Law:

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Section 147 of the Income tax Act, 1961 - Income escaping assessment - Information - Position prior to 1-4-1989 - Assessee was director in a company - In assessment of company Assessing Officer disallowed certain expenditure incurred in respect of assessee - Thereafter, Assessing Officer reopened assessment of assessee under section 147(b) to include said expenditure as perquisite in assessee's income as that aspect had not been considered by Assessing Officer in original assessment of assessee - Whether Assessing officer was within his jurisdiction in invoking powers under section 147(b) - Held, yes FACTS The assessee was director of a private limited company. In the assessment of the company, the ITO disallowed certain expenditure as incurred in respect of directors. Thereafter the ITO issued notice under section 148 proposing to reopen the original assessment completed on the assessee under section 147 to include the said expenditure as perquisites which had escaped assessment in the hand of the assessee. On appeal, the AAC upheld the legality of the assessment proceedings as well as the assessment of that expenditure as taxable perquisites. On further appeal, the Tribunal also held that reassessment proceedings were legally and validly taken. On reference, the assessee contended that the assessment of the company was completed by the same ITO, long prior to the original assessment on the assessee, and that the ITO could not be said to have come into possession of any information subsequent to the original assessment which would have formed a reason for him to believe that any income chargeable to tax has escaped assessment. HELD Unless the ITO had originally considered that question and the reopening of the assessment could be characterised as amounting to a change of his view, the jurisdiction of the ITO to invoke the powers under section 147(b ) could not be questioned. Therefore, in the instant case the ITO was within his jurisdiction in invoking his powers under section 147(b ). Note: The case was decided against the assessee. CASES REFERRED TO CIT v. Holck Larsen [1972] 85 ITR 467 (Bom.), CIT v. A. Raman & Co. [1968] 67 ITR 11 (SC), Salem Provident…

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