RATNAM J.

These two references relating to the assessment years 1968-69 and 1969-70 raise a common question of law. The assessee is co-operative society. Besides carrying on business in the supply of milk it runs a canteen and also raises grass for the use of cattle as part of salvage farm, poultry dairy farm and livestock unit. In respect of the assessment years in question, a claim was made by the assessee for the loss incurred by it in the salvage farm and this was allowed by the Income-tax Officer. Subsequently, while making the assessment for the assessment year 1970-71, the Income-tax Officer came into possession of information that there was an underassessment of the total income of the assessee for the two years in question. Thereupon, the Income-tax Officer initiated action under section 147(b) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and brought to tax the loss allowed under salvage farm, after holding that under section 10(27) of the Act, the income derived by the assessee from the salvage farm, poultry dairy farm and livestock unit carried on by the assessee was exempt from tax and that consequently the losses incurred in the salvage farm operation should not have been allowed. On appeals before the Appellate Assistant Commissioner by the assessee, it was contended that all facts relating to the salvage farm operations carried on by the assessee had been placed before the Income-tax Officer, who made the original assessment and only after consideration thereof, the loss was allowed in the original assessment and, therefore, it was not open to the successor-officer, on a mere change of opinion, to initiate proceedings for reassessment. It was also contended that section 10(27) of the Act would not apply, as the asses see was not running a dairy farm. The Appellate Assistant Commission upheld the reopening of the assessment on the ground that the Income-tax Officer, who made the original assessment, was unaware of the fact that the assessee was maintaining stud bulls and such expenditure had been debited to the profit and loss account and that only in the course of the assessment proceedings for the subsequent year, the successor-officer found that, the assessee's activity included livestock breeding and dairy farming and maintenance of bulls and the income therefrom was exempt under section 10(27) of the Act and under these circumstances, the loss under this business should not have been allowed. On further appeal by the assessee before the Tribunal, reiterating its objection that there was only a mere change of opinion and that section 10(27) of the Act would not apply, the Tribunal, relying upon Kalyanji Mavji and Co. v. CIT 1976 AIR(SC) 203, 1976 (102) ITR 287, 1976 (1) SCC 985, 1976 (2) SCR 966, 1976 TaxLR 123, 1976 CTR(SC) 85 (SC), held that the reopening of the assessment for the assessment years in question was justified and that on the other question of applicability or otherwise of section 10(27) of the Act, the matter had to be remitted to, the Appellate Assistant Commissioner for going into that question, giving liberty to the assessee to produce whatever evidence it wanted in support of that contention At the instance of the assessee, under section 256(2) of the Act, the following common question of law for the two assessment years in question, has been referred to this court for its opinion.

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Income-tax Officer acted properly in invoking the provisions of section 147(b) of the Income-tax Act?" *

Learned counsel for the assessee strenuously contended that the reassessment proceedings had been initiated merely on the basis of the change of opinion on the part of the successor-officer and that that would not in any manner justify the reopening of the assessment. Reference in this connection was also made to several decisions holding that a mere change of opinion on the