Escapement of income: reassessment justified where successor possesses information of predecessor's omission, not a mere change of opinion.

Whether income escaped assessment and whether reassessments were invalid due to mere change of opinion were answered by applying the statutory test for deduction and the scope of information under section 34(1)(b). The court found the predecessor officer had allowed a deduction without applying the statutory requirement, causing assessable income to escape assessment, and held that the successor's perusal of records and discovery of that omission constituted 'information' justifying reassessment. Outcome: escapement established and reassessments under section 34 upheld; matter remitted to the Tribunal for further proceedings.

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Issues: (i) Whether there was escapement of income in assessment years 1948-49 and 1949-50 within the meaning of section 34 of the Income-tax Act; (ii) If so, whether the notices and proceedings under section 34 were null and void because they resulted from a mere change of opinion by the successor Income-tax Officer rather than from information within the meaning of section 34.

Issue (i): Whether income had escaped assessment in the years 1948-49 and 1949-50.

Analysis: The assessments had allowed deduction of one-fifth of the net income without determining that one-fifth of the actual income had been applied or finally set apart for religious or charitable purposes as required by section 4(3)(i). The predecessor officer followed the Tribunal's earlier direction without applying the specific statutory test, resulting in a larger deduction than was legally justified. The omission to apply the statutory requirement meant part of assessable income was not taxed.

Conclusion: In the affirmative; a portion of income escaped assessment in each of the two years.

Issue (ii): Whether the successor's proceedings under section 34 were invalid as founded on a mere change of opinion.

Analysis: Section 34(1)(b) requires information in the officer's possession leading to reason to believe that income has escaped assessment. The successor acquired information (by perusal of records and the predecessor's orders) subsequent to the original assessments showing the predecessor had overlooked the statutory requirement of section 4(3)(i). Precedent establishes that "information" includes knowledge as to the state of the law and relevant facts, and that the 1948 amendment broadened the scope of information. The successor's knowledge of the predecessor's omission qualified as information within section 34(1)(b) and justified reopening; this is not a case of mere internal change of opinion but of newly possessed information of an omission.

Conclusion: The notices and proceedings under section 34 were valid; they were not null and void on the ground of mere change of opinion.

Final Conclusion: The reference is answered by holding that (i) income had escaped assessment for the years in question and (ii) the reassessments under section 34 were valid; the matter is returned to the Tribunal for further proceedings consistent with these answers.

Ratio Decidendi: Where a successor assessing officer, subsequent to an original assessment, acquires information that the predecessor omitted to notice or apply a material statutory provision and that omission results in assessable income escaping assessment, such information falls within section 34(1)(b) and justifies reassessment under section 34.

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