Law:

Section:

Section 147(b) of the income-tax act, 1961-Reassessment-Information-On receipt of audit objections after completion of original assessment, certain details and evidence were collected by ito from assesses-Ito, in a report to commissioner inviting him to take action under section 263, stated that, in his view, no action under section 147 could be taken-Later, on basis of commissioner's direction, ito expressed satisfaction that action could be taken under section 147-Whether there was any information before ito justifying reassessment under section 147-Held, no-Whether direction or satisfaction of commissioner could be substituted for satisfaction of ito on basis of information-Held, no Facts After completion of the original assessment, the ITO received certain audit objections that in the said assessment order certain expenses were not property allowed. On the basis of these objections, after making certain enquiries from the assessee, the ITO completed reassessment under section 147(b ) disallowing the said expenses. On appeal, the Tribunal justified the ITO's action, on the ground that he had initiated action on the basis of certain details and evidence actually obtained from the assessee after receipt of audit objections. On reference, the assessee contended (i) that the audit objection was not 'information' within the meaning of section 147(b), ( ii) that the fact that the ITO in a report to the Commissioner inviting him to take action under section 263, had stated that he was of the view that action under section 147 could not be taken clearly showed that he had no new facts before him and that he had only changed his opinion on the matter and (iii) that the direction of the Commissioner was the only matter which weighed with the ITO for expressing satisfaction for taking action under section 147. Held The ITO's order starting proceedings under section 147 and his report to the Commissioner, which admittedly, was after making all preliminary enquiries, clearly disclosed that no new facts were found nor any new information was collected but on a reconsideration of the facts, which were before the ITO at the time of assessment, he was impressed by the…

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