Law:

Section:

Section 147 of the Income-tax Act, 1961 [Corresponding to section 34(1) of the Indian Income-tax Act, 1922] - Income escaping assessment - Information - Position prior to 1-4-1989 - Assessment years 1949-50 to 1952-53 - Tribunal while dealing with appeal for assessment year 1948-49 though had held that commission paid by assessee company to one of its employee represented secret commission, yet it allowed deduction to extent of Rs. 3000 out of total commission of Rs. 12112 paid to said employee - On basis of said order of Tribunal, ITO allowed certain amount out of total commission paid to said employee in relevant assessment years - However, different bench of Tribunal on appeal in respect of relevant assessment years held that amounts paid to said employee represented secret commission and thus no deduction should have been allowed at all - ITO accordingly issued notices to assessee under section 34(1)(b) of 1922 Act to reopen assessment - Whether, on facts, there was change of opinion by Tribunal on same material which was before income-tax authorities when they made assessment orders - Held, yes - Whether, therefore, Tribunal's appellate order relating to assessment years in question did not amount to information in possession of Income-tax Officer within meaning of section 34(1)(b) of 1922 Act to entitle Income-tax Officer to reopen assessment - Held, yes FACTS The assessee company carrying on business of manufacturing different kinds of condiments, tin drums and kegs, in the relevant assessment years, paid commission to one of its employee, 'B', and claimed deduction for same. For the assessment year 1948-49 the ITO had not accepted the explanation of the assessee and disallowed the whole claim of commission for Rs. 14,352, In the appeal taken by the assessee against this order, the AAC allowed the claim of the assessee to the extent of Rs. 3,000. The Tribunal though had held that payment of the amount made to 'B' was not for any services rendered by him and that the amount represented secret commission in the nature of illegal gratification which had to be passed on to others in the course of securing orders. However, it upheld the order of the AAC in…

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