9911796707
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Issues:
Reopening of assessments based on directions from IAC, Validity of reassessments made by ITO/WTO, Interpretation of law by IAC, Competence of IAC to instruct reopening of assessments. Analysis: The case involved the reassessment of two Hindu undivided families (HUFs) based on cross-gift transactions. The ITO/WTO reopened the assessments to include interest income from these gifts. The assessees challenged the reassessments, arguing that all relevant facts were already before the assessing authority during the original assessments. The AAC accepted the assessees' claim, canceling the reassessments. The Revenue appealed, contending that the reassessments were valid as they were based on directions from the IAC received after the original assessments. The assessees' counsel argued that the IAC had no authority to interpret the law, citing relevant case law. The Tribunal found that the IAC's directions contained interpretations of the law and directed the assessments to be reopened, leading to the conclusion that the reassessments were not based on correct information. The Department argued that the IAC's memorandum merely pointed out the applicable law, while the assessees' counsel maintained that the IAC's interpretation in the memorandum rendered the reopening invalid. The High Court noted that the IAC's directions constituted an interpretation of the law, contrary to the Supreme Court's ruling on the matter. The High Court referenced various judgments to support its decision, highlighting that the IAC's interpretation of the law in the memorandum did not constitute valid information for reopening the assessments. The Court emphasized that the Tribunal's findings regarding the IAC's actions were conclusive, leading to the affirmation of the Tribunal's decision against the Department. The High Court ruled in favor of the assessees, holding the reassessments invalid based on the IAC's interpretation of the law, and dismissed the Department's appeal.
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