Reassessment on fresh information failed where the alleged material was already on record and did not justify action under clause (b).

Reassessment under section 34(1)(b) of the Indian Income-tax Act, 1922 required fresh information in the Income-tax Officer's possession giving reason to believe that income had escaped assessment. The trust deed and the fact that the trust became revocable after seven years were already in the departmental record, and earlier correspondence had identified both the deed date and the limited irrevocability period. A later internal communication did not supply any new material beyond what was already available on record, and the Tribunal's findings did not establish the necessary basis for action under clause (b). Reassessment was therefore held not to have been validly initiated, in favour of the assessee.

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Issues: Whether reassessment could validly be initiated under section 34(1)(b) of the Indian Income-tax Act, 1922 on the basis of alleged fresh information.

Analysis: The relevant test under section 34(1)(b) was whether the Income-tax Officer had, in consequence of information in his possession, reason to believe that income chargeable to tax had escaped assessment. The record showed that the trust deed and the fact that the trust became revocable after seven years were already available in the departmental record. Earlier correspondence on record had specifically noted that the trust was irrevocable only for seven years and identified the trust deed date. The subsequent communication from another Income-tax Officer did not supply any new material which was not already available on record. The Tribunal's finding also did not establish the necessary foundation for action under clause (b).

Conclusion: Reassessment under section 34(1)(b) was not validly initiated, and the question was answered in favour of the assessee.

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