1997 (10) TMI 5 - SC - Income Tax

Tribunal and the High Court were in error in holding that the information given by the internal audit party could not be treated as information within the meaning of section 147(b) - There can be no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law

Summary

The Supreme Court allowed the appeals related to assessment years 1974-75 and 1975-76. The Tribunal and High Court erred in holding that reopening of assessment under section 147(b) was not permissible based on a report by the audit department. The internal audit party pointed out that a charitable trust's recognition had expired before the relevant years, making donations ineligible for deduction under section 80G. The Court held that reopening based on factual information from the audit party was valid. The judgment under appeal was set aside, and no costs were awarded.