M.R.A. Ansari, J.
(1) The following question, which is common to both the assessment years under reference, namely, 1960-61 and 1961 -62, has been referred to this Court by the Income-tax Appellate Tribunal (Delhi Bench 'A') (hereinafter referred to as the Tribunal under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the New Act) :-
'WHETHERon the facts and in the circumstances of the case the Tribunal was legally justified in holding that it was a case of mere change of opinion on the same facts and the assessment could not be reopened under section 147(b) of the Income-tax Act, 1961?'
(2) The relevant facts may be briefly stated : The assessed in the case is Her Highness Smt. Chand Kanwarji, the Maharani of Alwar, (hereinafter referred to as the assessed). Her assessment for the year 1960-61 was completed on 26th October, 1962 on a total income of Rs. 48,394.00 under section 23(3) of the Income-tax Act, 1922 (hereinafter referred to as the Old Act). Similarly, the original assessment on the assessec for the assessment year 1961-62 was completed on 3rd January, 1963 on a total income of Rs. 55,930.00 under Section 143(3) of the New Act. For these two assessments, the income derived by the assessed by way of interest from bank deposits was treated as 'earned income' and the Income-tax Officer has also accepted the assessed's claim of expenditure on the salary paid to her danghter-in-law. Subseauently. the Revenue Audit staff working under the Comptroller and Auditor General of India, while scrutinising these assessments, brought to the notice of the Department that the Income-tax Officer had wrongly treated the 'interest income' as 'business income' and also that the Income-tax Officer had wrongly allowed the assessed's claim with regard to the salary paid to her da lighter-in-law.
(3) Acting upon this scrutiny note of the Revenue Audit, the Inspecting Assistant Commissioner wrote to the Income-Tax Officer asking him to rectify these defects by reopening the assessments under section 147(b) of the New Act. The Income-tax Officer thereupon reopened the original assessments under section 147(b) of the New Act, and issued notice to the assessed. The assessed objected to the reopening of the original assessments by the Income-tax Officer and contended that all the relevant information was available to the Income-tax Officer at the time of the original assessments and that the Income-tax Officer, after a consideration of the said material, had come to a definite conclusion that the 'interest income' constituted 'earned income' and also that the salary paid by the assessed to her daughter-in-law was an allowable item of expenditure. The Income- tax Officer overruled the assessed's objections on both these points and treated the 'interest income' as 'unearned income' and he also disallowed a major portion of the assessed's claim regarding the salary paid to her daughter-in-law.
(4) The assessed preferred appeals to the Appellate Assistant Commissioner and again contended before him that the reopening of the original assessments under section 147(b) of the New Act was illegal, The Appellate Assistant Commissioner accepted this contention and held that inasmuch as all the material facts were before the Income-tax Officer at the time of the original assessments and he had, after a consideration of these facts, arrived at a definite conclusion, he could not by mere change of opinion reopen the original assessments. He, thereforee, set aside the re-assessments under setion 147(b) of the New Act,
(5) Against these orders of the Appellate Assistant Commissioner, the Revenue preferred appeals before the Tribunal. It was pointed out to the Tribunal that the scrutiny note of the Revenue Audit staff and the letter written by the Inspecting Assisant Commissioner to the Income-tax Officer were not brought to the notice of the Appellate Assistant Commissioner and it was contended that these documents constituted 'information' within the meaning of section 147(b) of the New Act. The Tribunal, however, did not accept this contetnion and agreed with the view of the Appellate Assistant Commissioner that the Income-tax Officer had no information in his possession which would justify the re-opening of the original assessments under section 147(b) of the New Act. The Tribunal, thereforee, dismissed the appeals filed by the Department. But at the latter's instance, the Tribunal has referred the question, as already stated, to this Court.
(6) Before answering the question, it would be necessary to state the scope of the question referred to us- From the order of the Appellate Assistant Commissioner it would appear that the only contention which was urged before him on behalf of the assessed and which was in the nature of a preliminary objection was that the reopening of the original assessments under section 147(b) of the New Act was illegal in view of the fact that the entire material relevant to the two assessments was before the Income-tax Officer making the original assess- ments, that the latter had applied his mind to the material and duly considered that material and had come to certain conclusions which were incorporated in the assessment orders and that there was no new information which had come to his notice subsequently on the basis of which action under section 147(b) of the New Act could be. taken. The learned Appellate Assistant Commissioner considered only this preliminary objection and decided it in favor of the assesses and cancelled the re-assessments under section 147(b) of the New Act. He did not go into the merits of the assessed's appeals and did not record any findings on the two questions, namely,-
(I)whether the 'interest income' constituted 'earned income' or income under 'other sources' and (ii) whether the assessed's claim for allowance of. the salary paid to her daughter-in-law was allowable; if so, to what extent ?
Although in the appeals before the Tribunal, the assessed appears to have challenged the Income-tax Officer's finding in the re-assessments on both these questions and although the Tribunal has also made some stray remarks while narrating the assessed's contentions regarding the assessed's claim, the Tribunal has not decided the appeals on merit. The Tribunal has not in 'so many words held that 'interest income' was in the nature of 'earned income' or that the assessed's claim regarding the salary was allowable in its entirety or to some extent. The 'Tribunal has decided the appeals entirely on the basis of the legal contention urged on behalf 'of the assessed, namely, that the scrutiny note of the Revenue Audit staff and the letter of the Inspecting Assistant Commissioner did not constitute 'information' within the meaning of section 147(b) of the New Act. It is, thereforee, only this legal question which is 'to be decided by us in this reference. Although the question framed by the Tribunal is in somewhat general terms, the real question that arises for decision in this case is whether the 'scrutiny note of the Revenue Audit and the letter of the Inspecting Assistant Commissioner constitute 'information' within the meaning of section 147(b) of the New Act? .
(7) What constitutes 'information' within the meaning of sections 34(1)(b) of the Old Act and 147 (b) .of the New Act has been a vaxed question and to borrow the words of Banerjee J. in Commissioner of Income-tax v. Kalayanji Mavji and Co. : 74ITR107(Cal) 'still remains a rich germinating ground for forensic arguments'. We have had occasion to notice the views expressed by the Supreme Court and the different High Courts on this point in our judgment in Delhi Glass Works (P) Ltd. v. Commissioner of Income Tax ., (1971) 51 I.T.R. 95. Some more decisions have been brought to our notice by Shri G. C. Sharma, learned counsel for the Revenue, which indicate that the divergence has not yet been reconciled. But it is really not necessary for the purpose of this case to traverse the entire ground of what constitutes information within the meaning of section 147(b) of the New Act. because the question before us lies with a narrow compass. It is admitted that all the relevant facts regarding the two questions, namely. interest income and salary paid to the assessed's daughter-in-law, were available before the Income-tax Officer at the time of the original assessment and that it was only on a consideration of these facts that the Income-tax Officer had come to the conclusion that the interest income was in the nature of earned income and also that the salary paid by the assessed to her daughter-in-law was in the nature of allow- able expenditure. The Income-tax Officer, however, on a considera- corporation of the same facts subsequently, came to a different conclusion. In a way, this may amount to a change of opinion on the part of the Income-tax Officer. Does such a change of opinion under the circum- stances of this case entitle the Income-tax Officer to reopen the original assessments under section 147(b) of the New Act? There can be no doubt that even a change of opinion under certain circumstances would entitle the Income-tax Officer to reopen the assessments, under section 147(b) of the New Act. Change of opinion based on instruc- corporation or knowledge obtained by the Income-tax Officer subsequent to the completion of the original assessments regarding the correct posi- corporation of law would entitle the Income-tax Officer to reopen the assess- ment under section 147(b) of the New Act. Such instruction or knowledge may also be regarding the correct position of facts or particulars. This is what the Supreme Court held in Maharaj Kumar Kamal Singh v. Commissioner of Income-fax, (1959) 35 I.T.R. l, The position was reiterated by the Supreme Court in a later case, namely, Assistant Controller of Estate Duty v. Nawab Sir Mir Osman All Khan Bahadur : 72ITR376(SC) , in which it was held that the opinion of the Central Board of Revenue regarding the correct valuation of securities for the purposes of estate duty was 'information' within the meaning of section 59 of the Estate Duty Act, 1953 which is analogous to section 147(b) of the New Act. It is no doubt true that such information regarding the correct facts or particulars has to come from an external source as held by the Supreme Court in Commissioner of Income-tax v. A. Roman and Co., : 67ITR11(SC) . But then the question arises what is the nature of the 'external source' from which the Income-tax Officer has derived instructions or knowledge concerning facts or particulars. The Tribunal has taken the view that the external source should be the judgment of courts like the Privy Council, the Supreme Court or the High Courts or of appellate bodies under the Income-tax Act like the Appellate Assistant Commissioner or the Tribunal and that the external source cannot be of the nature of the scrutiny note by the Revenue Audit or a letter of the Inspecting Assistant Commissioner. We have to exa- mine the correctness of this view.
(8) There appears to be no decision directly on this point and, there- fore, this question is in the nature of res-integra. But in deciding this question, we have naturally to seek guidance from the decisions of the Supreme Court and the various High Courts, which have a beanng on this point. The Supreme Court has not in any manner qualified the words 'external source' in A. Roman and Co./s case. It has not held that the external source must either be a fudgment of a Court or the judgment of an appellate authority under the Income-tax Act. Although in the case of Nawab Sir Mir Osman Ali Khan Bahadur the external source which was held to be information was the opinion expressed by the Central Board of Revenue in an aopeal under the Estate Duty Act. the Supreme Court has not held that the view ex- pressed by the Central Board of Revenue was information only because the view was expressed in an appeal under the Estate Duty Act. The opinion of the Central Board of Revenue was held to be information from an external source because the Income-tax Officer had not acted on his own initiative or on a change of his own opinion but because the correct position was brought to his notice by the decision of the Central Board of Revenue. In R. B. Bansilal Abir- chand Firm v. Commissioner of Income-tax : 70ITR74(SC) the Supreme Court has held that the income-tax Officer had not acted on his own initiative or on the change of his own opinion when he took proceedings under section 34(l)(b) of the Old Act and that the correct position had been brought to his notice by the decision of the Tribunal and the High Court and that must be held to be information as a consequence of which he came to believe that the provisions of section 34(l)(b) of the Old Act were attracted. In our view, the emphasis laid by the Supreme Court in these two cases does not appear to be on the character of the external source as a court or a tribunal. but the emphasis appears to be on the fact tliat the Income-tax Officer bad not acted on his own initiative or on the change of his own opinion but acted on the basis of the correct poistion brought to his notice by some other authority. The correct significance of the words 'external source' has been explained by the Bombay High Court in Rarnkrishna Ramnath v. Income-tax 'Officer : 77ITR995(Bom) , in the following words :-
'THEinformation which is relied upon by the Income-tax Officer for issuing the notice under section 148 must be information which he has obtained aliunde and not merely by looking at his own order made in the proceeding for a subsequent year.'
It is no doubt true that no case has come to our notice in which proceedings under section 147(b) of the New Act were initiated on the basis of the information or finding of a body or authority other than the Supreme Court, the High Courts, the Tribunal or the appellate authorities under the Income-tax Act. But, at the same time. none of these decisions has in so many words restricted .the scope of 'external source' to courts or the tribunals under the Act. The Tribunal has referred to the decision of the Allahabad High Court in Jawahur Lal Mani Ram v. Commissioner of Income-tax : 48ITR837(All) in support of its view that only judicial decisions of the Appellate Assistant Commisisoner or the Income-tax Appellate Tribunal are information within the meaning of expression 'external source' used in section 34(l)(b) of the Old Act. We have carefully read the report of the judgment of the Allahabad Hi'h Court, but we find that while the High Court has held that decisions of A.A.C. or the Tribunal constituted information within the meaning of section 34(1) (b) of the Old Act, it has no where held that only such decisions constituted such information. thereforee, in our view, the expression 'external source' used by the Supreme Court in A. Raman and Co; s case cannot be restricted to opinions expressed or findings given by Courts of law or the Tribunal or other authorities under the Income-tax Act.
(9) It is not necessary for us for the purpose of this case to define the exact scope of the words 'external source'. We arc concerned in this case only with the question whether the scrutiny note of the Revenue Audit and the letter of the Inspecting Assistant Commissioner would come within the scope of 'external source' The Comptroller and Auditor General of India has the statutory right to scrutinise the proceedings of all departments of the Government including the Income-tax Department and to point out any defects or mistakes in such proceedings which adversely affect the revenues of the State- It is in the exercise of this statutory power that the Comptroller and Auditor General of India, acting through his Revenue Audit staff, pointed Out what he considered to be- the errors committed by the Income-tax Officer in the original assessments. On the basis of this scrutiny note by the Revenue Audit, the Inspecting Assistant Commissioner, who had the authority under the Income-tax Act, to supervise the work of the Income-tax Officer, including the assessments made by them, brought these errors pointed out by the Revenue Staff to the notice of the Income-tax Officer. It was only on the basis of the scrutiny note and the letter of the Inspecting Assistant Commissioner that the Income-tax Officer came to the conclusion that the interest income had been wrongly treated as earned income and that the full claim of the assessed regarding the salary paid to her daughter- in-law had been wrongly allowed. Although this might amount to a change of opinion by the Income-tax Officer, it was not a change of opinion on his own initiative and on his own re-consideration of the available material; but it was a change of opinion brought about as a result of information from an 'external source' which came into his possession subsequent to the original assessments. This information, in our view, satisfies the tests laid down by the Supreme Court in A Roman and Co.'s case as well as the case of Nawab Sir Mir Osman Ali Khan.
(10) Before concluding, we may refer to another finding of the Tribunal which has apparently weighed with the Tribunal in rejecting the Department's appeals. The Tribunal has held that the change of opinion was indirectly forced upon the I. T.O. by the I.A.C. and that the I.T.O. was asked to do within a period of four years what the Commissioner of Income-tax could do under section 263(b) of the New Act within the time-limit of only two years. These, in our view, are not relevant considerations. Whether the re-assessment proceedings under setion 147 (b) of the New Act were initiated voluntarily by the Income-tax Officer or whether the Income-tax Officer was persuaded by his superior officers to do so, will have no bearing upon the question. Again, the fact that the error committed by the Income- tax Officer in the original assessments could have been corrected by the Commissioner of Income-tax under section 263(b) of the New Act but the Commissioner had failed to do so, is also not relevant. In Maharaj Kumar Kamal Singh's case, the Supreme Court has observed as follows:-
'IT is then contended that sections 33B and 35 confer ample powers on the specified authorities to revise the Income-tax Officer's orders and to rectify mistakes respectively and so it would be legitimate to construe the word 'information' in section 34(1) (b) strictly and to confine it to information in regard to facts or particulars. This argument also is not valid. If the word 'information' in its plain grammatical meaning includes information as to facts as well as information as to the state of the law, it would be unreasonable to limit it to information as to the facts on the extraneous consideration that some cases of assessment which need to be revised or rectified on the ground of mistake of law may conceivably be covered by sections 33B and 35. Besides, the application of these two sections is subject to the limitations prescribed by them; and so the fact that the said sections confer powers for revision or rectification would not be relevant and material in construing section 34(1) (b).'
(11) As a result of our discussion, we answer the question referred to us in the negative, i.e., for the Revenue and against the assessed. The Tribunal will now have to decide the departmental appeals on merits. The Revenue will also get the costs of this reference. Pleader's fee is fixed Rs. 250.00