1. This is an appeal by the revenue against the order of the Commissioner (Appeals) for the assessment year 1975-76 Two questions are raised in this appeal by the revenue. The first question is regarding the validity of the action of the ITO under Section 147(b) of the Income-tax Act, 1961 ("the Act"). The Commissioner (Appeals) had held that the ITO had not validly reopened the assessment for this assessment year under Section 147(b). The second question is regarding the taxability of the rubber replantation subsidy received by the assessee. The Commissioner (Appeals) held that the rubber replantation subsidy is not income liable to be taxed in the hands of the assessee.
2. We will take up the second question first. The question has already been considered by this Tribunal earlier in two cases. The first was in the order in IT Appeal Nos. 593 and 594 (Coch.) of 1977-78 dated 27-8-1979. The second is in the order in IT Appeal Nos. 208 and 209 (Coch.) of 1979 dated 25-6-1981. It has been held by the Tribunal in those cases that the rubber replantation subsidy cannot be treated as the income of the recipient assessee for the purpose of charging of income-tax. We consider that these orders of the Tribunal cover this second question raised in the appeal. We, therefore, hold that in the case of the assessee here also the rubber replantation subsidy cannot be treated as the income of the assessee.
3. On the first question, namely, the validity of the reopening of the assessment, the factual position is this : The original assessment was made on 20-3-1978. The assessee did not return the rubber replantation subsidy of Rs. 1,17,788. The ITO also did not include it in the assessment. The ITO in the reassessment order has stated that the subsidies of this nature are income exigible to Central income-tax and that this position is clear from the specific exemption provided in the case of tea replanting subsidy given by the Tea Board to tea growers under Section 10(sic) of the Act. It has been further stated by him that this position, which according to him, is a position in law as communicated by the audit wing of the department. Acting on this information in the form of this audit objection, the ITO issued a notice under Section 148 on 12-7-1978.
4. In the course of the hearing before us, the learned departmental representative read out the audit objection of the special audit wing of the department. It has been stated in this note of the audit party that the assessee was in receipt of the rubber replanting subsidy for this assessment year, that the replanting subsidy is taxable and, therefore, action should be taken to bring such receipt to tax.
5. The Commissioner (Appeals) considered that the ITO having duly considered the amounts received towards the rubber replantation subsidy while making the assessment and having viewed them as not attracting assessment, had subsequently substituted the view as per the audit opinion to the opposite effect that they were in fact assessable, in the place and stead, of his own view of the matter and, therefore, it was the audit note which constituted information in the case. He did not accept the contention of the ITO that the communication by the audit was a bare communication of an apparent liability to assessment under the law. He considered that there was a mere change of opinion on the part of the ITO. In any event, he was of the view that the audit note was interpretive of the provisions of law and, therefore, could not constitute information in terms of the ratio of the decision of the Supreme Court in the case of Indian & Eastern Newspaper Society v. CIT  119 ITR 996. He, therefore, held that the assessment has not been validly reopened.
6. In the appeal before us, it is contended on behalf of the revenue that the audit has merely pointed out the factum of receipt of the subsidy to the ITO and the further proposition that such a receipt is taxable receipt. It was also stated in the course of the hearing before us that the note of the special audit wing of the department was based upon a circular issued by the Central Board of Direct Taxes conveying the opinion of the Law Ministry that in view of the decision of the Supreme Court in the case of V.S.S.V. Meenakshi Achi v. CIT  60 ITR 253, the rubber replanting subsidy given by the Rubber Board to rubber growers in India should also be considered to be taxable. It is argued that the special audit party has only pointed out an obvious provision of law and, therefore, the note of the audit party would constitute information for the purpose of Section 147(b). It is pointed out, on behalf of the assessee, on the other hand, that the decision of the Supreme Court in the case of Meenakshi Achi (supra) was in respect of a subsidy received by the recipient-assessee having rubber estates in Malaya from the Government of that country and, therefore, could not be a direct authority for the proposition that the subsidy received by the rubber growers in India from the Rubber Board is income assessable to Central income-tax. It is also submitted that on the basis of the noting in the file and also on the basis of the narration given by the ITO in the reassessment order, the information to the ITO for taking action under Section 147(b) was only the note of the special audit party and not the opinion of the Law Ministry. It is pointed out that the note of the special audit party communicated to the ITO that the rubber replanting subsidy is income taxable. This communication must be taken to be an interpretation of the relevant provision of Law on the question whether such a subsidy is taxable or not. Since the audit party of the department cannot be considered to be an authority for expounding the position of law, its opinion cannot constitute information for the purpose of Section 147(b) in terms of the decision of the Supreme Court in the case of Indian & Eastern Newspaper Society (supra).
7. We agree with the Commissioner (Appeals) that the ITO cannot be considered to have validly reopened the assessment under Section 147(b). We consider that the immediate source of information for the ITO to act under Section 147(b) is the note of the special audit party communicated to the ITO. This note does intimate to the ITO that the rubber replanting subsidy is assessable as the income of the assessee.
In our opinion, this particular intimation is clearly an exposition on a legal question, namely, whether the rubber replanting subsidy is taxable as the income of the recipient. It is not as though that there has been a judicial pronouncement on this question and that this special audit note has merely brought such judicial pronouncement to the notice of the ITO. In these circumstances, it cannot be said that the ITO had information as required under Section 147(b) to invoke the provision.
8. It has been submitted by the departmental representative that the basis of the audit note was the opinion of the Law Ministry circulated by the Central Board of Direct Taxes to the officers of the department.
We are unable to agree that the opinion of the Law Ministry on a question of law would constitute information. It has been held by the Supreme Court in the case of Indian & Eastern Newspaper Society (supra) that it is only the judicial pronouncement made by the authorities vested with the power of interpreting the provision of law that would constitute information for the purpose of Section 147(b). The advice of the Law Ministry cannot be considered to belong to this category. We, therefore, hold that the ITO has not validly initiated proceedings under Section 147(b).