Reassessment under section 147(b) to be decided under binding Supreme Court interpretation of section 40A(7).

Reassessment under section 147(b) of the Income-tax Act, 1961 was considered in the context of section 40A(7) and a notice under section 148, with the Court applying the binding Supreme Court ruling on the retrospective effect of section 40A(7). The Court did not re-examine the merits independently; instead, it required the Tribunal to align its decision with that precedent. The matter was therefore remitted for fresh decision in light of the Supreme Court's interpretation.

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Issues: Whether reassessment could be reopened under section 147(b) of the Income-tax Act, 1961 in view of section 40A(7) and whether the reassessment and restoration of the original assessment were justified.

Analysis: The question referred was answered by applying the binding Supreme Court decision on the effect of section 40A(7), inserted with retrospective effect, on reassessment initiated under section 147(b) and notice issued under section 148. The Court did not independently redecide the merits of the controversy but directed that the Tribunal adjust its decision and proceed in accordance with that precedent.

Conclusion: The reference was answered in terms of the Supreme Court ruling and the matter was sent back for fresh decision in the light thereof.

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