N.N. Mathur, J. - (1.) THIS is an application under Section 256(2) of the Income-tax Act, 1961, (hereinafter referred to as "the Act"), for seeking direction to the Income-tax Appellate Tribunal/Jaipur, to refer the following question of law for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that any action taken by the Assessing Officer under Section 147(b) of the Income-tax Act, 1961, on the basis of an audit report does tantamount to change of opinion and, therefore, action under Section 147(b) was not justified ?"
(2.) THE facts in brief are stated as follows : THE assessee partnership firm consisting of three partners and one minor, was dissolved on October 5, 1980, and the business was taken over by one Madan Lal Jain and a new firm was constituted with effect from October 6, 1980. THE return was filed by the asses-see-firm for two different periods ; firstly, for the period July 1, 1980, to October 5, 1980, declaring income of Rs. 1,93,330 and, secondly, for the new firm for the period October 6, 1980, to June 30, 1981, declaring income of Rs. 94,390. THE return was accompanied by copies of the manufacturing account, profit and loss account and other details, duly audited. THE Assessing Officer completed two separate assessments, one for the first period at a total income of Rs. 2,10,606 and another for the second period for the total income of Rs. 1,05,693. On appeal, the Commissioner of Income-tax (Appeals) granted relief to the assessee of Rs. 10,000 for the first period and Rs. 7,000 for the second period. THE Revenue audit while checking the assessment order, observed that at the time of dissolution of a firm, i.e., on October 5, 1980, the closing stock was valued at cost price below as per certificate given by the partners at Rs. 12,26,363.20 and the same was accepted by the Department. It was further observed that as the assessee declared gross profit rate at 6.73 per cent., the market price of the closing stock must be higher if the amount equal to the gross profit rate as disclosed is added to the closing stock, it would give the fair market value of the closing stock and at this rate, its market value would work out to Rs. 13,09,683. Thus, according to the audit, the market price was higher as on the date of dissolution by Rs. 83,300. As the business came to an end within the relevant period, the Department should have adopted the market value of the closing stock for determining the profit of the business for the first period. Keeping in view the said observation in the audit report, the Assessing Officer initiated proceedings under Section 147(b) of the Act. In response to the notice under Section 148 of the Act, the assessee filed a return for the second period declaring total income of Rs. 98,693. THE return was filed under protest. THE objection was also taken with respect to initiation of proceedings under Section 147 of the Act. However, the same was overruled. THE Assessing Officer completed the reassessment at a total income of Rs. 2,70,168 for the first period with the addition and enhanced the value of the closing stock by Rs. 83,300. THE matter was carried in appeal by the assessee. THE Commissioner of Income-tax (Appeals) accepted some of the objections raised by the assessee and concluded as follows : "THE notice under Section 148 does not specifically indicate the firm against which it was issued. Further, the return filed in response to the said notice under Section 148 is for the firm constituted on October 6, 1980. Thus the reassessment made against the earlier firm is without initiation of proper proceedings and the same is held to be invalid. Further, other arguments advanced by the learned counsel and various decisions cited in support thereof put question mark on valid initiation of reassessment proceedings. Keeping in view the totality of the facts and circumstances and the decisions cited supra, the reassessment made is held against the provisions of law and the same is hereby quashed." The Department preferred an appeal before the Tribunal. In the opinion of the Tribunal, it was clearly a case of change of opinion on the basis of the audit note. Thus, in view of the decision of the apex court in the case of Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996, reassessment proceedings were not sustainable. The Tribunal also gave a finding to the effect that the assessee had disclosed all the primary facts for completion of the assessment. The Tribunal by order dated March 7, 1995, dismissed the Departmental appeal. The application filed by the Department under Section 256(1) of the Act for reference was rejected, as in the opinion of the Tribunal, the question proposed did not raise a referable question of law having the controversy settled by the Supreme Court. It is contended by Mr. Sundeep Bhandawat, learned counsel for the Revenue, that the Tribunal has misread the decision of the apex court in the case of Indian and Eastern Newspaper Society's case [1979] 119 ItR 996. In the said case, the apex court has held that although an 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 audit party's observation was communication regarding the application of law with regard to valuation of stock on the dissolution of the firm and, accordingly, on the basis of the said decision, it is erroneous to say that it was a case of change of opinion. Learned counsel has also referred to a decision of the apex court in the case of A. L A. Firm v. CIt [1991] 189 ItR 285. On a careful consideration of the submissions made by learned counsel for the Revenue, we are of the view that no referable question of law arises from the order of the Tribunal. The position of law with respect to the whole trading results of the business for an accounting period is well settled. It is the practice to value the closing stock at cost. The entire material was before the Assessing Officer during the original proceedings. On the basis of that material, a view was taken by the Assessing Officer. There is no dispute that at the time of completing the original assessment, the position of the valuation of closing stock was examined by the Assessing Officer. The Assessing Officer could have taken one view or the other. Simply because, there can be another view of the matter, this cannot be a ground for reopening of assessment. It may further be noticed that the Commissioner of Income-tax (Appeals) has allowed the appeal on the ground that the reassessment made against the earlier firm was without jurisdiction inasmuch as that there was no service of notice. In view of this, no referable question of law arises from the order of the Income-tax Appellate Tribunal. The reference application is rejected. ;