1982 (10) TMI 64 - AT - Income Tax

Summary

Issues:
Reopening of assessment under section 147(b) of the IT Act, 1961 based on information from audit party.

Analysis:
The Department filed an appeal against the CIT(A)'s order canceling the reopening of assessment for the assessment year 1972-73. The issue revolved around the provision for gratuity made by the assessee, where the ITO originally added back only a portion of the provision. Subsequently, the audit party pointed out the under-assessment, leading to the reopening of assessment by the ITO. The CIT(A) relied on the Indian & Eastern Newspapers Society case to hold that the reopening was invalid as the audit party's opinion did not constitute "information" under section 147(b).

The Department argued that the audit party's opinion can constitute "information" if it points out a factual matter leading to under-assessment. They contended that the CIT(A) erred in canceling the reassessment and that the ITO's decision should be upheld based on the same Supreme Court case. The counsel for the assessee, on the other hand, supported the CIT(A)'s order, emphasizing that the audit party's opinion did not qualify as "information" under section 147(b) as it was a mere change of opinion on existing facts.

The Tribunal analyzed the case law and guidelines set by the Supreme Court in the Indian & Eastern Newspapers Society case regarding what constitutes "information" under section 147(b). They concluded that the audit party's opinion, being from an external source, coming after the original assessment, and relating to factual points, did constitute "information." Therefore, the Tribunal held that the CIT(A) erred in his decision and allowed the appeal, directing the CIT(A) to reconsider the case on its merits.

In summary, the Tribunal found that the audit party's opinion constituted valid "information" under section 147(b), allowing the reopening of the assessment. The decision emphasized the importance of external sources providing factual insights after the original assessment for a valid reassessment under the IT Act.