TMI Blog1980 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the assessment year 1975-76 on June 30, 1975, and disclosed its income for the relevant year as under? Rs. Business income 1,79,468 Adjusted against loss of prior years 1,79,468 ---------------- Nil --------------- Rs. Dividend 10,599 Interest from co-op. society 5,088 Property income 10,271 Godown income 6,044 Capital gains 33,615 --------------- 65,617 Deduction u/s. 80P 44,331 --------------- Taxable income 21,286 --------------- During the course of assessment proceedings it became clear that the loss of prior years may not be allowed and the assessee submitted a revised statement of income working out the net total income at Rs. 1,00,845. Along with this revised total income the assessee also filed a statement showing the proportionate business profits income exempt under s. 80P of the Act because of its dealing with non-members as well. It is pertinent to note at this stage that the petitioner-society had sold during the accounting year some depreciable assets and had filed a statement of profit as per s. 41(2) of the Act. The society had also made a claim in the revised statement of income under s. 80P(2)(iii) and (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (iv) was wrongly claimed and allowed. " A copy of the said letter reopening the assessment is at annex. C to the petition. The petitioner-society contends that the impugned notice at annex. D, when read in the light of the reasons for the notice at annex. G, clearly showed that the respondent had no authority or jurisdiction to reopen the assessment proceedings which had become final for the relevant assessment year merely on account of change of opinion on the part of the ITO. The latter had issued the impugned notice and, that, therefore, it was the case of an attempt to revise the assessment without there being any new information and that the ITO was not justified in issuing the said notice. The petitioner has, therefore, approached this court for the issuance of writ of mandamus or any other appropriate writ, direction or order to quash and set aside the impugned notice at annex. D. The respondent in response to the rule issued by this court has filed his reply and stated that he sought to reopen the assessment under s. 147(b) on account of fresh information available to him from the audit note from the competent audit party and the reasons for reopening the completed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n applied his mind to all the pros and cons of the case pertaining to the question of capital gains and profits. If the audit felt in retrospect that the ITO had not made further detailed inquiry about the said matter it cannot ask the ITO to reopen the assessment proceedings only on that ground. It is now well settled by the recent decision of the Supreme Court in the case of Indian and Eastern Newspaper Society Ltd. v. CIT [1979] 119 ITR 996, that the opinion of an internal audit party of the I.T. Dept. on a point of law cannot be regarded as " information " within the meaning of s. 147(b) of the Act for the purpose of reopening the assessment. It is further stated in the aforesaid decision that 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 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 s. 147(b) may be avoided. While the law may be enacted or laid down only by a person or body with authority in that behalf, the knowledge or awareness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the ground that the question regarding capital gain had not been satisfactorily considered by the then ITO. The audit objection also does not give any information as to fresh facts. It was only pointed out by the audit that detailed inquiries were not made by the ITO at the time of the original assessment. That certainly cannot be considered to be any positive information under s. 147(b) so as to clothe the ITO with the requisite jurisdiction. Consequently, the first reason supplied by the ITO cannot be of any avail for the issuance of the impugned notice as the same is obviously untenable and does not constitute the condition precedent to the exercise of the power under s. 147(b) of the Act. Switching over now to the second reason supplied by the ITO at annex. ' G ' it is clear that it is mentioned therein that deduction under s. 80P(2)(a)(iii) of Rs. 46,469 and Rs. 30,499 has not been correctly allowed. This also cannot amount to any information within the meaning of s. 147(b) of the Act so as to enable the ITO to reopen the assessment proceedings which have otherwise become final. At page 3 of the audit note it has been stated as under: "Deduction u/s. 80P(2)(a)(iii) of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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