LexINDIAN AND EASTERN NEWSPAPER SOCIETY, NEW DELHI versus COMMISSIONER OF INCOME TAX, NEW DELHI
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442
INDIAN AND EASTERN NEWSPAPER SOCIETY.
NEW DELHI
v.
COMMISSIONER OF INCOME TAX, NEW DELHI
August 31, 1979
[P. N. BHAGWATI, V. D. TuLZAPURKAR AND R. S. PATHAK, JJ.]
Income Tax Act 1961--S. 147(b)--Scope of-"Information" "Reason
to
believe"-Meaning of-Opinion of audit party of Income Tax Department-If
would comtitute "information".
Section 147(b) of the Income Tax Act, 1961 provides that if an Income
Tax Officer has, in consequence of information in his possesaion, reason to
believe that income chargeable to tax has escaped assessment for any asc;ess-
ment year, he may assess or re~s such income.
l he internal audit organisation of the income tax department, in the course
of auditing the income tax records pertaining to the assessee for certain assess-
ment. years stated that the assessee's in.come on account of letting out of halls
and rooms should not have been assessed as income from business but an asses!-
-ment should have been niade uiider the head "Income from property". Treating
the report as,information in his possession under s.147(b) the Income Tax
Officer re-t:lSseSsed the assessee's income. The Appellate Assistant ·Com.mi.1sioner
reversed th~ Income Tax Officer's order. On the other band, the Appellate Tribu-
nal took the view that the Income Tax Officer bad jurisdiction to proceed under
s.14 7 ( b). In a reference under s. 257 of the Income Tax Act the question was
whether the Income Tax Officer was legally justified in reopening the assess-
ment under s. 147 (b) on the basis of the view expressed by the Internal Audit
party received by him subsequent to the original assessment.
Allowing tho appeal,
HELD : The opinion of the internal audit organization of the Department
on a point of law cannot be regarded as information within the meaning r.f
s. 147(b) of the Act. [455A].
1. {a) An assessment proceeding, which is a quasi-judicial proceeding, ac-
quires hnality on the assessment order being made. The finality of such an
order can be disturbed only in proceedings, and within the confines, provided
by Jaw.
An appeal, revision and rectification are proceedings in which the
fin51Jity of the assessment may be questioned.
Section 147, under ·which an
assessment may be reopened, is a proceeding for assessing income which has
<!Caped asse,.ment.
[446F-G]
2. In cases falling under s. 147(b) "information" is an indispensable in·
gredient. The word "infonnation" has been interpreted by this Court to mean
not only facts or factual material but include information as to the true_ and
corre:c.t state of the law and, therefore, informatiov. as to relevant
judicial
decision~. The term is also defined as "instruction" or knowledge derived from
an external source concerning facts or particularF, or as to law, r.elating· to a
matter bearing on the essessment.
[447P-Fl
Maharaj Kamal Singh v. Commissioner of Income Tax 35 I.T.R. 1 (S.C.)=
[1959] Sup. I SCR 10, Commissioner of Income Tax v. Raman & Company
67 I.T.R. 1l(SC)=[1968] I SCR 10, referred to.
,.
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IE N S V. CIT
443
3. -(a) By its inherent nature, a fact has concrete existence. It influences the
A
determination of an issue by the mere circumstance of its relevance. It require.11;
no further authority to make it significant. (447-HJ.
(b) The term •taw' is used in the sense of norms or guiding
princip188
having
legal
effect
and
legal
consequences. To
possess
legal
'1gru·
fic:i.nce for that purpose, law must be enacted or dedared by a
competent
B
authority.
Tho legal sanction vivifying it imparts to it its force and validity
and binding nature.
Lnv may be statutory law enacted by a competent le~is·
Iative authority, or it mtl'Y be judge made law emanating from a declaration or
exposition of the content of a legal principle or the interpretation of a statute
and may in particular cases extend to a definition of the status of a party or the
legal relationship between the parties, the declaration being rendered by a
competent judicial or quasi-judicial authority empowered to decide question.!
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of law between contending parties. The declaration or exposition is ordinarily
set forth in the judgment of a court or the order of a tribunal. Such de-
claration or exposition in itself bears the character of law.
In every
case,
therefore, to be law it must be a creation by a formal source, either legislative
or judicial authority. A statement by a person or body _not compExcerpt shown. Read the full judgment & AI analysis in Lexace.