JUDGMENT [ENTITY], J.
1. At the instance of an assessee to income-tax, the Income-tax Appellate Tribunal has referred the following question of law for the decision of this court :
" Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment in the case of the assessee for the year 1974-75 was validly reopened ? "
2. The respondent is the Revenue. We are concerned with the assessment year 1974-75 for which the accounting period ended on June 30, 1973. The original assessment for the year was completed on November 27, 1975, on a total income of Rs. 55,580. Therein, set off was given to the unabsorbed development rebate in respect of the assessment year 1966-67. The assessment was reopened under [SECTION] of the [ACT]. It was so done on the basis of an audit note. The audit pointed out that the condition regarding the creation of the reserve has not been satisfied by the assessee and the set off of the development rebate for the assessment years 1965-66 and 1966-67 against the income for the assessment years 1973-74 and 1974-75 is not in order. This was based on the circular of the Board dated October 14, 1965, relying on the decision of the Bombay High Court in [PRECEDENT]. In the reassessment order dated November 29, 1976, set off of unabsorbed development rebate was not allowed to the extent of Rs. 36,146, since the condition regarding the creation of the reserve was not satisfied. In appeal, the Commissioner of Income-tax (Appeals), following the decision of the Supreme Court in [PRECEDENT], accepted the plea of the assessee that the reassessment based on the audit note was without jurisdiction. In further appeal by the Revenue, the Income-tax Appellate Tribunal held that the audit note was one drawing the attention of the Income-tax Officer to certain material facts that had escaped his notice while effecting the original assessment and the basic information for the reopening constituted such facts and no interpretation of law by the audit was involved and hence the proceeding is valid. The decision of the Supreme Court aforesaid was applied in coming to the above conclusion. The appeal filed by the Revenue was allowed and the order passed by the Income-tax Officer was restored. It is, thereafter, at the instance of the assessee that the Income-tax Appellate Tribunal has referred the question of law formulated hereinabove for the decision of this court.
3. We heard counsel. The main thrust of the argument was that the reopening of the assessment based on the audit note is illegal and without jurisdiction. We are unable to accept the said plea. The Income-tax Appellate Tribunal, in its order dated November 27, 1981, found that what the audit had done in the instant case is only to mention the law which escaped the notice of the Income-tax Officer and the Income-tax Officer had determined for himself what is the effect and consequence of the law mentioned in the audit note. The Tribunal opined that the distinction between the source of the law and the communication of the law is clear and what the Income-tax Officer has done is proper. Relying on the decision of the Supreme Court in Indian and Eastern Newspaper Society's case [PRECEDENT], the Appellate Tribunal held that although the 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 finding of the Appellate Tribunal is that what the audit had done is only to mention the law which had escaped the notice of the Income-tax Officer and he determined for himself what is the effect and consequence of the law mentioned in the audit note. This is not a case where the audit party pronounced on the law and elucidated the scope of the legal provisions. The audit note, in the circumstances, amounted to " information " within the meaning of [SECTION] of the Act. The said finding is not challenged. No separate question is formulated to challenge the above finding. Nor has the assessee or the Tribunal forwarded, along with the statement of the case, the exact terms of the audit note to verify whether the finding entered by the Appellate Tribunal that the audit has only mentioned the law which escaped the notice of the Income-tax Officer, is correct and justified. In the circumstances, on the facts found by the Appellate Tribunal, it was right in holding that the assessment in the case of the assessee for the year 1974-75 was validly reopened.
4. We answer the question in the affirmative, against the assessee and in favour of the Revenue.
5. The reference is answered as above.
6. A copy of this judgment under the seal of this court and the signature of the Registrar shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.