Reassessment on internal audit information upheld where the audit exposed a factual mistake in allowing a section 80G deduction.

Internal audit information exposing a factual mistake or overlooked fact in the original assessment can constitute valid "information" for reopening under section 147(b) of the Income-tax Act, 1961. Here, the deduction under section 80G had been allowed on the footing that the charitable trust remained recognised, but the audit party pointed out that the recognition had expired before the relevant accounting years. As this was a factual omission rather than an audit opinion on law, reassessment was held valid in law and the Revenue succeeded.

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Issues: Whether reassessment under section 147(b) of the Income-tax Act, 1961 was valid when the internal audit party pointed out that the charitable trust's recognition had expired before the relevant accounting years, affecting deduction under section 80G.

Analysis: The earlier assessment had allowed deduction on donations to a charitable trust on the footing that it was recognised. The internal audit party later pointed out that the trust's recognition had expired before the relevant years, which meant the deduction had been wrongly allowed. The point noted by the audit party was a factual omission in the assessment and not an opinion on a question of law. Information supplied by the audit party that exposes a factual mistake or overlooked fact can constitute valid information for reopening under section 147(b).

Conclusion: Reopening under section 147(b) was valid in law, and the view that such audit information could not justify reassessment was . The issue was decided in favour of the Revenue.

Final Conclusion: The appeals succeeded, and the reassessment based on factual information supplied by the internal audit party was sustained.

Ratio Decidendi: Information from an internal audit party revealing a factual mistake or overlooked fact in the original assessment can validly form the basis for reopening under section 147(b) of the Income-tax Act, 1961.

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