Law:

Section:

Section 147, read with sections 62 and 164(1) of the Income-tax Act, 1961 (Corresponding to section 34(1), read with sections 16(1)(c) and 41(1) of Indian Income-tax Act, 1922) – Income escaping assessment – Position prior to 1-4-1989 – Assessment year 1957-58 – Assessee had created trust for benefit of himself, his future wife and any children as might be born of union – From 1939-40 to 1961-62, ITO assessed trustees at maximum rate under first proviso to section 41(1) of 1922 Act – Thereafter, ITO reopened assessment for relevant assessment year on ground that on proper construction of provisions of trust deed, settlement was recoverable and consequently trust income was liable to be assessed in settlor's hands under section 16(1)(c) of 1922 Act – No definite opinion had been taken prior to assessment year in question on question of revocability of trust – Whether reopening of assessment was sought to be done on basis of provisions of trust deed which were being construed by ITO in assessment of individual and would come within scope of information – Held, yes – Whether, therefore, reopening of assessment was not on mere change of opinion and as such justified – Held, yes FACTS The assessee had created a trust. The assessee, his future wife and any children as might be born of the union were all beneficiaries of the trust. From 1939-40 to 1961-62, the trustees had been assessed at the maximum rate under the first proviso to section 41(1) of the 1922 Act. In 1962, the ITO reopened the assessment for the assessment year in question under section 34(1)(b) of the 1922 Act on the ground that on a proper construction of the provisions in the trust deed the settlement was revocable and consequently the trust income was liable to be assessed in the settlor's hands under section 16(1)(c) of the 1922 Act. The AAC confirmed the assessment. On further appeal, the Tribunal held that the reopening of the assessment was on the basis of a change of opinion and there was no information which had come into the possession of the ITO in 1962 which would warrant the reopening of the assessment for the assessment year in question. On reference : HELD There was no material to show…

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