C.I.T. PATIALA vs. M/S SANT RAM MANGAT RAM CHD.

ITR/133/1992HC Punjab & HaryanaPHHC01021972199217 February 2009Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE M.M. KUMAR2 pages
AI SummaryDismissed

What were the facts?

The Assessing Officer (AO) initiated re-assessment proceedings based solely on an audit objection, without independent determination. The assessee, M/s. Sant Ram Mangat Ram, was subject to a re-assessment order dated March 25, 1987. The Income Tax Appellate Authority (ITAA) subsequently set aside this re-assessment order on January 8, 1992. The Commissioner of Income Tax (CIT), Patiala, filed a reference petition before the High Court of Punjab and Haryana challenging the ITAA's order. The High Court noted that the AO's decision was exclusively based on the audit objection and not on any independent assessment.

What did the High Court hold?

The High Court held that the opinion of an audit party on a point of law cannot be regarded as information within the meaning of Section 147(b) of the Income Tax Act, 1961, for the purpose of re-opening an assessment. This principle was established by the Supreme Court in Indian and Eastern Newspaper Society Vs. Commissioner of Income Tax (1979) 119 ITR 996. Since it was not disputed that the re-assessment order passed by the Assessing Officer dated March 25, 1987, was based solely on the advice of the audit, and the AO did not consider any material besides the audit objection, the High Court found no reason to interfere with the order of the Income Tax Appellate Authority dated January 8, 1992, which had set aside the re-assessment order. The appeal was dismissed.

What were the issues?

1. Whether the opinion of an audit party on a point of law can be considered as 'information' within the meaning of Section 147(b) of the Income Tax Act, 1961, for the purpose of re-opening an assessment? (Question of law) The reference petitioner (CIT) argued that the AO's re-assessment was validly initiated. The respondent (assessee) contended that the re-assessment was based solely on an audit objection, which does not constitute valid information for re-opening under Section 147(b). The judgment relies on the Supreme Court's decision in Indian and Eastern Newspaper Society Vs. Commissioner of Income Tax (1979) 119 ITR 996.

Which sections of the Income-tax Act were involved?

Section 147(b)

AI-generated summary — verify with the full judgment below

In the High Court of Punjab and Haryana, Chandigarh.

Date of Decision: 17.02.2009 The C.I.T., Patiala.

....Reference Petitioner. Versus M/s. Sant Ram Mangat Ram. ....Respondent.

Coram:- Hon'ble Mr.Justice J.S. Khehar Hon'ble Mr. Justice Nawab Singh Present: Ms. Urvashi Dhugga, Advocate for the Reference Petitioner. Mr. S.K. Mukhi and Mr. Rajiv Sharma, Advocates for the respondents. ... J.S. Khehar, J. (Oral). It is not a matter of dispute, that the view expressed by the Assessing Officer was solely based on the opinion of the audit objection without any independent determination in respect thereof by the Assessing Officer during the course of re-assessment. The legal position in respect of party of the Income Tax Department on a point of law cannot be regarded

The order continues below.

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