Audit objection as factual information can justify reopening, and a non-mandatory draft assessment step will not vitiate reassessment.

Factual information in an audit objection can constitute information for reopening where it shows a possible double allowance of gratuity and thus escapement of income; on that basis, reassessment under section 147(b) was validly initiated. The draft assessment procedure under section 144B was held inapplicable to reassessment proceedings, and any consultation with the IAC was treated as a non-prejudicial irregularity that did not invalidate an otherwise lawful reassessment. The jurisdictional objections to reopening and the reassessment were rejected, and the reassessment was sustained on those grounds.

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Issues: (i) Whether the reassessment was validly initiated on the basis of information arising from the audit objection under section 147(b); (ii) Whether the draft assessment procedure under section 144B applied to the reassessment and, if not, whether the participation of the IAC invalidated the reassessment.

Issue (i): Whether the reassessment was validly initiated on the basis of information arising from the audit objection under section 147(b).

Analysis: The reopening was founded, at least in part, on the factual position that a sum of gratuity had already been allowed in an earlier year, resulting in a possible double allowance. The information supplied through the audit note therefore contained a factual element capable of constituting information for the purpose of reassessment. The objection was not confined to a mere opinion on law, and the statutory condition for reopening was satisfied.

Conclusion: The reassessment was validly initiated under section 147(b), against the assessee.

Issue (ii): Whether the draft assessment procedure under section 144B applied to the reassessment and, if not, whether the participation of the IAC invalidated the reassessment.

Analysis: The draft assessment procedure was held to be inapplicable to reassessment proceedings. Even if the IAC was consulted or the procedure was gone through, such superfluous compliance did not prejudice the assessee and did not nullify an otherwise lawful reassessment. An irregular step, without statutory mandate and without demonstrated prejudice, could not vitiate the completed reassessment.

Conclusion: Section 144B did not apply to the reassessment, and the reassessment was not invalidated on that ground, against the assessee.

Final Conclusion: The jurisdictional objections to reopening and reassessment were rejected, and the reassessment was sustained on those points.

Ratio Decidendi: Factual information suggesting escapement of income can justify reopening under section 147(b), and a procedural step taken without statutory requirement does not invalidate a reassessment absent prejudice.

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