Reassessment on subsequent legal information upheld when later final ruling showed the original tax position was wrong.

A reassessment under section 147(b) is valid where subsequent information gives the Income-tax Officer reason to believe that income has escaped assessment. A later and final judicial determination that section 44D did not apply, especially where the original assessment had proceeded before that issue attained finality, could constitute such information. The court treated the later High Court decision, together with departmental acceptance of that view, as fresh material and held that the reopening was not a mere change of opinion. The reassessment for 1960-61 was therefore upheld and the issue was decided in favour of the Revenue.

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Issues: Whether the assessment for 1960-61 was validly reopened under section 147(b) on the basis of subsequent information that section 44D was inapplicable.

Analysis: The reopening power under section 147(b) can be exercised when, in consequence of information in the possession of the Income-tax Officer, there is reason to believe that income chargeable to tax has escaped assessment. A view on a question of law, when it differs from the view on which the original assessment proceeded, may constitute information. Here, the original assessment was made while the applicability of section 44D was still under reference and had not attained finality; the later High Court decision affirming that section 44D did not apply, coupled with the department's acceptance of that view, provided fresh information. That subsequent and final determination enabled the Income-tax Officer to form the requisite belief that income had escaped assessment.

Conclusion: The reassessment was validly initiated under section 147(b), and the issue was answered against the assessee and in favour of the Revenue.

Final Conclusion: The reopening of the assessment for 1960-61 was upheld as based on valid subsequent information and not on a mere change of opinion.

Ratio Decidendi: A final judicial determination on the inapplicability of a provision, where the earlier view had not yet attained finality, constitutes information for reassessment under section 147(b) if it leads the Income-tax Officer to believe that income has escaped assessment.

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