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TMI Blog2003 (4) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... m storage tanks, handling charges, throughput, interest, etc. The return was processed under section 143(1)(a) and was subsequently selected for scrutiny ...... The assessee is not an investment company and profit or loss arising out of share dealing is treated as speculation profit and loss." The income for the assessment year 1994-95 was assessed by Sri P. D. Meena, Deputy Commissioner of Income-tax, on September 11, 1996, holding, inter alia, as follows: "The assessee-company is an exporter of molasses and leather goods. Besides these, the assessee-company has shown income from rent from storage tanks, handling charges, throughput, interest, dividend, profit on sale of fixed assets, shares speculation loss and also share of profit in A. V. R. and Company (Madras) ........ The assessee is not an investment company and profit or loss arising out of share dealings is treated as speculation profit or loss." After completion of regular assessment under section 143(3) of the Income-tax Act, 1961, for the aforesaid years Sri S. R. Sikdar, joint Commissioner of Income-tax, issued the impugned notices under section 10 of the Interest-tax Act, 1974. It is significant that within ten da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to issuance of the aforesaid notices have also been disclosed which read as follows: "(a) In this case, it is found from the income-tax record that the assessment records of a closely held company for the assessment year 1993-94 revealed that the assessee's total income of Rs. 361.25 lakhs included amount of Rs. 252.66 lakhs on account of interest bills of exchange which attracted levy of interest-tax. However, the assessee did not file interest-tax return for the assessment year 1993-94. Issue notice under section 10 of the Interest-tax Act, 1974. (b) In this case, it is found from the income-tax record that the assessment records of a closely held company for the assessment year 1993-94 revealed that the assessee's total income of Rs. 22.93 lakhs included amount of Rs. 145.45 lakhs on account of interest bills of exchange which attracted levy of interest-tax. However, the assessee did not file interest-tax return for the assessment year 1994-95. Issue notice under section 10 of the Interest-tax Act, 1974." The factual position which emerges from the aforesaid narration of facts briefly stated is that income including income on account of interest was assessed to income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down the law as follows: "In the present case, an internal audit party of the income-tax Department expressed the view that the receipts from the occupation of the conference hall and rooms did not attract section 10 of the Act and that the assessment should have been made under section 9. While sections 9 and 10 can be described as law, the opinion of the audit party in regard to their application is not law. It is not a declaration by a body authorised to declare the law. That part alone of the note of an audit party which mentions the law which escaped the notice of the Income-tax Officer constitutes 'information' within the meaning of section 147(b) ; the part which embodies the opinion of the audit party in regard to the application or interpretation of the law cannot be taken into account by the Income-tax Officer. In every case, the Income-tax Officer must determine for himself what is the effect and consequence of the law mentioned in the audit note and whether in consequence of the law which has now come to his notice he can reasonably believe that income has escaped assessment. The basis of his belief must be the law of which he has now become aware. The opinion rendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer can act upon that because that would not be a case of information on a question of law. The submission made by Mr. Saha is correct but does no. apply to the facts of this case because in the present case according to the affidavit of Mr. Sikdar the audit has opined that the income from interest was taxable under the Interest-tax Act, 1974. Therefore, it is a legal opinion which they have given and on the basis thereof the taxing authorities have acted in issuing the impugned notices. There is another reason why I am of the view that the notices are bad because it is a clear case of change of opinion based on the opinion of the audit. Change of opinion does not authorise initiation of proceedings for reopening the assessment. Reference in this regard can be made to the case of ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC), wherein their Lordships held as follows: "It would appear from the perusal of the provisions reproduced above that two conditions have to be satisfied before an Income-tax Officer acquires jurisdiction to issue notice under section 148 in respect of an assessment beyond the period of four years but within a period of eight years from the end ..... X X X X Extracts X X X X X X X X Extracts X X X X
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