1979 (10) TMI 131 - AT - Income Tax

Issues:
1. Validity of re-opening assessment under section 147(b) of the Income Tax Act.
2. Allowability of relief under section 80J for a bakery unit.
3. Consideration of information for re-opening assessment.
4. Granting of provisional tax exemption certificate under section 80J.

Detailed Analysis:

1. Validity of re-opening assessment under section 147(b):
The case involved the re-opening of the assessment under section 147(b) of the Income Tax Act. The Assessing Officer withdrew the relief under section 80J for a bakery unit in the reassessment, which was initially allowed in the original assessment. The Appellate Assistant Commissioner (AAC) dismissed the appeal, stating that the re-assessment was not based on a mere change of opinion. However, the tribunal held that the re-assessment was invalid as there was no new information within the meaning of section 147(b) after the completion of the original assessment. The tribunal referred to various decisions and ultimately set aside the assessment made pursuant to the notice under section 148.

2. Allowability of relief under section 80J for a bakery unit:
The controversy arose regarding the allowability of relief under section 80J for a bakery unit. The tribunal noted that the relief claimed for the bakery unit was disallowed in the reassessment as there was a loss in that division. The tribunal cited relevant case laws to support its decision that the relief under section 80J is confined to the new industrial undertaking and does not extend to the profit of any other business activities, even if closely connected. The tribunal ordered that the relief amount would be carried forward under section 80J(3) to be deducted from the future profits of the bakery unit.

3. Consideration of information for re-opening assessment:
The tribunal analyzed whether the Audit Note constituted "information" within the meaning of section 147(b) for re-opening the assessment. It was argued that the assessment was reopened solely on a change of opinion, without any new information. The tribunal referred to relevant precedents and held that the assessment could not be maintained on this ground, as there was no valid information to justify the reassessment.

4. Granting of provisional tax exemption certificate under section 80J:
The tribunal examined the grant of a provisional tax exemption certificate under section 80J for the bakery unit. The assessee had requested the certificate based on the capital employed in the bakery unit. The tribunal reviewed the correspondence between the assessee and the Income Tax Officer (ITO) regarding the provisional certificate. It was noted that the assessment was reopened based on a change of opinion, as evidenced by the correspondence and notings in the assessment order. The tribunal concluded that the assessment order was invalid and set it aside, ultimately allowing the appeal.

In conclusion, the tribunal's decision focused on the validity of re-opening the assessment, the allowability of relief under section 80J, the consideration of information for reassessment, and the granting of a provisional tax exemption certificate under section 80J. The tribunal set aside the assessment made under section 148, emphasizing the importance of valid information and adherence to statutory provisions in the assessment process.

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