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Section 147 of the Income-tax Act, 1961 [Corresponding to section 34(1)(b) (after amendment in 1948) of the Indian Income-tax Act, 1922] - Income escaping assessment - Position prior to 1-4-1989 - Assessment year 1945-46 - Whether word "information" in section 34(1)(b) of 1922 Act includes information as to true and correct state of law and so would cover information as to relevant judicial decisions - Held, yes - ITO did not include in assessee's total income interest on arrears of rent in respect of agricultural land on basis of decision of High Court which was subsequently reversed by Privy Council holding that such interest was not agricultural income - ITO thus re-opened assessment under section 34(1)(b) of 1922 Act and brought interest amount to tax - Whether decision of Privy Council was 'information' within meaning of section 34(1)(b) of 1922 Act and said decision justified belief of ITO that assessee's income had escaped assessment for relevant year - Held, yes FACTS For the assessment year 1945-46, assessee was assessed on a total income of Rs. 1,60,602 including Rs. 93,604, received by the assessee on account of interest on arrears of rent due to him after deduction of collection charges. It was urged before the ITO that this amount was not liable to be taxed in view of the decision of the Patna High Court inKamakshya Narayan Singh v. CIT [1946] 14 ITR 673. The ITO, however, held that, since appeal was pending before the Privy Council against the said decision, the matter was sub-judice and so he did not accept the assessee's contention and included the said amount in the total income. This was set aside by AAC who held that the ITO was bound to follow the decision in the case of Kamakshya Narayan Singh case (supra) so he set aside the order under appeal in regard to the amount of Rs. 93,604 and directed the ITO to make fresh assessment. Pursuant to this appellate order ITO made a fresh assessment under sections 23(3) and 31, by deducting the whole of the amount of Rs. 93,604. Neither the appellate order nor the subsequent order of ITO was challenged by the Department. Subsequently, the appeal preferred by the Department to the Privy Council against…

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