K.K Dutta, J.:— These four cases arising out of references under section 66(1) of the Indian Income-tax Act, 1922, were heard together as common questions are involved in all the cases and the references in question arise out of proceedings relating to the assessment of the same assessee, namely, Messrs. Bankipur Club Ltd., Patna, which is the opposite party in all the cases. These four cases, that is cases Nos. 10 and 11 of 1965 and 14 and 15 of 1966, respectively, relate to the assessment years 1956-57, 1957-58, 1958-59 and 1959-60. It is admitted that the assessee duly submitted its return in each of these years showing its income as “nil” and claiming that, as it was a members' club, its receipts from its own members were not taxable. Its balance-sheets, profit and loss accounts and books of accounts for the relevant accounting periods were duly produced before the Income-tax Officer and, so far as the assessment year 1956-57 is concerned, the Income-tax Officer accepted the assessee's contention and made an order on November 14, 1957, determining the income as “nil”. Similarly, the Income-tax Officer accepted the assessee's contention with respect to the other three years also, namely, 1957-58, 1958-59 and 1959-60, and so far as these three years are concerned, he passed the following orders for each of the years.

“Returns filed. The assessee has no business income and income from property during the year. The case is filed.”

2. Subsequently, on February 17, 1961, the Income-tax Officer issued separate notices for each of the aforesaid four years purporting to be under section 34(1)(b) of the Income-tax Act, 1922, proposing to reassess the income for the respective years on the ground that he had reason to believe that the same had been under-assessed. In the reassessment proceedings, which were taken up in pursuance of the aforesaid notices under section 34(1)(b) of the Income-tax Act, the only item of income which was taken into consideration, by the Income-tax Officer was the income derived by the assessee under the head “Guest charges”. It was contended on behalf of the assessee that these charges were realised from members for occupation of the rooms of the Club's guest house by members and their guests and, therefore, this income was not assessable. The Income-tax Officer, however, held that the profit arising to the club under the head “Guest charges” was taxable, as the income arose not from members but from persons who were definitely not members. After deducting from the gross income under this head certain amounts on account of expenses, the net profits under this head for the aforesaid four years were determined at Rs. 7,526, Rs. 3,522, Rs. 5,314 and Rs. 6,882, respectively, and the club was assessed to tax on basis thereof. Separate appeals were filed by the assessee in connection with all these four| assessment years and these were all heard together by the Appellate Assistant Commissioner. It was contended before the Appellate Assistant Commissioner that no valid reassessment could be made under section 34(1)(b) and that all the facts and materials were placed before the Income-tax Officer at the time, of the original assessments and the Income-tax Officer accepted the assessee's contention that the amount was not chargeable to tax on the ground of mutuality. The Appellate Assistant Commissioner held that the Income-tax Officer was justified in making reassessment, as there was reason for the Income-tax Officer to believe that the assessee did receive income from outsiders and had taxable income which had escaped assessment. He was further of the opinion that, although the appellant had shown before him that the guest charges were received not from guests but from members, there were other items chargeable to tax which had escaped assessment, for example, the income derived from the members in the bar where foreign liquor was sold and the income derived from members and non-members, such as the rotary club, under the head “Miscellaneous income” for letting use of the club premises. He, accordingly, set aside the assessments for all the four years and directed the Income-tax Officer to make fresh assessment for each of the years in question. It may be added that the Appellate Assistant Commissioner further held that a surplus arising out of trade or business by an association or company with its own members was taxable.

3. The assessee thereafter went up in appeal before the Income-tax Appellate Tribunal in all the four cases. The Appellate Tribunal took up the appeal arising out of the assessment order relating to 1956-57 separately from the other three appeals, which arose out of the assessment orders relating to the remaining three years, that is 1957-58, 1958-59 and 1959-60.

4. In the appeal arising out of the assessment year 1956-57, two contentions were raised on behalf of the assessee before the Tribunal, namely, that the reassessment under section 34(1)(b) was illegal and void and that the direction given by the Appellate Assistant Commissioner to the Income-tax Officer was ultra vires and ineffective. The second contention was negatived by the Tribunal, but so far as the first contention was concerned, the Tribunal, referred to the decision of the Supreme Court in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax [1959] 35 I.T.R 1, and held that “as the Income-tax Officer has failed to record that he had information subsequent to the making of the original assessment order which has led him to believe that this income had escaped assessment, the provisions of section 34(1)(b) had not been properly invoked and the reassessment proceedings commenced thereon were not valid.” The appeal was accordingly allowed and the re-assessment proceedings taken under section 34(1)(b) were held to be invalid.

5. As regards the other three appeals, which were heard together by the Tribunal, the same point as to the Income-tax Officer having no jurisdiction just referred to above was raised before the Tribunal and the Tribunal referred to its decision on the point in the other appeal and held in these appeals also that “as the Income-tax Officer had not recorded that in consequence of information which came into his possession subsequent to the making of the original assessment orders he had reason to believe that income chargeable to tax had escaped assessment, the reassessment proceedings were not properly instituted”. Another point raised in these appeals before the Tribunal was that as the assessee had filed returns and the Income-tax Officer had not chosen to make any order of assessment thereon in the original assessment proceedings, action under section 34 was not justified and the income could not be said to have escaped assessment as the assessment proceedings had not terminated in final assessments. Reliance was placed in this connection on the decision of the Privy Council in the case of Rajendranath Mukherjee v. Commissioner of Income-tax [1934] 2 I.T.R 71 P.C.. This contention was accepted by the Tribunal and the contention of the department that f the order regarding filing of the cases as passed by the Income-tax Officer in connection with the original assessment for these years meant an assessment order determining “nil income” was negatived. In view of these findings, these appeals were also allowed and the proceedings for reassessment under section 34(1)(b) for the aforesaid three years also were quashed.

6. The present references have been made at the instance of the income-tax department after the above decisions by the Tribunal. So far as Case No. 10 of 1965 is concerned, the following question of law has been referred for the decision of this court:

“Whether, on the facts and circumstances of this case, the Tribunal erred in holding that the provisions of section 34(1)(b) were not properly invoked and the reassessment proceedings for the assessment year 1956-57 were invalid.”

7. In Case No. 11 of 1965 and Cases Nos. 14 and 15 of 1966, the questions of law that have been referred for the decision of this court are as follows:

“1. Whether, on the facts and circumstances of these cases, the Tribunal was justified in holding that the reassessments for the years 1957-58, 1958-59 and 1959-60 under section 34 were invalid on the ground that the Income-tax Officer had passed no orders of assessment on the original returns?

2. Whether, on the facts and circumstances of these cases, the Tribunal erred in holding that the provisions of section 34(1)(b) were not properly invoked and the reassessment proceedings for the assessment years 1957-58, 1958-59 and 1959-60 were invalid?”

8. It would thus appear that question No. 2, referred to in Cases Nos. 11, 14 and 15 is the same as the only question referred to in Case No. 10 and hence, this question is first taken up for consideration. It appears that section 34(1) of the Income-tax Act, 1922, has undergone amendments from time to time and it will be convenient to quote here the relevant portion of this section as it stood after the amendment as made by section 18 of the Finance Act, 1956, as we are concerned with the section as it stood after this amendment.

“34. Income escaping assessment.—(1) If—

(a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been underassessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act or excessive loss or depreciation allowance has been computed, or

(b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income, profits and gains chargeable to income-tax have escaped assessment for any year, or have been under-assessed, or assessed at too low a rate or have been made the subject of excessive relief under this Act or that excessive loss or depreciation allowance has been computed,

he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of the end of that year; serve on the assessee or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that subsection:

Provided that the Income-tax Officer shall not issue a notice under clause (a) of sub-section (1)—….

(iii) for any year, unless he has recorded his reasons for doing so and in any case falling under clause (ii), unless the Central Board of Revenue, and in any other case, the Commissioner, is satisfied on such reasons recorded that it is a fit case for the issue of such notice.”

9. It may also be mentioned that the amendments, as made under the Finance Act of 1956, resulted in substantial alterations in the provisions the provisos to section 34(1). Under the amended provisos, one of the essential conditions which the Income-tax Officer is required to comply with, before issue of notice in cases coming under clause (a) only of sub-section (1), is to record his reasons for issue of the notice. The proviso, as it stood, prior to the amendment, however, provided that the Income-tax Officer shall not issue a notice under sub-section (1), that is, in cases covered by both clauses (a) and (b) unless he had recorded his reasons for doing so and the Central Board of Revenue was satisfied on such reasons recorded that it was a fit one for issue of such notice. It is important to note the above distinction between the proviso as it stood prior to the amendment made by the Finance Act, 1956, and the same as incorporated by this amendment.

10. Turning now to the facts of the present case, it may be mentioned at the outset that it was conceded before us on behalf of the opposite party that the words “escaped assessment”, as used in section 34(1)(b) include cases in which there has been no assessment of a particular income owing to inadvertence or oversight or other lacuna attributable to the assessing authority, although the return was duly filed by the assessee and there was no suppression of any facts by him. As held, however, by the Supreme court in the case of Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, two conditions must be satisfied before the Income-tax Officer can act under section 34(1)(b).

“He must have information in his possession, which, in the context, means that the relevant information must have come into his possession subsequent to the making of the assessment order in question and this information must lead to his belief that income chargeable to income-tax has escaped assessment for any year or that it has been under-assessed or assessed at too low a rate or has been made the.subject of excessive relief under the Act.”

11. This decision of the Supreme Court has been referred to by the Tribunal also and Mr. S.N Dutta, appearing for the department, did not dispute the proposition that one of the pre-requisite conditions for the exercise of jurisdiction by the Income-tax Officer under section 34(1)(b) is that, after an order of assessment has already been made, the Income-tax Officer must have some information which gives him reason to believe that some income, profits or gains had escaped assessment in the previous assessment order. I may add here that, as held by a Division Bench of this court in Bhimraj Panna Lal v. Commissioner of Income-tax, there must be ground for belief and not mere suspicion. It is, however, well settled by decisions of the Supreme Court that if the Income-tax Officer has, prima facie, reasonable grounds for such belief, the sufficiency or otherwise of the grounds of such belief is not justiciable (vide Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta [1961] 41 I.T.R 191).

12. The question as to whether the information referred to in section 34(1)(b) can be derived by the Income-tax Officer himself from the materials available in the record of the original assessment proceeding without any extraneous information was left open by the Supreme Court in the aforesaid case of Maharaj Kumar Kamal Singh v. Commissioner of Income-tax. The views of the Madras High Court as expressed in Salem Provident Fund Society Ltd. v. Income-tax Officer [1961] 42 I.T.R 547. and Commissioner of Income-tax v. Rathinasabapathi Mudaliar [1964] 51 I.T.R 204., of the Bombay High Court as expressed in Dr. M.R Dalai v. Commissioner of Income-tax [1963] 49 I.T.R 492., and of the Allahabad High Court as expressed in Asghar Ali Mohammad Ali v. Commissioner Of Income-Tax. [1964] 52 I.T.R 952., are, however, that such information can be obtained even from the record of the original proceeding itself and the Allahabad High Court has gone to the length of expressing that any knowledge acquired by the Income-tax Officer is “information” regardless of the source and manner of acquisition. Our attention was not drawn to any decision of the Patna High Court on this particular point. It is, however, not necessary to decide this particular question in the present case and it may only be pointed out that there may be various sources from which the Income-tax Officer may obtain the information, as referred to in section 34(1)(b). It may also be added that if at the time of the passing of the original assessment order, the Income-tax Officer had duly taken into consideration all the relevant materials including the relevant legal aspects, a subsequent change only in his view as to the inference to be drawn from those materials cannot be considered as subsequent information, as this will merely amount to a change of opinion.

13. The question as to whether the Income-tax Officer had jurisdiction to act under section 34(1)(b) in the present cases on the ground of absence of any subsequent information, as required under the above sub-clause, does not, however, arise for decision in the present references. As would appear from the points of reference, the question to be considered is whether, on the facts and in the circumstances of each of the cases, the Tribunal erred in holding that the provisions of section 34(1)(b) were not properly invoked and the reassessment proceeding was invalid. On a reference to the statements of case as well as the orders as passed by the Tribunal, it is manifest that the finding of the Tribunal on the above point is based merely on the ground that the Income-tax Officer had failed to record that he had information subsequent to the assessment order which led him to believe that the income had escaped assessment. The relevant portion of the order as passed by the Tribunal in the appeal (I.T.A No. 6661 of 1962-63), out of which reference No. 10 arises, is as follows:

“In this case we are prepared to hold that if the Income-tax Officer had originally failed to assess the amount of guest charges on the erroneous belief that this amount was not taxable, that would constitute ‘escape’ as contemplated in section 34(1)(b). But as the Income-tax Officer has failed to record that he had information subsequent to the making of the original assessment order, which has led him to believe that this income had escaped assessment, we must hold that provision of section 34(1)(b) had not been properly invoked and the reassessment proceedings commenced thereon was not valid.”

14. The finding in the other appeals, out of which References Nos. 11 of 1966 and 14 and 15 of 1966 have arisen, is based on the same ground as would appear from the following observations:

“In any event, for the reasons recorded in our order in I.T.A No. 6661 we hold that as the Income-tax Officer had not recorded that in consequence of information which came into his possession subsequent to the making of the original assessment orders he had reason to believe that income chargeable to tax had escaped assessment, the reassessment proceedings under section 34(1)(b) were not properly instituted. In the result, therefore, these appeals are allowed and the proceedings for reassessment under section 34 for the assessment years 1957-58, 1958-59 and 1959-60 are quashed.”

15. As already pointed out above, under the proviso to section 34(1), as it stood prior to the amendment as made by the Finance Act of 1956, the Income-tax Officer was required to record his reasons for issuing a notice under clause (a) as well as clause (b) of sub-section (1) of section 34 before he could issue any notice under either of the two clauses and this was subject to the further condition that the Central Board of Revenue or the Commissioner, as the case may be, was to be satisfied on such reasons recorded that it was a fit case for issue of such notice. It is thus apparent that, prior to the amendment, the Income-tax Officer had to record in writing his reasons for holding that notice under section 34(1) ought to be issued in cases covered by clause (a) as well as clause (b) and this necessarily involved recording by him the information on the basis of which he held the belief regarding the escape of income from assessment, etc. The amendment, however, as made in 1956, dispensed with this requirement in cases covered by clause (b) of section 34(1) while maintaining the same in connection with cases covered by clause (a). It is quite apparent that, in view of this change in the law, it was not necessary in the present cases for the Income-tax Officer to record any such reason for issuing the notices in question, as the same were issued under clause (b) and not under clause (a).

16. It was, however, contended by Mr. Rajeshwari Prasad, appearing on behalf of the assessee, that even if it was not necessary for the Income-tax Officer to record his reasons prior to the issue of notice, there must be something recorded by the Income-tax Officer either prior to the issue of notice or subsequently to show that there was actually some subsequent information in his possession as required under section 34(1)(b) and as no materials were placed either before the Appellate Assistant Commissioner or before the Income-tax Tribunal to show any such recording of the information by the Income-tax Officer, he had no jurisdiction to act under section 34(1)(b). This contention of Mr. Rajeshwari Prasad that there must be a record in writing by the Income-tax Officer to show that he had subsequent information cannot be accepted. Even if the Income-tax Officer had not himself recorded in writing the subsequent information on the basis of which he proceeded to act under section 34(1)(b), there may be material on the record itself, for example, some direction or instruction issued or observation by the superior authority in course of or after an inspection or in an appellate judgment, or even some letter received from some extraneous source and also various other materials which may show that the Income-tax Officer had really subsequent information on the basis of which he acted under section 34(1)(b). As the section itself does not require the Income-tax Officer to record his reasons for the issue of such a notice in cases covered by section 34(1)(b), the existence of any such material on the record which shows that the Income-tax Officer had. really information, as required under clause (b) of section 34(1) before he proceeded to act under that clause will be quite sufficient to give him jurisdiction to act under this section. If an assessee challenges the jurisdiction of the Income-tax Officer to proceed under section 34(1)(b) on the ground that there were no materials on the record to show that the Income-tax Officer had any subsequent information, it would be incumbent on the department to show that this contention was not correct by producing the necessary materials. In the present cases, however, neither the order of the Appellate Assistant Commissioner nor the orders as passed by the Tribunal show that this point was agitated either before the Appellate Assistant Commissioner or the Tribunal. The Tribunal has neither made any observation nor has based its finding on the ground that there was no material on the record to show that the Income-tax Officer had any information as required under section 34(1)(b) but has based its finding merely on the ground that the Income-tax Officer had failed to record that he had the information as required and, as such, the provisions of section 34(1)(b) have not been properly invoked. It is not possible to accept the contention of Mr. Rajesh-wari Prasad that this finding of the Tribunal is tantamount to a finding that there are no materials on the record to show that the Income-tax Officer had any subsequent information, as required under section 34(1)(b). Hence, in “view of our finding that it was not incumbent upon the Income-tax Officer to record that he had information subsequent to the making of the original order, which led him to believe that the income had escaped assessment, it follows that the Tribunal erred in holding that the provisions of section-34(1)(b) were not properly invoked and reassessment proceedings for the Assessment years in question were invalid. It may be added that the facts ??? mentioned in the statements of case as recorded by the Tribunal in making these references and as stated in the appellate orders as passed by the Tribunal are only to be taken into consideration by this court in refttermining these references and it is not for this court to enter into new werts which were not placed before the Tribunal.

17. In view of the above findings, the sole question of reference in Case No. 10 of 1965 and the second question of reference in Cases Nos. 11 of 1965 and 14 and 15 of 1966 are answered in the affirmative and in favour of the petitioner.

18. I next take up the other question, namely, the first question which arises only in References Nos. 11 of 1965 and 14 and 15 of 1966. As already stated in the appeals arising out of the reassessment proceedings for the years 1957-58, 1958-59 and 1959-60, one of the points urged on behalf of the assessee was that the orders as passed in the original assessment proceedings were not tantamount to orders terminating in final assessment and, as such, no reassessment proceedings could be started as the original proceedings were still pending. This contention, as already mentioned, has been accepted by the Tribunal. The contention of the department that the orders as passed amount, in effect to assessment orders determining “nil income” was not accepted and it was accordingly held that there was no scope for invocation of the provisions of section 34 for these years. As would appear from the order of the Tribunal and the statements of case, as made by it in making these references, the contention of the assessee at the time when the original assessments were made was that the income was “nil” as it was a members' club and receipts from its own members were not taxable. The Income-tax Officer accepted this contention and passed orders as follows in the proceedings relating to each of the three assessment years:

“Returns filed. Assessee has no business income and income from property during the year; case is filed.”

19. The contention of the assessee is that the order as to the case being filed does not imply that the proceeding was terminated and in the absence of any specific order terminating the proceeding and accepting the income as nil, the proceedings must be considered as still pending. The question as to what is meant or intended by an order for filing a case has evidently to be determined with reference to all the attendant facts and circumstances in which the order was passed. As pointed out in the appellate order of the Tribunal, a similar point arose in the case of Esthuri Aswathiah v. Income-tax Officer, in which the Income-tax Officer had passed an order “No proceeding” and it was held by the Supreme Court that such an order in the circumstances of the case meant that the Income-tax Officer accepted the return and assessed the income as “nil”. In another case, namely, Commissioner of Income-tax ??? Bidhu Bhusan Sarkar, an order passed by an Additional Income-tax Offic??? to the effect that the case is filed came up for consideration and it was he??? by the Supreme Court that on the facts of the case the intention of the Additional Income-tax Officer could have, in making the order that the case but filed, been that the proceedings should no longer remain in existence as be??? unnecessary and he clearly intended that they should be terminated ??? dropped and, in the circumstances, the word “filed” has to be interprebuios as equivalent to “disposed of”. In the present case, it is evident from ??? has been stated above that the Income-tax Officer had accepted the conte???tion of the assessee that his income was nil and had thereon passed theaforesaid order to the effect that the assessee had no business income orincome from property during the year and hence he directed the case to befiled. In view of these attendant facts and circumstances, there cannot bethe least doubt that the order regarding filing of the case is really tantamountto an order disposing of the proceeding on the finding that the income was nilas contended by the assessee, hence, the finding of the Appellate Tribunal onthe above point cannot be upheld and the Tribunal has evidently erred in holding that the reassessment of the aforesaid years were invalid on the ground that the Income-tax Officer had passed no order of reassessment on theoriginal returns. It may be added that it was contended by Mr. Rajeshwari Prasad that, on the basis of the question referred to, it is not open to this courtto consider whether the original order as passed by the Income-tax Officeramounts to an order terminating the proceeding and assessig the income asnil and the court has to proceed on the basis that the Income-tax Officer hadpassed no order of assessment on the original returns. He drew our attentionto the fact that there is some difference in the question as framed by the Tribunal and the question which the department had suggested in its petition before the Tribunal for reference to the court. It appears that in the petition the prayer of the department was for framing a question whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the recording of the case as “filed” did not amount to as “nil”. The question as framed by the Tribunal, no doubt, is what different from that suggested by the department but on constru-the entire question as framed and referred to by the Tribunal, there is secope for the contention that the court is to proceed on the basis that the come-tax Officer had passed no orders of assessment on the original turn. The finding of the Tribunal was that the reassessment proceedings le invalid on the ground that no order of assessment had been passed by Income-tax Officer and the question for determination by this court is whether this finding was justified and, as such, the correctness of the ground on which the finding is based and the inference to be drawn therefrom are both matters which arise for determination under the reference as made by the Tribunal. As such, there is no merit in the above contention raised by Shri Rajeshwari Prasad. In view of the above findings, the aforesaid point of reference is answered in the negative, and it is held that the orders passed by the Income-tax Officer actually amounted to orders terminating the proceeding on the finding that the income was nil and the Tribunal was not justified in holding that the reassessments were invalid. The question is, therefore, answered in the negative.

20. In the result the sole question referred to in Reference No. 10 of 1965 and the second question of References Nos. 11 of 1965, and Hand 15 of 1966, are answered in the affirmative and the question No. 1 in References Nos. 11 of 1965 and 14 and 15 of 1966 is answered in the negative. Both the questions are thus answered against the opposite-party, assessee, and in favour of the petitioner-department. The assessee will pay a consolidated sum of Rs. 100 in Reference No. 10 and a consolidated sum of Rs. 150 in References Nos. 11 of 1965 and 14 and 15 of 1966, to the petitioner by way of costs.

Ramratna Singh, J.:— I agree.