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Issues:
1. Validity of re-opening assessment under section 147(b) based on Commissioner's letter. 2. Determination of whether the Commissioner's letter constituted information from an extraneous source. 3. Validity of reassessment proceedings despite the Appellate Assistant Commissioner's order. Analysis: Issue 1: The case involved the re-opening of the assessment under section 147(b) based on the Commissioner's letter. The Tribunal held that the proceedings were validly initiated, considering the letter as constituting information under section 147(b). However, the High Court disagreed, emphasizing that the Appellate Assistant Commissioner's final order, which found no error in the original assessment, precluded the Income-tax Officer from re-opening the assessment. The court cited the decision in Commissioner of Income-tax v. Rao Thakur Narayan Singh, highlighting that final decisions against the revenue in earlier proceedings cannot be circumvented by new information. The High Court concluded that the re-assessment based on the Commissioner's letter was not valid. Issue 2: The second issue revolved around whether the Commissioner's letter constituted information from an extraneous source under section 147(b). The Tribunal had deemed the letter as such, justifying the re-opening of the assessment. However, the High Court rejected this notion, emphasizing the finality of the Appellate Assistant Commissioner's order, which determined that no income had escaped assessment. The court held that the letter did not provide new information warranting re-assessment, as the original assessment was deemed correct by the Appellate Assistant Commissioner. Issue 3: Regarding the validity of reassessment proceedings despite the Appellate Assistant Commissioner's order, the High Court ruled in favor of the assessee. The court reiterated that the Appellate Assistant Commissioner's decision, accepted by the department, conclusively determined that no income had escaped assessment. Therefore, the Income-tax Officer was bound by this final decision and could not re-open the assessment under section 147(b). The court relied on legal precedent to assert that the Income-tax Officer could not circumvent final orders by initiating new proceedings based on the same facts. In conclusion, the High Court found in favor of the assessee, ruling that the reassessment proceedings initiated under section 147(b) were not valid due to the finality of the Appellate Assistant Commissioner's order. The court emphasized the principle that final decisions must be respected, preventing the Income-tax Officer from re-opening assessments based on the same facts.
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