Reassessment for excessive relief allowed where later use of wartime assets showed the original tax relief premise had failed.

Section 15 of the Excess Profits Tax Act, 1940 was treated as a machinery provision permitting reassessment on definite information where excessive relief had been allowed. The Supreme Court held that "discovers" has wide scope and is not limited to facts existing within the chargeable accounting period. Relief earlier granted under section 26(3) on the assumption that the relevant buildings, plant and machinery would not be needed after hostilities could be reopened when later use of those assets in business showed that the basis of the relief had failed. The objection based on change of opinion or unchanged past facts was rejected, and reassessment was held valid.

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Issues: Whether reassessment under section 15 of the Excess Profits Tax Act, 1940 could be sustained where the discovery of excessive relief was founded on the assessee's continued use after the war of buildings, plant and machinery for which relief had earlier been granted under section 26(3).

Analysis: Section 15 was construed as a machinery provision intended to correct assessments where, on definite information, profits had escaped assessment, been under-assessed, or been the subject of excessive relief. The word "discovers" was held to be of wide amplitude and not confined to facts existing during the chargeable accounting period. Relief under section 26(3) was granted on the footing that the relevant plant and machinery would not be required after hostilities, so the later finding that the assets were in fact used in business after the war directly showed that the premise of the relief had failed. The Court distinguished authorities dealing with reopening on the basis of unchanged past facts or mere change of opinion and treated those as inapplicable to a case where later events destroyed the basis of the earlier relief.

Conclusion: Reassessment under section 15 was valid, and the objection to reopening failed.

Ratio Decidendi: In the context of a relief granted on a future contingency, subsequent events that show the relief to have been wrongly allowed may constitute "definite information" enabling reassessment under a machinery provision empowering correction of excessive relief.

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