1998 (2) TMI 24 - HC - Income Tax

High Court rules against Revenue in reassessment case, upholding original assessment for 1972-73

The High Court of Madras upheld the Tribunal's decision, ruling against the Revenue's contention that reassessment under section 147(b) was valid for the ... Reassessment Issues involved: Interpretation of section 147(b) for reassessment based on fresh information from audit party regarding deduction in managing director's remuneration.Summary:The High Court of Madras addressed the question of law referred by the Tribunal regarding the validity of reassessment u/s 147(b) for the assessment year 1972-73. The Income-tax Officer justified the reassessment based on fresh information from the audit party regarding the deduction in managing director's remuneration. The Tribunal, citing a Supreme Court decision, held that the audit party's opinion on a point of law does not constitute 'information' for the purpose of reassessment under section 147(b) of the Income-tax Act, 1961. The Tribunal set aside the reassessment order, which the High Court upheld.The Revenue argued that the audit party merely informed the Income-tax Officer of the relevant statutory provisions, but the provisions had not been applied during the original assessment. However, the High Court rejected this argument, stating that the relevant legal provisions were known to the Assessing Officer during the original assessment. The reassessment was solely based on the audit party's interpretation of the provisions, which does not qualify as 'information' for reassessment u/s 147(b).The High Court affirmed the Tribunal's decision, ruling against the Revenue's contention that the reassessment was valid u/s 147(b). The question was answered in the affirmative in favor of the assessee, who was awarded costs of Rs. 500.