Deb, J. - (1.) In this reference under Section 256(1) of the I.T. Act, 1961, we are concerned with the following questions of law : " 1, Whether, on the facts and circumstances of the case, the Tribunal was justified in upholding the reopening of the assessment under Section 147(b)?
(2.) Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the assessee was not a company engaged in the manufacture or processing of goods and was, therefore, not entitled to the concessional rates of tax under the respective Finance Acts ? " 2. The assessee is a private limited company and is engaged in pharmaceutical business. The assessment years are 1965-66 and 1966-67 and the relevant accounting years are calendar years 1964 and 1965, respectively.
(3.) In the assessment proceedings, the assessee was treated as a manufacturing concern and was taxed at concessional rates under the Finance Acts of 1965 and 1966, respectively. Thereafter, the Comptroller and Auditor-General of India raised certain objections in the audit report regarding the assessments. The ITO, after applying his mind to the said audit report, reasonably believed that the income had escaped assessments in both the years and, accordingly, he reopened the assessments.;