the Indian Income-tax Act, 1922. Counsel for the assessee further contended that the aforesaid decision had been referred to by the Supreme Court in several cases and had been distinguished on facts. He, for instance, drew our attention to the decision of the Supreme Court in the case of R.B. Bansilal Abirchand Firm v. Commissioner of Income-tax. of the report the decision of the Bombay High Court had been considered by the Supreme Court. The Supreme Court was of the view that in that case after considering the facts, the Bombay High Court had held that it could hardly be stated that any additional information had come into the possession of the Income-tax Officer which was not in his possession when the assessment orders had been made. It was in view of this finding of fact that it was held that Section 34(1)(b) of the Indian Income-tax Act, 1922, was not applicable. The Supreme Court distinguished the facts of the case in K.T. Kabul Private Ltd. v. Commissioner of Income-tax from the facts before the Supreme Court in the case of R. B. Bansilal Abirchand Firm v. Commissioner of Income-tax.