Audit note cannot justify reassessment where it only reflects a change of opinion on statutory interpretation.

Reopening under section 147(b) cannot rest on an audit note that merely disputes the interpretation of rule 19(5) used in granting relief under section 84, because a change of opinion on the same material is not "information" for reassessment. The original assessments had applied the average assets and liabilities method, and the audit objection introduced no fresh factual material. The same principle applied to the surtax assessments, which depended entirely on the validity of the income-tax reopening. The reassessment proceedings were therefore not sustainable.

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Issues: Whether reassessment under section 147(b) could be initiated on the basis of an audit note pointing out the alleged interpretation of rule 19(5) while granting relief under section 84, and whether such reopening was valid for the surtax assessments as well.

Analysis: The original assessments had allowed relief under section 84 by computing capital on the average assets and liabilities method. The audit objection did not bring any new factual material to light; it only expressed a different view on the proper construction of rule 19(5) and asserted that the Income-tax Officer had erred in applying that rule. A mere difference of legal opinion, or an audit party's view on the interpretation of a statutory provision, is not "information" within section 147(b). Reopening on the basis of a reappraisal of the same material amounts only to a change of opinion and not to the acquisition of fresh or subsequent information. Since the surtax reopening depended entirely on the validity of the income-tax reopening, the same reasoning applied there as well.

Conclusion: The reopening was invalid; the audit note did not furnish information under section 147(b), and the reassessment proceedings could not be sustained.

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