Reassessment on mere change of opinion is invalid where no fresh information or error justifies reopening escaped assessment.

Reopening under section 34(1)(b) of the Indian Income-tax Act, 1922 is valid only where the Income-tax Officer has fresh information, including material from the record or an external source, leading to a reasonable belief that income has escaped assessment. A mere re-examination of the same material, without discovery of new facts, mistake, oversight, or subsequent information, does not confer jurisdiction. On the facts, no clear fresh information or demonstrated error in the original assessment was shown, and the clubbing issue was one on which two views were possible. The reassessment could not therefore rest on a mere change of opinion, and the reference was answered in favour of the assessee.

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Issues: Whether action under section 34(1)(b) of the Indian Income-tax Act, 1922 was validly initiated on the basis of fresh information, or whether the reassessment was founded only on a mere change of opinion without jurisdiction.

Analysis: Reopening under section 34(1)(b) requires the Income-tax Officer to possess information, whether from an external source or from the record itself, leading to a reasonable belief that income chargeable to tax has escaped assessment. A mere fresh look at the same material, without discovery of new facts, mistake, oversight, or subsequent information, does not confer jurisdiction. On the record, the earlier assessment file contained material suggesting that the capital contributions had been gifted by the assessee, but there was no clear showing of what fresh information had later come to the Officer's notice, nor of any demonstrated oversight or mistake in the original assessment. The material also showed that two views were possible on the clubbing issue, so the reopening could not be sustained merely because a later Officer took a different view on the same facts.

Conclusion: The reopening was not validly initiated and the answer to the reference was in favour of the assessee.

Ratio Decidendi: Reassessment under section 34(1)(b) is valid only when subsequent information or discovery of an error leads to the statutory belief of escaped assessment; a mere change of opinion on the same material is without jurisdiction.

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