COMMISSIONER OF INCOME TAX Vs. IMPACO LIMITED

JUDGEMENT

(1.) THIS reference is made under the provisions of Section 256(1) of the Income -tax Act, 1961, at the instance of the Revenue. The questions that are raised read thus :

(2.) THERE is no dispute between counsel in regard to the answers to be given to the second and third questions. They are agreed that both these questions must be answered in favour of the Revenue, having regard to the judgment of a Full Bench of this court delivered on September 8, 1989, in Income -tax Reference No. 401 of 1975 CIT v. Central Bank of India Ltd. : [1990]185ITR6(Bom) . The second question is, accordingly, answered in the affirmative and in favour of the Revenue and the third question is answered in the negative and in favour of the Revenue.

(3.) WHILE , however, the assessee's appeal to the Tribunal in regard to the assessment for the assessment year 1966 -67 was pending, the Income -tax Officer reopened, under the provisions of Section 147(b), the assessment for the assessment 1965 -66 to reduce the relief allowed to the assessee under Section 85A. The Income -tax Officer indicated that he had initiated reassessment proceedings on the basis of the appellate Assistant Commissioner's said order. The Income -tax Officer reduced the relief given to the assessee under Section 85A and the assessee preferred an appeal. The Appellate Assistant commissioner rejected the assessee's contention that the reassessment proceedings had not been validly initiated. He accepted the assessee's contention that the relief under Section 85A has to be allowed on the basis that the average rate of income -tax for that purpose was what the assessee claimed it was. The assessee filed a further appeal to the Tribunal against the Appellate Assistant Commissioner's said order because it had rejected the assessee's contention in regard to its capital gains. The Revenue also appealed to the Tribunal against the Appellate Assistant Commissioner's order in so far it had enhanced the relief given to the assessee under Section 85A. The Tribunal found that the Appellate Assistant Commissioner's said order had merely upheld the changed stand of the Income -tax Officer in regard to the assessment year 1966 -67 and it did not constitute information for the purposes of Section 147(b). It took the view that what was originally a change of opinion could not stand transformed into information only because the Appellate Assistant Commissioner's said order had confirmed the Income -tax Officer's stand. Accordingly, it held that the reassessment was invalid. It also upheld the assessee's contention in regard to the meaning to be given to 'average rate of income -tax' for the purposes of Section 85A.