TMI Blog1981 (8) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... t fulfilled and the notice was without jurisdiction as there was no 'information' within the meaning of section 147(b) of the Act, enabling the Income-tax Officer to invoke such action of reassessment ? " The facts leading to this reference are as follows: We are concerned in this reference with assessment year 1964-65, the relevant year of account being the calendar year 1963. The assessee before us is a limited company and it derives income from extraction of oil and manufacture of de-oiled cakes. It also sells extracted oil and de-oiled cakes. The company follows the mercantile system of account keeping. For the assessment year 1964-65, the assessment was originally completed by the ITO on March 25, 1968 and the total income which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the auditor, the ITO initiated reassessment proceedings by issuance of the requisite notice under s. 148 of the I.T. Act, 1961. This notice was served on the assessee on February 15, 1969, and a show-cause notice why such a notice should not be issued was earlier issued on December 31, 1968. The decision to reopen the assessment was taken on February 4, 1969. In response to this notice the assessee furnished a fresh return of income on August 6, 1969. In the reassessment proceedings the ITO, for reasons which he had set out in the assessment order for the assessment year 1965-66 in this very assessee's case, held that the assessee was not entitled to export profit rebate and this relief was consequently withdrawn and with a few other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result of a change of opinion inasmuch as the ITO had allowed the relief under s. 2(5)(a)(ii) of the Finance Act, 1964, at the stage of original assessment after due scrutiny and after a modification of the claim in that behalf. The Tribunal dismissed the appeal of the Revenue. Thereafter, in pursuance of the directions given by this High Court on the income-tax application, the question hereinabove set out has been referred to us at the instance of the Revenue. The Industries (Development and Regulation) Act, 1951, in its First Schedule sets out the list of industries engaged in the manufacture or production of any of the articles mentioned under each of the headings or sub-headings in the list, inter alia, in the field of " vegetable oi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exported by the assessee governed by that sub-clause. Under sub-cl. (iii) of cl. (a) of sub-s. (5) of s. 2 : " Where an assessee of the type referred to in sub-clause (i) engaged in the manufacture of any articles in an industry specified in the said First Schedule (to the Industries (Development and Regulation) Act, 1951 (65 of 1951)) has sold after the 28th day of February, 1963, such articles to any other person in India who himself has exported them out of India and evidence is produced before the Income-tax Officer of such articles having been so exported, the assessee shall be entitled to a deduction from the amount of income-tax and super-tax with which he is chargeable for the assessment year of an amount equal to the income-tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action to withdraw the rebate granted. " The legal position as regards the information mentioned in s. 147(b) of the I.T. Act, 1961, is now clarified by the decision of the Supreme Court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996. There it was pointed out (headnote): " The opinion of an internal audit party of the income-tax department on a point of law cannot be regarded as 'information' within the meaning of s. 147(b) of the I.T. Act, 1961, for the purpose of reopening an assessment. But although an audit party does not possess the power to pronounce on the law, it nevertheless may draw the attention of the ITO to it. Law is one thing, and its communication is another. If the distinction between the source of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed by him was not vegetable oils-or vanaspati and, therefore, the exception contained in s. 2(5)(c)(i)(8) was not attracted to the facts of the case. However, the auditor called upon the ITO to rectify the mistake pointed out in the audit report. What we have reproduced from annex. B to the paper book clearly shows that the information of the audit party on the legal position was clearly expressed and the opinion expressed was that the rebate of Rs. 35,148 on the export of de-oiled cakes was not correct and the ITO was asked to withdraw the rebate granted. It nowhere appears from the record in this case that on the legal aspect his attention was being drawn to the provisions of s. 2(5)(c)(i)(8) of the Finance Act, 1964, or that the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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