Reassessment by change of opinion is invalid where no new information reveals escaped assessment

Reassessment under section 34 of the Income-tax Act, 1922 required definite information leading to discovery of escaped assessment; a later change of opinion on facts already before the Income-tax Officer was insufficient. The original assessment had already considered the commission income and the competing claims of the assessee and the Hindu undivided family, and the officer had consciously treated the income as belonging to the family. The Appellate Assistant Commissioner's later view did not introduce any new fact. Section 34 was therefore inapplicable and the reassessment proceedings were incompetent.

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Issues: Whether proceedings under section 34 of the Income-tax Act, 1922 were validly initiated for reopening the assessee's assessment for the relevant year.

Analysis: The material available to the Income-tax Officer when the original assessment was considered already included the facts relating to the commission income and the competing claims of the assessee and the Hindu undivided family. The officer had consciously proceeded on the view that the income belonged to the family and therefore omitted to issue notice to the assessee in his individual capacity for that year. The later decision of the Appellate Assistant Commissioner did not supply any new fact; it only expressed a different view on the same material already before the officer. Reassessment under section 34 could not be founded merely on a subsequent change of opinion without definite information leading to the discovery of escaped assessment.

Conclusion: Section 34 was not legally applicable and the reassessment proceedings were incompetent.

Ratio Decidendi: A reassessment under section 34 of the Income-tax Act, 1922 requires definite information about facts leading to the discovery of escaped assessment, and a mere later change of opinion on facts already before the officer is insufficient.

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