TMI Blog2003 (4) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... ri S. K. Biswas, Deputy Commissioner of Income-tax, under section 143(3) of the Income-tax Act, 1961, on March 19, 1996, holding, inter alia, as follows : "The assessee is an exporter of molasses and leather goods. Besides this the assessee has shown income from rent from 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." A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e objection is not accepted by the Commissioner of Income-tax. Where an objection is accepted, suitable remedial action should be initiated and completed expeditiously." The audit objection, however, has not been disclosed. In the said affidavit two several reasons recorded prior 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of the objection raised by the audit that the income from interest was assessable under the Interest-tax Act, 1974. In support of his submission he has relied upon the case of Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996, wherein their Lordships of the Supreme Court laid 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlooked by the Income-tax Officer. In support of his submission he relied on the case of CIT v. P. V. S. Beedies Pvt, Ltd. [1999] 237 ITR 13 (SC). That was a case wherein the apex court opined that a factual mistake overlooked by the Income-tax Officer can be pointed out by the audit and the Income-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: " ..... X X X X Extracts X X X X X X X X Extracts X X X X
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