Audit objection is not valid information for reopening completed assessments where the issue was already considered in the original assessment.

An audit note that merely expressed disagreement with the Income-tax Officer's earlier treatment of items as borrowings under rule 2 of the Second Schedule did not constitute valid "information" under section 8(b). Where the original assessments had already considered that provision and adopted the same capital computation, reopening on the same material was only a reconsideration of an earlier decision. The High Court held that reassessment could not be founded on such audit opinion, and the notices issued to reopen the completed assessments were without jurisdiction and liable to be quashed.

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Issues: Whether an audit report pointing out that certain items were wrongly treated as borrowings under rule 2 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 constituted "information" within section 8(b) so as to justify reopening of completed assessments.

Analysis: The assessments had already taken note of rule 2 and treated the disputed items as borrowings while computing capital. The audit note did not merely communicate the existence of a statutory provision; it expressed an opinion that the Income-tax Officer had erred in applying the provision and that the items could not be treated as borrowings. Reassessment under section 8(b) is permissible only on the basis of valid information in possession of the Income-tax Officer, and an audit opinion on a point already adjudicated in the original assessment does not amount to such information. The reopening was, in substance, a reconsideration of the earlier decision on the same material.

Conclusion: The audit note was not valid information under section 8(b), and the notices reopening the assessments were without jurisdiction and liable to be quashed.

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