Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Information - Position prior to 1-4-1989 - Assessment year 1981-82 - Assessee-firm was dissolved on 30-7-1980 and a proprietary concern of one of its partners came into existence - Assessment of firm was completed by adopting value of closing stock at original cost which was method adopted by firm - Subsequently, on advice of audit party that stock of firm on dissolution should be valued at market price, Assessing Officer reopened assessment and added difference between market value of stock and cost price of stock to income of assessee - Whether, in view of decision of Supreme Court in Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996 wherein it was held that opinion of an internal audit party of income-tax department on a point of law cannot be regarded as 'information' within meaning of section 147(b) for purpose of reopening an assessment, reassessment proceedings initiated against assessee were ab initio void and, therefore, were liable to be cancelled - Held, yes CASE REVIEW Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996 (SC), followed. [Para 6] CASES REFERRED TO Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996 (SC) [Para 4] and Adani Exports v. Dy. CIT [1999] 240 ITR 224 (Guj.) [Para 5]. S.K. Garg Narwana for the Applicant. JUDGMENT M.M. Kumar, J. - At the instance of the revenue the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh ('the Tribunal') has referred the following question of law for determination of this Court by exercising jurisdiction under section 256(1) of the Income-tax Act, 1961 ('the Act'), which is stated to have emerged from order dated 8-1-1992, passed in ITA No. 408/Chandi./88, in respect of assessment year 1981-82 :- "Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in law to hold that the reassessment proceedings initiated in the case of the assessee in relation to assessment year under reference, are ab initio void?" 2. Brief facts of the case are that the assessee-firm is engaged in the business of purchase and sale of gold, silver and diamond ornaments.…

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