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TMI Blog1994 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal be directed to refer the same to this court : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that no information was given by the audit party within the meaning of section 147(b) of the Income-tax Act and that initiation of proceedings under that provision was wholly invalid ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in quashing the reassessment order ? " The brief facts of the case are that while submitting a return a copy of the profit and loss account for the year ending on September 30, 1971, was submitted by the assessee and a sum of Rs. 69,338 was debited in the profit and loss account as follows: "Leave salary and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,338." A sum of Rs. 60,569 was disallowed being the provision for pension. On appeal, the Commissioner of Income-tax (Appeals) found that the assessee has not disclosed while making the original assessment that the amount was only a provision for pension and not the expenditure in respect of the accrued liability and, therefore, information given by the audit party with regard to the correct state of law about the allowability of the deduction of this amount amounted to an information. Against the said order, the assessee preferred an appeal to the Income-tax Appellate Tribunal, where it was submitted that the provision for pension was Rs. 3,02,870 up to September 30, 1970, and Rs. 3,80,637 up to the relevant assessment year for which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Explanation 1.-- Production before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been discovered by the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as law. They are merely opinion or at best evidence in regard to the state of law and in themselves possess no binding effect as law. The opinion of the internal audit party of the Income-tax Department was held to be not an information within the meaning of section 147(b) of the Act for the purpose of reopening an assessment. It was, however, observed that while the audit party does not possess the power to pronounce on the law, it nevertheless may draw the attention of the Income-tax Officer to it. Law is one thing, and its communication another. If the distinction between the source of the law and the communication of the law is carefully maintained, the confusion which often results in applying section 147(b) may be avoided. It was fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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