Reassessment on fresh information upheld; pure questions of fact did not justify interference with the proposed tax reference.

Fresh material coming to the Income-tax Officer's notice after the original assessments, showing that debts due from sister concerns included interest-free advances, provided valid grounds for reopening under section 147(b) of the Income-tax Act, 1961. The Tribunal's finding on the emergence of new information supported the reassessment, and the reference questions under section 256 were treated as pure questions of fact. On that basis, the court found no justification to interfere with the manner in which the reference was framed or to direct a reference.

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Issues: Whether the reassessment proceedings under section 147(b) of the Income-tax Act, 1961 were valid on the basis of fresh information that interest-free advances to sister concerns had come to light after the original assessments; and whether the questions proposed for reference under section 256 of the Income-tax Act, 1961 warranted interference.

Analysis: The Tribunal recorded a categorical finding that after completion of the original assessments, new material came to the notice of the Income-tax Officer showing that the debts due from the sister concerns included interest-free advances. That fresh information constituted a valid basis for reopening the assessments under section 147(b) of the Income-tax Act, 1961. The court also noted that the questions sought to be referred were pure questions of fact and that the manner in which the reference was framed was not permissible.

Conclusion: The reopening of the assessments was held to be valid, and no case was made out for directing a reference under section 256 of the Income-tax Act, 1961.

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