Income Tax Reference under section 257 of Income Tax Act 1961 made by T T. Appellate Tribunal Delhi Bench C in A. Nos.
Having regard to the dimensions of the companytroversy and the importance of the question, we have been persuaded to take a fresh look at the point.
opinion on the question has been divided among the High Courts, and accordingly the present cases have been referred by the Income tax Appellate Tribunal under s. 257 of the Act.
S. Desai, Mrs. A. M. Verma, A. N. Haskar an 3 J. Dadachanji for the appellant.
The Judgement of the Court was delivered by PATHAK, J. Can the view expressed by an internal audit party of the Income Tax Department on a point of law be regarded as information for the purpose of initiating proceedings under section 147 b of the Income Tax Act, 1961 ?
The income from that source was assessed to tax all along as income from business.
1 to 4 of 1973.
The assessee, Messrs. Indian and Eastern Newspaper Society, is a society registered under the Indian Companies Act.
CIVIL APPELLATE JURISDICTION Tax Reference Case Nos.
1961, and reassessed the income on that basis.
It is a professional association of newspapers established with the principal object of promoting the welfare and interest of all newspapers.
Chand Kanwarji Alwar has expressed a companytrary view.
The Income Tax Officer treated the companytents of the report as information in his possession for the purpose of s. 147 b of the Income Tax Act.
The assessee owns a building in which a companyference hall and rooms are let out on rent lo its members as well as to outsiders.
In the companyrse of auditing the income tax records pertaining to the assessee for the assessment years 1960 61 to 1963 64, the internal audit party expressed the view that the money realised by the assessee on account of the occupation of its companyference hall and rooms should number have been assessed as income from business.
It was so assessed for the years 1960 61, 1961 62, 1962 63 and 1963 64 also.
It said that an assessment should have been made under the head Income from property.
The assessee applied for a reference, and having regard to the difference between the High Courts on the point, the Tribunal has companysidered it expedient to refer the following question of law directly to this Court Whether, on the facts and in the circumstances of the case, the Income tax officer was legally justified in reopening the assessments under section 147 b for the years 1960 61, 1961 62, 1962 63 and 1963 64 on the basis of the view expressed by the Internal Audit party and received by him subsequent to the original assessment ?
Dr. Devi Pal, Ravinder Narain and J. B. Dadachanji for the Intervener.
The Income Tax Department includes an internal audit organisation whose function it is to examine income tax records and check mistakes made therein with a view ultimately to improve the quality of assessments.
Certain other services are also provided to the members.
The Gujarat High Court in Kasturbhai Lalbhai v. K. Malhotra, Income tax Officer, Group Circle 11 1 , Ahmedabad had held that an internal audit report companyld number be regarded as information, while the Delhi High Court in Commissioner of Income tax v. H. H. Smt.
491 to 494 of 1971 72 I.T.A. NOS.
A. Ramachandran and Miss A. Subhashini for the respondent.
6992,19629 19631 of 1967 68 .
