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Issues:
1. Validity of reopening assessments under section 147(b) of the Income-tax Act, 1961 for the assessment years 1960-61, 1961-62, and 1962-63. 2. Interpretation of provisions under section 14(3) of the Indian Income-tax Act, 1922 and section 81 of the Income-tax Act, 1961. 3. Determining whether the Income-tax Officer had proper jurisdiction to invoke section 147(b) for reassessment. Analysis: The High Court of Madras addressed the issue of the validity of reopening assessments under section 147(b) of the Income-tax Act, 1961 for the assessment years 1960-61, 1961-62, and 1962-63. Initially, the Income-tax Officer had treated the business income of the co-operative society as exempt from taxation. However, a successor officer later took the view that the exemption was not applicable and reopened the assessments. The Tribunal held that there was no proper jurisdiction for invoking section 147 and set aside the assessments. The revenue contested this decision, leading to the reference question on the validity of the proceedings under section 147(b. The court analyzed the interpretation of provisions under section 14(3) of the Indian Income-tax Act, 1922, and section 81 of the Income-tax Act, 1961. It was argued that the Income-tax Officer had made a mistake in granting exemption beyond the prescribed limit of Rs. 15,000. The court examined whether the society fell under the category of a credit society as specified in the relevant provisions. It was established that the society, dealing in grocery articles and piece-goods, did not provide credit facilities or engage in banking activities, thus not meeting the criteria of a credit society. Furthermore, the court deliberated on whether the Income-tax Officer had proper jurisdiction to invoke section 147(b) for reassessment. The revenue contended that there was no express opinion in the original assessment regarding the society being a credit society, allowing for a reassessment based on a change of opinion. However, the court emphasized that unless new evidence, not available during the original assessment, surfaced, the reassessment under section 147(b) could not be justified. As there was no fresh material indicating a change in circumstances, the court concluded that the reassessment was merely a change of opinion and not valid under section 147(b). In conclusion, the High Court ruled in favor of the assessee, holding that the reassessment under section 147(b) was not valid due to lack of proper jurisdiction and absence of new evidence warranting a reassessment. The court answered the reference question in the affirmative, against the revenue, and awarded costs to the assessee.
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