MUNNA LAL AND SONS VS COMMISSIONER OF INCOME-TAX, 1992 PTD-ALLAHABAD-HIGH-COURT-INDIA 1038 (1990)

Income-tax---

----Reassessment---"Information", meaning of---Assessment completed ---IAC bringing to notice of ITO errors in assessment order---Assessment reopened on basis of remarks of IAC---IAC did not bring to notice of ITO information as to law---Such remarks of IAC do not constitute information---Reassessment not valid.

The assessment of the assessee for the assessment year 1967-68 was completed by the Income-tax Officer. Subsequently, the Inspecting Assistant Commissioner brought to the notice of the Income-tax Officer that the computation made by him of the assessee's income from other sources was not in accordance with the provisions of sections 57 and 58 of the Income-tax Act, 1961, and that the deductions granted by the Income-tax Officer were contrary to law. Thereupon, the Income-tax Officer issued notice under section 147(b) read with section 148 of the Act reopening the assessment and passed another assessment order. The Commissioner (Appeals) allowed the appeal filed by the assessee. The Tribunal set aside the order of the Commissioner (Appeals) and remanded the matter to him for fresh disposal. On a reference:

Held. that the assessment was reopened on the basis of and in pursuance of the report or remarks made by the Inspecting Assistant Commissioner who pointed out the errors in the assessment order. It was not a case of the Inspecting Assistant Commissioner bringing the correct position of law to the notice of the Income-tax Officer, but it was a case where the Inspecting Assistant Commissioner pointed out the errors in the assessment order. Such a proceeding or remarks of the Inspecting Assistant Commissioner could not constitute information within the meaning of section 147(b) of the Indian Income Tax Act, 1961. Therefore, the reopening of the assessment was not valid.

CIT v. H.D. Dennis (1982) 135 ITR 1 (Bom.) and Indian and Eastern Newspaper Society v. CIT (1979) 119 ITR 996 (SC) fol.

Vikram Gulati for the Assessee.

JUDGMENT

B.P. JEEVAN REDDY, C.J.---Under section 256(2) of the Income Tax Act, 1961, the Tribunal has referred the following question for the opinion of this Court:

"Whether, on the facts and circumstances of the case, the Tribunal was legally justified in holding that the assessment was validly reopened under section 147(b) of the Income Tax Act, 1961?"

In this case, an assessment was made on July 25, 1969, for the assessment year 1967-68. Subsequent thereto, it appears that the Inspecting Assistant Commissioner brought to the notice of the Income-tax Officer that the computation made by him of the assessee's income from other sources was not in accordance with the provisions of sections 57 and 58 of the Income-tax Act and that the deductions granted by the Income-tax Officer are contrary to law. Thereupon, the Income-tax Officer issued a notice under section 147(b) read with section 148, reopened the assessment and passed another assessment order. The assessee's appeal against the same was allowed by the Commissioner of Income-tax (Appeals) but, on further appeal by the Department, the Tribunal set aside the first appellate order. It found that the first appellate authority has not examined certain contentions raised by the assessee and, accordingly, the matter was remanded to him. Thereupon the petitioner applied for and obtained the present reference.

It is clear from a reading of the order of the Tribunal that the assessment was reopened on the basis of and in pursuance of the report, or remarks as it may be called, by the Inspecting Assistant Commissioner who pointed out the errors in the assessment order. It is not a case of the Inspecting Assistant Commissioner bringing the correct position of law to the notice of the income-tax Officer but it is a case where the Inspecting Assistant Commissioner pointed out the errors in the assessment order. Such a proceeding or remarks of the Inspecting Assistant Commissioner cannot constitute "information" within the meaning of section 147(b). This is the view taken by a Bench of the Bombay High Court in CIT v. H.D. Dennis (1982) 135 ITR 1, following decision of the Supreme Court in Indian and Eastern Newspaper Society v. CIT (1979) 119 ITR 996.

For the above reasons, the question referred is answered in the negative, i.e. in favour of the assessee and against the Revenue. No costs.

M.BA./1565/T Reference answered.