( 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 e