9911796707
TMI Blog1981 (1) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... es for such manufacture had been given to other concerns. Before the ITO the assessee had relied on the decision of the Supreme Court in (1979) 119 ITR 996 (SC) and it was submitted that the reopening of the assessments was bad in law. The ITO, however, held that if the audit party points out certain obvious mistake of law based on some formal source of law then that is a valid information for s. 147(b) of the IT Act. According to him the objection of the audit did not amount to interpretation of law and it was a communication of legal mistake committed by the ITO. He, therefore, held that the above decision of the Supreme Court was not applicable to this case. On facts the ITO held that the benefit under s. 80J was not to be allowed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 147 (b) was legal. He, however, held that the information rendered by the Internal Audit Party was of no consequence since the interpretation of law had to be done by the ITO. He, therefore, held that the initiations of proceedings under s. 147 (b) was not improper and he rejected the plea of the assessee. On merits, however, he set aside the order of the ITO and directed the ITO to go into the facts and find out all the relevant materials before passing the orders. 5. At the time of hearing we have obtained reasons recorded by the ITO for reopening the assessments for the three years. The reasons recorded are as under: Assessment year 1975-76 In this case assessment was completed on 25th Oct., 1976 at the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, notice under s. 148. Assessment year 1977-78 In this case assessment was completed on 2nd March, 1978 of Rs. 1,54,940 allowing the deduction under s. 80J to the tune of Rs. 78,755. Consequently the internal audit party pointed out that the deduction under s. 80J was not in order because the whole of the business of the assessee was not of manufacturing and the auditor's report as required under s. 80J (6A) was not filed along with the original return. In view of this, I have reason to believe that an income of Rs. 78,755 has escaped assessment within the meaning of s. 147(b) of the IT Act. Issue, therefore, notice under s. 148 of the IT Act. 6. From the above reasons it appears that for the asst. yrs. 1975-76 and 1976 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the facts of the case and we have perused the contents of the audit note as given by the CIT (A) in his order. In our opinion, the audit note in so far as it expressed an opinion on the legal position about the availability of relief under s. 80J to a concern not directly involved in the manufacturing activity was not a communication of law but an interpretation of law and it's application to the facts of this very case. It appears that the ITO had merely proceeded on the basis of that report and had reopened the assessment. To that extent, therefore, the initiation of re-assessment proceedings under s. 147(b) was invalid as held by the Supreme Court in the case of 119 ITR 996. 8. However, in respect of the asst. yr. 1977-78 audit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
