O.CHINNAPPA REDDY,J. - (1.) THE assessments of M/s. Yash Pal Mehra and Co. , Amritsar, for the assessment years 1968-69 and 1969-70 were completed by the Income-tax Officer on July 18, 1970. In the profit and loss accounts filed along with the returns, the assessee claimed "langer" expenses (expenses on customers) of Rs. 12,868 and Rs. 10,497 for the years 1968-69 and 1969-70 respectively. The expenses claimed by the assessee were allowed by the Income-tax Officer without any question. Subsequently, the internal audit party of the income-tax department pointed out by its note dated September 25, 1971, that entertainment expenses had wrongly been allowed in excess of Rs. 5,000 contrary to the provisions of Section 37 (2) of the Income-tax Act, 1961. On the basis of the audit party's note, the Income-tax Officer reopened the assessments under Section 147{b) of the Income-tax Act and reassessed the assessee by including an additional sum of Rs. 7,868 for the assessment year 1968-69 and an additional sum of Rs. 5,497 for the assessment year 1969-70. The Appellate Assistant Commissioner, however, cancelled both the reassessments on the ground that there was not before the Income-tax Officer "information" within the meaning of Section 147 (b) of the Act. According to the Appellate Assistant Commissioner, the view expressed by the internal audit party of the income-tax department that the limit of Rs. 5,000 prescribed by Section 37 had been exceeded, was not such information. The orders of the Appellate Assistant Commissioner were confirmed by the Income-tax Appellate Tribunal, Amritsar Bench. The Appellate Tribunal reiterated the view expressed by the Appellate Assistant Commissioner that the report of the internal audit party did not constitute "information" within the meaning of Section 147 (b ). In arriving at that conclusion, the Appellate Tribunal followed the decision of the Gujarat High Court in Kasturbhai Lalbhai v. R. K. Malhotra [1971] 80 ITR 188 (Guj) in preference to the decisions in Commissioner of Income-tax v. H. H. Smt. Chand Kanwarji [1972] 84 ITR 584 (Delhi), Muthukrishna Reddiar v. Commissioner of Income-tax [1973] 90 ITR 503 (Ker) and Vashist Bhargava v. Income-tax [1915] "99 ITR 148 (Delhi ).
(2.) AT the instance of the revenue, the following question has been referred to us for our opinion : "whether, on the facts and in the circumstances of the case, the proceedings under Section 147 (b) of the Income-tax Act, 1961, are legal and valid ?" In Anandji Hari Das and Co. (P.) Ltd. v. S. P. Kushare [1968] 21 STC 326 (SC), the Supreme Court held that the term "information" meant knowledge, that "to inform" meant "to impart knowledge" and that mere availability of a detail to the Income-tax Officer did Hot make it "information". It became transmuted into "information" only if and when its existence was realised and its implications recognised. They quoted with approval the following observations of a Division Bench of the Madras High Court in Salem Provident Fund Society Ltd. v. Commissioner of Income-tax [1961] 42 ITR 547, 564 (Mad): "we are unable to accept the extreme proposition, that nothing that can be found in the record of the assessment, which itself would show escape of assessment or under-assessment, can be viewed as information which led to the belief that there has been escape from assessment or underassessment. Suppose a mistake in the original order of assessment is not discovered by the Income-tax Officer himself on further scrutiny but it is brought to his notice by another assessee or even by a subordinate or a superior officer, that would appear to be information disclosed to the Income-tax Officer. If the mistake itself is not extraneous to the record and the informant gathered the information from the record, the immediate source of information to the Income-tax Officer in such circumstances is in one sense extraneous to the record. It is difficult to accept the position that while what is seen by another in the record is 'information' what is seen by the Income-tax Officer himself is not information to him. In the latter case he just informs himself. It will be information in his possession within the meaning of Section 34. In such cases of obvious mistakes apparent on the face of the record of assessment, that record itself can be a source of information, if that information leads to a discovery or belief that there has been an escape of assessment or under-assessment. "
(3.) IN Commissioner of Income-tax v. A. Roman and Co. [1968] 67 ITR 11, 15, 16 (SC), Shah J. observed : "the expression 'information' in the context in which it occurs (in Section 147 (b) of the Income-tax Act, 1961) must, in our judgment, mean instruction or knowledge derived from an external source concerning facts or particulars or as to law relating to a matter bearing on the assessment. " These observations were relied upon by the learned counsel for the assessee to argue that "information" must be from an external source and that the view of the internal audit party could not be said to be "information" from an external source. We do not agree with the submission. In that very decision, the learned judges observed : ". . . . but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income-tax Officer is not affected. " ;