Law:

Section:

Section 147(b), read with section 80K, of the Income-tax Act, 1961 and rule 20 of the Income-tax Rules, 1862 - Reassessment - Information - ITO issued provisional certificates under section 197(3) to two companies indicating how much of dividend was to be distributed without deduction of tax by reason of provisions of section 80K - But after completing assessments of said companies, ITO sent letters to them indicating that dividend which was to be distributed without deduction of tax under section 197(3) was much lower than what had been indicated in earlier provisional certificates - Consequent to said letters, ITO reopened assessees' assessments, who were shareholders of said two companies, under section 147(b) on ground that on account of provisional certificate granted to said companies, income of assessees had escaped assessment - Whether in view of the provisions of rule 20, it was not a case for reassessment but was a case for applying the said rule - Held, on facts, yes Facts In the relevant assessment year, the ITO granted provisional certificates to two companies under section 197(3) indicating how much of the dividend was to be distributed without deduction of tax at source. After the assessments of these two companies were completed, the ITO sent letters to them indicating the deduction to be allowed under section 80K. These letters indicated that the dividend which was to be distributed without deduction of tax at source was much lower than what had been indicated in the earlier provisional certificates. On the basis of these letters, the ITO reopened the assessments under section 147(b) of the assessees who were shareholders of the aforesaid two companies and had got benefit of section 80K. He, accordingly, assessed the dividend which had escaped tax on account of the provisional certificates granted to the said companies. On appeal, the AAC, however, held that no action could be taken under section 147(b), because the ITO could not amend the determination made under rule 20 of the Income-tax Rules, 1962. On appeal by the revenue, the Tribunal confirmed the AAC's order holding (i) that once the deduction had been allowed under section 80K, it…

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