1988 (7) TMI 95 - AT - Income Tax

Summary

Issues:
Validity of assessment under section 147(b) based on audit note.

Analysis:

1. The appeal by the Revenue challenged the CIT (A)'s cancellation of the assessment due to the alleged invalid initiation of proceedings under section 147(b). The dispute revolved around the exemption claimed under sections 80P(2)(a)(iii) and 80P(2)(a)(iv) in the original return of income.

2. The CIT (A) based their decision on the fact that all relevant facts were available to the Income Tax Officer (ITO) during the original assessment, and no new information had come to light. The appellant contested the initiation of proceedings under section 147(b) as a mere change of opinion, citing the Indian and Eastern Newspaper Society case.

3. The Departmental representative argued that the audit note constituted new information, contrary to the CIT (A)'s finding. The appellant's counsel relied on the CIT (A)'s order. The CIT (A) highlighted discrepancies in the audit note and the ITO's response, ultimately siding with the assessee.

4. The Tribunal noted that the Revenue itself questioned the accuracy of the audit note, and the Punjab and Haryana High Court's decision favored the assessee. The Tribunal deemed the CIT (A)'s decision valid, considering all facts were known during the original assessment.

5. The Tribunal emphasized that when all facts were available initially, any subsequent challenge based on the audit note amounted to a change of opinion. The Tribunal upheld the CIT (A)'s decision, emphasizing the lack of merit in the Revenue's appeal.

6. The Tribunal concluded that the initiation of proceedings under section 147(b) based on the audit note was unfounded, especially after the Revenue discredited the note itself. Additionally, the Tribunal found no legal basis for the Revenue's case in light of the Punjab and Haryana High Court's ruling.

7. Ultimately, the Tribunal dismissed the Revenue's appeal, affirming the CIT (A)'s decision regarding the invalidity of the assessment under section 147(b) and upholding the assessee's position on the exemption claimed under sections 80P(2)(a)(iii) and 80P(2)(a)(iv).