TaxTMI 
TaxTMI 
2002 (10) TMI 12
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....en by the Assessing Officer under section 147(b) of the Income-tax Act, 1961, on the basis of an audit report does tantamount to change of opinion and, therefore, action under section 147(b) was not justified?" The facts in brief are stated as follows: The assessee partnership firm consisting of three partners and one minor, was dissolved on October 5, 1980, and the business was taken over by one Madan Lal Jain and a new firm was constituted with effect from October 6,1980. The return was filed by the assessee-firm for two different periods; firstly, for the period July 1, 1980, to October 5, 1980, declaring income of Rs. 1,93,330 and, secondly, for the new firm for the period October 6, 1980, to June 30, 1981, declaring income of Rs. 94,3....
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....tiated proceedings under section 147(b) of the Act. In response to the notice under section 148 of the Act, the assessee filed a return for the second period declaring total income of Rs. 98,693. The return was filed under protest. The objection was also taken with respect to initiation of proceedings under section 147 of the Act. However, the same was overruled. The Assessing Officer completed the reassessment at a total income of Rs. 2,70,168 for the first period with the addition and enhanced the value of the closing stock by Rs. 83,300. The matter was carried in appeal by the assessee. The Commissioner of Income-tax (Appeals) accepted some of the objections raised by the assessee and concluded as follows: "The notice under section 148 ....
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....by Mr. Sundeep Bhandawat, learned counsel for the Revenue, that the Tribunal has misread the decision of the apex court in the case of Indian and Eastern Newspaper Society's case [1979] 119 ITR 996. In the said case, the apex court has held that although an audit party does not possess the power to pronounce on the law, it nevertheless may draw the attention of the Income-tax Officer to it. The audit party's observation was communication regarding the application of law with regard to valuation of stock on the dissolution of the firm and, accordingly, on the basis of the said decision, it is erroneous to say that it was a case of change of opinion. Learned counsel has also referred to a decision of the apex court in the case of A.L.A. Firm ....