Per Shri Manzoor Ahmed Bakhshi J.M. - Appellant is a registered firm. Its appeal relating to assessment year 1985-86 is directed against the order dated 18-9-1990 of CIT (A), Karnal. The issue involved is as to whether Assessing Officer was justified in initiating proceedings under section 147(b) and in disallowing the claim of the assessee under section 80-I on the ground that the assessee had not filed the report of the auditors in Form No. 10CCB along with the return of income. In this case original assessment had been completed on 31st January, 1986 at an income of Rs. 5,09,786. This assessment was modified under section 154 to Rs. 4,42,000 vide order dated 7-3-1986. On the basis of the internal audit objection, Assessing Officer initiated proceedings against the assessee on the ground that deduction under section 80-I amounting to Rs. 61,379 had been wrongly allowed to the assessee. Besides a trading loss amounting to Rs. 51,581 was also considered to have wrongly been allowed to the assessee. In pursuance to the initiation of proceedings under section 147(b) a notice under section 148 had been served upon the assessee on 13-5-1988. The assessee filed a return of income on 19-1-1989 declaring income of Rs. 4,42,000 as assessed earlier. The assessee objected to the initiation of proceedings under section 147(b) on the ground that the Assessing Officer had considered the material at the time of first assessment and allowed deduction to the assessee and therefore, without there being any fresh material coming in the possession of the Assessing Officer, reopening of assessment was not justified. The objection of the assessee was rejected on the ground that Assessing Officer had not taken note of non-furnishing of Form No. 10CCB as stipulated by sub-section (7) of section 80-I. It was further observed that the assessee had not maintained separate accounts in respect of the new unit. The Assessing Officer accordingly held that re-opening of assessment under section 147(b) did not amount to change of opinion or reappraisal of material already considered. The Assessing Officer was also of the view that the trading loss amounting to Rs. 51,581 has also wrongly been allowed in the original assessment without proper consideration of the provisions of law.

2. The Assessing Officer accordingly, while passing fresh assessment order dated 9-8-1989, disallowed the claim of the assessee under section 80-I amounting to Rs. 61,379. (The trading loss of Rs. 51,581 was also disallowed). The reassessment was made at an income of Rs. 5,54,960. The assessee appealed to the CIT (A) challenging the validity of the proceedings initiated under section 147(b) and the additions made by the Assessing Officer. The CIT (A) has upheld the reopening of the assessment under section 147(b). It was held that correct state of law on the point which has not been considered during the original assessment, constitutes information as it conveys knowledge and awareness of law and brings into notice the effect and consequences of correct state of law leading to the belief that income has escaped assessment.

3. On merits, the CIT (A) held that though maintenance of separate accounts in respect of the new unit was not-necessary yet filing of audit report in Form No. 10CCB is mandatory. In this connection, he relied upon the decision of the Punjab and Haryana High Court in the case of CIT v. Jaideep Industries [1989] 180 ITR 81 where it was held that filing of audit report under section 80J(6A) with the return of income was a mandatory requirement and failure of the assessee to do so would disentitle him to the deduction under section 80J. According to the CIT (A), provisions of section 80-I(7) are identical with the provisions of section 80J(6A) and therefore, the decision of the Punjab and Haryana High Court in the case of Jaideep Industries (supra) was squarely applicable in the case of the assessee. Following the afore-mentioned judgment the withdrawal of deduc