Law:

Section:

Section 147(b) of the Income-tax Act, 1961 - Reassessment - Information - Whether when ITO came into possession of information during course of subsequent assessment proceedings that income for preceding two assessment years had escaped assessment, he was within his jurisdiction to make reassessment - Held, yes - Whether, notwithstanding assessment having been made originally on Indian agents of non-resident assessee, it was open to ITO to take reassessment proceedings against assessee on finding that reassessment proceedings against agents were barred by time - Held, yes Facts The appellant-assessee was a non-resident sterling company, engaged in the purchase of tobacco from India through its duly' appointed agents in India. For the assessment years 1959-60 and 1960-61 the returns were filed by the agents on behalf of the assessee and the same were completed by the ITO after working out proportionate overhead expenses of the assessee for its tobacco business in India. Subsequently, in the course of assessment proceedings for the assessment year 1962-63, the ITO noticed that the overhead expenses were attributable to the entire business of the assessee including the business as commission agents and not merely for the business of purchase and sale of tobacco. Thus realising that the income had escaped assessment for the two assessment years 1959-60 and 1960-61, he issued notices to the agents on 18-1-1964 but dropped the proceedings on finding that the said proceedings were barred by time in view of section 149(3). He, thereupon, issued notice under section 148 to the assessee and made reassessments. While the first appeal of the assessee Was dismissed by the AAC, its second appeal was accepted by the Tribunal on the ground that the ITO had acted without jurisdiction on a mere change of opinion and further that it was not open to the ITO to proceed directly against the assessee as the assessments had been made originally on the agents. On a reference at the instance of the revenue, the High Court restored the order of the ITO. On appeal to the Supreme Court : Held It is true, as the High Court has observed, that the information could have been acquired by the…

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