Law:

Section:

Section 147, read with section 81 of the Income-tax Act, 1961 - Income escaping assessment - Position prior to 1-4-1989 - Assessment years 1960-61 to 1962-63 - ITO sought to withdraw exemption granted under section 81(i) in original assessment on ground that assessee was not credit society - However, there was no evidence to show that any fresh material which was not available at time of original assessment had come to notice after order of assessment were passed - Whether Act of successor ITO only amounted to change of opinion and on that ground ITO was not entitled to invoke powers under section 147(b) - Held, yes Section 81 of the Income-tax Act, 1961 - Co-operative society - Assessment year 1964-65 - Whether 'credit society' within meaning of statutory provisions can only mean society which provides credit by way of loans of money to its members and not society which sells goods on credit - Held, yes FACTS The assessee-respondent was a co-operative society registered under the Co-operative Societies Act and was dealing in grocery articles and piece goods. For the assessment years 1960-61, 1961-62 and 1962-63, the ITO treated the business income of the assessee as exempt from taxation. During the assessment year 1964-65 a successor ITO took the view that the assessee was not entitled to the exemption. In the view that the ITO originally made a mistake in giving the exemption he reopened the assessments in respect of the assessment years 1960-61 to 1962-63 under section 147(b). In response to the notice issued, the society filed a return, but furnished the same particulars as was done in connection with the original assessment. The ITO considered that under section 14(3) of the Indian Income-tax Act, 1922, as amended by the Finance Act of 1960, the assessee was entitled, in respect of the assessment years 1960-61 and 1961-62, to an exemption in respect of its business income up to Rs. 15,000 only and that, therefore, the remaining income was assessable. In respect of the assessment year 1962-63 also, in view of the provisions contained in section 81(i) of the new Act, corresponding to section 14(3)(i) of the old Act, he took the same view that the assessee…

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