Law:

Section:

Section 147 of the Income-tax Act, 1961 – Income escaping assessment – Information – Position prior to 1-4-1989 – Assessment years 1966-67 to 1969-70 – Whether audit report would not constitute ‘information' within meaning of section 147(b) upon which ITO could have initiated reassessment proceedings – Held, yes FACTS After the completion of the assessments, the audit department pointed out to the Income-tax Officer that by virtue of the provisions contained in section 40(b), the claim for deduction of the amounts of interest paid to the partners during the relevant account years ought not to have been allowed. On basis of such audit report, the ITO reopened assessment under section 147(b) and reassessed the income adding back the amounts of interest which were allowed as deduction in the course of the original assessment proceedings. On appeal, the AAC held that the audit department was not an authority competent and authorised to declare the correct state of the law or to pronounce upon it, and the audit report could not, therefore, constitute "information" within the meaning of section 147(b) entitling the Income-tax Officer to initiate proceedings for reassessment. He, therefore, held that the action for reassessment taken by the Income-tax Officer under section 147(b) was not in order and that it was required to be cancelled. On further appeal, the Tribunal upheld the AAC's decision. On reference : HELD The true legal position is (1) that "information" means instructive knowledge concerning a matter bearing on the assessment received after the completion of the original assessment; (2) that the "information" may be as to the correct state of facts or of law relating to the taxable income; (3) that such "information" must be capable of arousing or suggesting ideas or notions not before existent in the mind of the Income-tax Officer; (4) that it must be of such a nature as to acquaint, enlighten or instruct the mind of the Income-tax Officer for the first time concerning a matter pertaining to the taxable income so that he could form a reasonable belief that there has been an escapement of assessment of tax which requires to be set right by taking steps for…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492