Court rejects reassessment for lack of new information in 1949-53, costs awarded to assessee

The court held that the reopening of assessments for the years 1949-50 to 1952-53 under section 34(1)(b) was not justified as there was no new information that came into the possession of the Income-tax Officer. The Tribunal's observations were based on the same facts already available during the original assessments, representing a mere change of opinion. Consequently, the court did not address the second issue regarding the admissibility of the commission paid to Mr. B. M. Desai. The Commissioner was ordered to pay the costs to the assessee.

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Issues Involved:
1. Whether the observations made in the Tribunal's appellate order for the assessment years 1949-50 to 1952-53 amounted to "information in the possession of the Income-tax Officer" within the meaning of section 34(1)(b) to reopen the assessments.
2. Whether the Appellate Tribunal was justified in not allowing the commission paid to Mr. B. M. Desai as an admissible expense under section 10(2)(xv).

Issue-Wise Detailed Analysis:

1. Reopening of Assessments under Section 34(1)(b):
The primary issue was whether the Tribunal's observations in its appellate order constituted "information" that could justify reopening the assessments for the years 1949-50 to 1952-53 under section 34(1)(b) of the Income-tax Act. The court noted that the assessments in question involved deductions claimed by the assessee for commissions paid to Mr. B.M. Desai. The Tribunal had previously allowed certain amounts as deductions, but later observations suggested that these amounts represented secret commissions, not genuine business expenses.

The assessee argued that there was no new information that was not already available to the income-tax authorities when the original assessments were made. The Tribunal's observations were based on the same set of facts, and thus, did not constitute fresh information. The court agreed with the assessee, noting that the statement of Mr. Desai, which indicated that the payments were secret commissions, had already been recorded in the Tribunal's order for the assessment year 1948-49. This information was available to the Income-tax Officer and the Appellate Assistant Commissioner when they made the original assessments.

The court concluded that the Tribunal's later observations did not bring any new information to light but merely represented a change of opinion on the same material. Therefore, the reopening of assessments under section 34(1)(b) was not justified. The answer to the first question was in the negative.

2. Allowance of Commission as Admissible Expense under Section 10(2)(xv):
Given the court's decision on the first issue, it was deemed unnecessary to address the second question regarding the admissibility of the commission paid to Mr. B. M. Desai under section 10(2)(xv). The court did not provide an answer to this issue.

Conclusion:
The court held that the reopening of assessments for the years 1949-50 to 1952-53 under section 34(1)(b) was not justified as there was no new information that came into the possession of the Income-tax Officer. The Tribunal's observations were based on the same facts already available during the original assessments, representing a mere change of opinion. Consequently, the court did not address the second issue regarding the admissibility of the commission paid to Mr. B. M. Desai. The Commissioner was ordered to pay the costs to the assessee.

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