Reopening completed assessments based on audit material is valid when post-assessment information comes from an external source.

A revenue audit scrutiny note and a letter from the Inspecting Assistant Commissioner were treated as "information" for reopening completed assessments under section 147(b) of the Income-tax Act, 1961. The court distinguished a mere change of opinion on the same material, which cannot justify reassessment, from reopening based on post-assessment information obtained from an external source. It held that "external source" is not limited to judicial decisions or appellate findings and may include statutory audit material and supervisory communications outside the assessing officer's original decision-making process. On that basis, the reassessment was held valid in favour of the Revenue.

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Issues: Whether a revenue audit scrutiny note and a letter from the Inspecting Assistant Commissioner constituted "information" within the meaning of section 147(b) of the Income-tax Act, 1961 so as to justify reopening of completed assessments.

Analysis: The original assessments had been made on the basis of the very material that was later reconsidered. The Court held that a mere change of opinion on the same facts would not, by itself, justify reopening, but that reassessment is permissible where the subsequent view is founded on information obtained from an external source. The expression "external source" was not confined to judicial decisions or appellate findings under the Income-tax Act. A statutory audit scrutiny note issued by the Comptroller and Auditor-General's revenue audit staff, together with the supervisory communication from the Inspecting Assistant Commissioner, supplied information coming from outside the assessing officer's own original decision-making process. The Court therefore treated the reopening as based on post-assessment information rather than on an impermissible self-generated reappraisal.

Conclusion: The audit scrutiny note and the Inspecting Assistant Commissioner's letter constituted information under section 147(b), and the reassessment was valid. The question was answered in favour of the Revenue and against the assessee.

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