Law:

Section:

section 147(b) of the income-tax act, 1961-reassessment-information-while calculating rebate under section 84 (now section 80j with effect from 1-4-1968), ito computed capital by including half the profits that had accrued during relevant assessment years-subsequently, on basis of audit note, ito resorted to reassessment under section 147(b) to reduce aforesaid rebate by reducing capital computation to extent of half the profits which were added in original assessments-whether ito had information within meaning of section 147(b) to justify reassessment proceedings-held, on facts, no Facts While calculating the rebate under section 84 (now section 80J with effect from 1-4-1968), for the assessment years 1965-66 and 1966-67, the ITO computed the capital by including half the profits that had accrued during the years. Later on, on the basis of audit note, the ITO took the view that the inclusion of half year's profit was not correct. Accordingly, he reopened the proceedings under section 147( b) and reduced the rebate allowable under section 84 by reducing the capital computation to the extent of half the profits which were added in the original assessments. The Tribunal, however, held that the case involved merely an interpretation of rule 19(5) of the Income-tax Rules. It further held that information regarding the position of law had to come from a person in whom the statute vested powers to decide questions of law, if it was to constitute information for the purpose of section 147(b) and that the audit's view could not be accepted as an authority on law, so that there was no information on the basis of which the ITO could reopen the proceedings under section 147(b). The Tribunal, therefore, held that the aforesaid reassessment proceedings were invalid. On reference : Held In Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996, the Supreme Court has clearly laid down that the opinion of an audit party on a point of law could not be regarded as 'information' enabling the ITO to initiate reassessment proceedings under section 147(b ). It is also clear that the information contemplated by section 147(b) has to be fresh information and the ITO must…

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