TaxTMI 
TaxTMI 
TaxTMI 
1972 (7) TMI 12
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...., 1954, leaving a will whereby the property was bequeathed to her 4 daughters, Nagammal, Maya Devi, Rajeswari and Visalakshi in equal shares. Nagammal and Maya Devi sold their interest in the property to the assessee on January 30, 1958, for Rs. 10,000. Thus, one-half of the entire property devolved on the assessee. He then sold this one-half interest in the property to his daughter, Rajeswari, on September 5, 1961, for Rs. 40,000. In the reassessment the capital gains sought to be assessed was the difference between the selling price of Rs. 40,000 and the purchase price of Rs. 10,000, namely, Rs. 30,000. At the time of the original assessment it was contended before the Income-tax Officer that in the estate duty proceedings following the death of assessee's wife, the property had been valued at Rs. 42,680. So, the value of the one-half share which the assessee had purchased was Rs. 21,340. On this basis the capital gains arising in the transaction was treated as Rs. 18,660 (Rs. 40,000-21,340). It was also alleged that the assessee had put up a building worth Rs. 10,000 in 1957 and from the amount of Rs, 18,660 this amount of Rs. 10,000 had to be deducted. The Income-tax Officer ac....
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....ng out under the relevant provisions of the Act that it was wrong to have allowed the market value of the property, namely, Rs. 21,340, to be substituted for the consideration of Rs. 10,000 paid and that the application of section 52(2) was not justified as the assessee neither possessed the property before January 1, 1954, nor received it as a gift from one who possessed it before January 1, 1954. It was also pointed out that the property having been purchased by the assessee in 1958, cost of improvements, if any, effected thereafter, alone could be deducted and the alleged improvements had been effected in 1957, when the assessee had no rights over the property. It was on this information, according to the revenue, that the Income-tax Officer entertained the plea that the income had escaped assessment. The Supreme Court has observed in Commissioner of Income-tax v. A. Raman & Co. : ". . . . that 'information' in the context it occurs in section 147(b) must mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. Mere change of opinion on the part of the Income-tax Officer cannot c....
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....ing the income of the properties under income from house property. Assessment was made in March, 1966. In July, 1969, the Income-tax Officer addressed a letter calling upon the petitioner to show cause why the amount of municipal tax allowed as deduction should not be added back on the ground that it was wrongly allowed. The assessee questioned the competency of the officer to reopen the assessment under section 147. The Income-tax Officer pointed out that income-tax assessments are subjected to audit by the office of the Comptroller and Auditor-General of India, and while auditing the assessment of the petitioner for assessment year 1965-66, the audit department had pointed out that on a true interpretation of section 23(2) the deduction of municipal tax in respect of self-occupied properties was not admissible. This information, according to him, constituted information under section 147(b). The court held that opinion as to the state of the law by any and every person cannot constitute information, so as to entitle the Income-tax Officer to reopen an assessment. The opposite view seems to have found favour with the Delhi High Court as is seen from its decision in Commissioner o....
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....ink that this decision reflects the correct view and has to be accepted in preference to the other view expressed by the Gujarat High Court referred to above. The Supreme Court, it must be remembered, did not pin-point or limit "external source " in A. Raman & Co.'s case to judgments of a particular court or authority. On the other hand, the Supreme Court has widened the scope and ambit of "external source" as is evident from the following observation in the judgment : "Jurisdiction of the Income-tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information must, it is true, have come into the possession of the Income-tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby, or from other inquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected." The point on which attention is to be focussed is as to whether the Income-t....
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....was held that to "inform " means to impart knowledge and a detail available to the Income-tax Officer in the papers filed before him does not by its mere availability become an item of information". It is transmuted into an item of information in his possession only if and when its existence is realised and its implications recognized. Applying that test to the case before them, the court held that the awareness of the Income-tax Officer for the first time after the assessment order of November, 1957, that the bonus shares were issued not out of premiums received in cash and the consequent result in the light of the Finance Act, 1957, was information within the meaning that expression is used in section 34(1) of the Indian Income-tax Act of 1922, and, consequently, the reopening of the assessment under that provision was not illegal. These two decisions, Salem Provident Fund Society Ltd. v. Commissioner of Income-tax and United Mercantile Co. Ltd. v. Commissioner of Income-tax, are quoted with approval by the Supreme Court in Anandji Haridas & Co. v. S. P. Kushare B. On the same lines more or less, is the decision of this court in a later case, Commissioner of Income-tax v. Kelukut....