Law:

Section:

Section 147(b), read with section 10(19A), of the Income-tax Act, 1961 - Reassessment - Information - Rental income from palace of assessee, an ex-ruler, was held as exempt by ITO under section 10(19A) - On audit party opinion that rental income was not exempt as part of palace was let out, ITO reopened assessment - Whether audit's opinion constituted 'information' for reopening of assessment - Held, no Facts The rental income of the assessee (an erstwhile ruler), from the palace owned by him was treated as exempt by the ITO. However, in view of the objections taken by the audit party that a part of the palace had been let out and the rental income therefrom was not exempt from tax, the ITO reopened assessment. The Tribunal held the reassessment proceedings to be valid. On reference: Held When the income of the palace was not held to be chargeable to tax by the ITO, the only relevant provision of the Act, which had a bearing on that question was sub-section (19A) of section 10. The opinion of the audit party that the provisions of sub-section (19A) of section 10 were not attracted because the palace of the assessee was partly let out, could not, as laid down by the Supreme Court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996, constitute 'information' within the meaning of section 147(b), conferring jurisdiction on the ITO to reopen assessment. The opinion of the audit party could not be held to be merely communication of law. The only provision enabling the ITO to hold that income from the palace of the assessee was not chargeable to tax was section 10(19A). Any different view taken by him afterwards on the applicability of that provision would amount to change of opinion on material already considered by him. As held by the Supreme Court in Indian and Eastern Newspaper Society's case (supra) an error discovered on a reconsideration of the same material and no more, does not give power to the ITO to reopen assessment under section 147(b). Under the circumstances, it must be held that the Tribunal was not justified in holding that the reassessment proceedings were validly initiated under section 147(b). Case referred to Indian & Eastern…

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