Law: Income Tax Act, 1961

Section: 147

Income tax---Re assessment Information Opinion of the audit party does not constitute information Audit party not pointing out or statutory provisions Re assessment based on the opinion of the Audit party not valid in law. Indian and Eastern Newspaper Society v. C. I. T. (1,979) 119 I T R 996 (S C) fal. Vashist Bhargava v. L T. O. (1975) 99 I T R 148 (Delhi) distinguished. Atul Products Ltd. v. L T. O. (1980) 125 I T R 452 (Guj.) ref. JUDGMENT MAIMUDAR, J. The petitioner company challenges in this petition under Article 226 of the Constitution of India, a notice issued by the respondent I. T. O. under section 147(b) of the I.T Act, 1961, hereinafter referred to as "the Act", seeking to reopen the assessment proceedings for the assessment year 1975 76 corresponding to the accounting year 1974 75. A few facts leading to this petition are required to be stated at this juncture. The petitioner is a public limited company, viz. the Anil Starch Products Ltd. at Ahmedabad. It is being assessed to Income tax under the Act. During the accounting year 1974 75, the petitioner company made an actual payment of gratuity of Rs. 71,045 to its retiring employees in accordance with the provisions of the Gratuity Act, 1972, and the scheme formulated by it and claimed the same as a deductible expenditure from its income. The I. -T. O. passed his assessment order for the relevant assessment year on 21st January, 1977. The said order is at Annexure "A" to the petition. Thereafter, it appears that the I. T. O. addressed under section 154 a notice, dated 20th January, 1978, to the petitioner company stating that an apparent error had crept in the original assessment in so far as he had allowed the amounts of Rs. 71,045 and he proposed to rectify the said error by withdrawing the said deduction. The petitioner company gave a reply to the above notice objecting to the proposed rectification. It was pointed out by the petitioner company that there was no error in the assessment which would justify the I. T. Q to have recourse to the (said) process under the Act. The I. T. O. also issued a notice under section 148, dated 13th December, 1977, which is at Exh. C to the petition, stating…

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