(1.) THE respondent, Shri Satya Paul Virmani, is a Hindu undivided family, which derives its income from various businesses besides property and dividend on shares. It owns a flour mill at Amritsar known as Jawala Flour Mills, Amritsar, which was leased out to M/s. S. P. Virmani and Sons Ltd., Amritsar, on the terms and conditions contained in the lease deed dated January 10, 1947. For the assessment year 1955-56 the Income-tax Officer made the assessment of the respondent on November 21, 1955; in which the income from the lease of the flour mill was determined at Rs. 36,609.00 and was treated as income from business. This income, along with some other income from business, was adjusted against the loss from some other business and the net income after adjustment was determined at Rs. 26,198-00. For the assessment year 1957-58, the Income-tax Officer treated the lease money of the flour mill as income from other sources and not as income from business. THE assessee (respondent) filed an appeal before the Appellate Assistant Commissioner of Income-tax, who accepted the appeal by order dated July 24, 1959, and held that the income from the lease of Jawala Flour Mills, Amritsar, was liable to be assessed under the head "business". THE Commissioner of Income-tax directed the Income-tax Officer on October 17, 1959, to file an appeal against the order of the Appellate Assistant Commissioner of Income-tax before the Tribunal. THE appeal was accordingly filed but was withdrawn later on. On March 21, 1960, the Income-tax Officer issued a notice under Section 34(1)(b) of the Indian Income-tax Act, 1922 (hereinafter called "the Act"), to the respondent for the assessment year 1955-56 and made a reassessment order on March 20, 1961, In this order, he assessed the income from the lease of Jawala Flour Mills, Amritsar, under the head "other sources" instead of the head "business" with the result that the brought forward business loss which had been set off in the original assessment dated November 21, 1955, was not set off against the income from business in the order of reassessment. THE respondent filed an appeal from that order before the Appellate Assistant Commissioner of Income-tax on the ground that at the time of issuing the notice under Section 34(1)(b) of the Act, the Income-tax Officer had no additional information in his possession on the basis of which he could issue such a notice. THE Appellate Assistant Commissioner of Income-tax accepted that contention and held that the decision of the department to go in appeal to the Tribunal against the order of the Appellate Assistant Commissioner of Income-tax for the assessment year 1957-58 did not amount to any fresh information within the meaning of Section 34(1)(b). He accordingly held by his order dated April 10, 1962, that the notice issued under Section 34(1)(b) to the respondent was based on a mere change of opinion by the Income-tax Officer on the, same set of facts and the notice was, therefore, invalid. He cancelled the reassessment made by the Income-tax Officer. THE Commissioner of Income-tax filed an appeal against the order of the Appellate Assistant Commissioner to the Income-tax Appellate Tribunal which was dismissed by the Tribunal on February 29, 1964. THE Tribunal held as under :
(2.) AGAINST that order, the Commissioner of Income-tax made an application. Before the Income-tax Appellate Tribunal under Section 66(1) of the Act for drawing up the statement of the case and to refer to this court the following question of law :
(3.) IN Commissioner of Wealth-tax v. Imperial Tobacco Co. of INdia Ltd., [1966] 61 I.T.R. 461, 466, 467 (S.C.), their Lordships of the Supreme Court, while considering the scope of Section 17(b) of the Wealth-tax Act, referred to the decisions under 34(1)(b) of the Act, as the two sections were in pari materia. Having referred to some judgments of the various High Courts, their Lordships observed as under :