Law:

Section:

Section 147(b) of the Income-tax Act, 1961-Reassessment-Information-Assessee-Company, engaged in business of extraction of oil and manufacture of deoiled cakes, obtained in original assessment an export profit rebate for export of deriled cakes under section 2(5)(a) of the finance act, 1964-On advice of internal audit party ITO withdraw impunged rebate by reassessment proceedings initiated under section 147(b)-Whether ITO had information within the meaning of section 147(b) and whether reassessment proceeding were vaild-Held, on facts, no Facts The assessee-company derived income from extraction of oil and manufacture of deoiled cake. For the assessment year 1964-65, the IIO completed the original assessment allowing, under section 21(5)( a)(ii) of the Finance Act, 1964, the assessee's claim for export profit rebate on export of deoiled cakes. Subsequently, the internal audit party pointed out to the ITO that the said rebate was not admissible as, under section 5(e) of the Finance Act, 1964, item 28 of its Schedule, namely, "Vegetable oils and vanaspati" was excluded from the scope of section 2(5)(a)( ii). The ITO did not subscribe to this view and replied back stating that the item of deoiled cakes was not vegetable oils or vanaspati and, therefore, the exception contained in said section 2(5)(c)( i)(8) was not attracted on the facts of the case. Nevertheless, at the insistence of the auditor, the ITO withdrew the impugned rebate in reassessment proceedings initiated under section 147(6). On appeal, the A AC set aside the reassessment as being bad in law holding ( i) that in the original assessment the ITO had duly considered the question of said rebate under section 2(5)( a)(ii); (ii) that no fresh information had come into his possession; and (ii) that the reassessment was based merely on a difference of opinion on the same set of old facts. On second appeal, the Tribunal sustained the AAC's decision. On reference: Held In the instant case, the ITO, even after his initial negative reply, rectified the impugned mistake on the basis of the audit report. This evidently show that the information and opinion of the audit party as to the legal position of the…

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