Reassessment on later information is valid where fresh facts show escaped income; a mere change of opinion is not enough.

Section 34(1)(b) of the Indian Income-tax Act, 1922 permits reassessment where the officer receives information after the original assessment that gives reason to believe income has escaped assessment. The term "information" is broad and may include fresh facts, later investigation of the original record, material from external sources, and even the true legal position declared in judicial decisions. On the stated facts, the later discovery that a deduction had been wrongly allowed, the diversion of borrowed funds as interest-free advances to partners, and the assessee's failure to produce supporting evidence constituted sufficient post-assessment information. Reopening on that basis was valid and was not a mere change of opinion on the same material.

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Issues: Whether reassessment under section 34(1)(b) of the Indian Income-tax Act, 1922 was competent on the basis of information received after the original assessment, or whether the reopening was merely a change of opinion on the same materials already on record.

Analysis: Section 34(1)(b) permits reopening where the Income-tax Officer, in consequence of information in his possession, has reason to believe that income chargeable to tax has escaped assessment. The word "information" is of wide import and may include fresh facts, material derived from an external source, information obtained by later investigation of the original record, and the true state of the law as declared in judicial decisions. It is not confined to material wholly outside the original record. On the facts, the later assessment proceedings revealed that the deduction earlier allowed had in fact been wrongly claimed, that the borrowed funds had been diverted as interest-free advances to partners, and that the assessee failed to produce supporting evidence when called upon to do so. These subsequent materials constituted information arising after the original assessment and were sufficient to found the statutory belief. The case was therefore distinguishable from a mere change of opinion unsupported by subsequent information.

Conclusion: The reassessment was competent under section 34(1)(b), and the challenge to the reopening failed.

Ratio Decidendi: For reopening under section 34(1)(b), the requisite information may be derived from fresh facts or later investigation of the original record, and reassessment is valid if such post-assessment information gives reason to believe that income has escaped assessment; a mere change of opinion on the same material is insufficient.

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