This is appeal filed by ITO, B Ward, Moradabad objecting to order passed by AAC whereby assessment made by ITO was annulled on sole ground that ITO did not possesses requisite jurisdiction to reopen assessment under s. 147(a) of IT Act. relevant facts are: assessee is registered firm carrying on business in Kirana goods at Moradabad. For year under appeal assessment was originally completed on 31st Oct., 1974 on total income of Rs. 7,925. Subsequent to completion of assessment, ITO received information from ST Department that Special Investigation Branch of that Department carried out survey in business premises of assessee wherein certain books of account and certain incriminating documents were found, which showed that assessee and turnover in sugar. Consequent on seizure of books in survey, assessee s turnover was determined at Rs. 10 lacs. turnover shown for income tax purposes was much below, namely, Rs. 1,22,445. ITO, therefore, thought that income from business relatable to turnover found in seized books escaped assessment and to bring that income to tax notice under s. 148 was issued. In response to this notice assessee did not file any return of income, but when ITO issued notice under s. 142(1) assessee s representative alongwith one of partners appeared before ITO and stated that firm was assessed on total income of Rs. 7,930, that firm consisted of partners, one of whom was Suresh Chand, that he said Suresh Chand carried on business of khand as his own business, which had nothing to do with business of firm, that said Suresh Chand had disclosed profit of Rs. 10,000 form that business, which was accepted by ITO and in circumstances there was no concealment of income. ITO examined these aspects with reference to proceedings that took place before ST authorities, various contentions raised before ST authorities and eventually held following conclusions reached in sales-tax assessment that it was assessee-firm that carried on business in khand and that turnover determined was Rs. 7 lacs eventually and that turnover would be adopted here for purpose of assessment. So concluding profit of 10 per cent was estimated on turnover of Rs. 7 lacs and reassessment was made on total income of Rs. 78,025. Appeal was then filed before AAC, before whom it was pointed out that t h e ITO reopened assessment under s. 148 not on basis of information procured by him but on basis of audit note dt. 26th Sept., 1977 wherein audit party pointed out that business in sugar found to have been carried on by ST authorities was in fact business of firm and that income had escaped assessment and that income should be brought to tax in hands of firm and it was following that note that ITO reopened t h e assessment and since ITO reopened assessment accepting opinion rendered by audit party, that opinion could not in law form information for purpose of forming belief that income libel to tax had escaped assessment and, therefore, reopening of assessment was bad in law. Strong reliance was placed before him on decision of Supreme Court in Indian & Eastern Newspapers Society Ltd. vs. CIT (1979) 12 CTR (SC) 190: (1979) 119 ITR 996 (SC). AAC quoting extensively from that decision came to conclusion that ITO was not justified in initiating reopening proceedings as different view was taken by him later on basis of same principles, which were already in his knowledge and that would amount to change of opinion. AAC therefore, annulled assessment without considering any other grounds of appeals. Aggrieved by this order of AAC, present appeal is filed by Revenue wherein it is contended that there was enough material before ITO to reopen assessment by forming belief that income liable to tax had escaped assessment and AAC was not justified in saying that ITO had only changed his opinion on basis of same material. AAC failed to note that information that raid had taken place by ST authorities in which turnover of about Rs. 7 lacs was detected was not available before ITO. That information cane into possession of ITO subsequent to assessment and also by way of audit note. Audit note only conveyed to ITO information that was already on record and they did not interpret late in any manner. By referring to audit note ld. Departmental Representative Shri P. K. Sridharan pointed out that audit party and after concluding that according to them income would be, suggested to ITO to take appropriate measures. There was nothing to indication in audit note that they were interpreting law. Supreme Court decision in Indian & Eastern Newspapers Society Ltd. vs. CIT (1979) 12 CTR (SC) 190: (1979) 119 ITR 996 (SC) has pointed out that Revenue Audit is not proper authority constituted under IT Act vested with power of interpreting law and that interpretation could not be source of information to ITO. Supreme Court also pointed out that it is open to Revenue Audit to inform ITO about certain facts on basis of which it is open to ITO to form his opinion to escapement of income. While conveying of information was not struck down as illegal, conveying of opinion on question of law was turned down as improper and without sanction of law behind it. Therefore, when audit party conveyed only information regarding facts, AAC erred in interpreting it as if it is interpreting question of law. ld. Departmental Representative therefore submitted that view taken by AAC is incorrect and that reopening of assessment must be held to be valid and he should be directed to go into facts sine he has not expressed any opinion on merits. ld. counsel for assessee Shri K. P. Bhatnagar, on other hand, supported order of AAC. He pointed out by reading copiously from audit note as well as reasons recorded for reopening that ITO mechanically adopted income computed by audit party as if there was duty cost upon him to adopt that income as if that was binding on him in law. adoption of income as concluded by audit party would mean that ITO did not exercise his mind at all allowed it to be dictated by audit party. This he was not expected to do under IT Act and it is this aspect that was frowned upon by Supreme Court in Indian & Eastern Newspapers Society Ltd. vs. CIT (1979) 12 CTR (SC) 190: (1979) 119 ITR 996 (SC). He further pointed out that sugar business belonged to one of partners and not to firm and in sugar business income would never be 10 per cent. These aspects, ITO did not examine which according to him made reopening unjustified in law. We have carefully considered mater and in our view reopening is valid and AAC is not justified in coming to opposite conclusion. We have gone through audit note very carefully as well as reasons recorded by ITO for reopening of assessment. We do not find anything in audit ITO for reopening of assessment. We do not find anything in audit note which would amount to converging any expression on question of law. audit party faithfully conveyed to ITO information they gathered relating to turnover found on search by ST authorities to ITO, no doubt by calculating possible income that could be deemed to have been earned on turnover. It is also true that this income was adopted by ITO for purpose of reopening. That does not mean that ITO was acting at information conveyed to him by audit party to form opinion that income liable to tax had escaped assessment. This is very clear from reasons recorded by him for reopening of assessment as can be seen: "Audit report dt. 26th Sept., 1977 read. It gives information that assessee- firm suppressed income from sugar and kirana business. In course of sales- tax raid papers concerning this business were seized on October, 1973. I have reasons to believe that for failure on part of assessee to disclose fully and truly all materials facts necessary for his assessment for that year income chargeable to tax has escaped assessment which is estimated by AG at Rs. 1,02,000. I am satisfied that action under s. 147(a) is warranted in this case to assess income of Rs. 1,02,000 which has escaped assessment, for aforesaid reasons. Issue 148 for 1974-75 to each partners who constituted firm at relevant time." AAC, in our opinion, therefore, fall into error in applying decision of Supreme Court to facts of this case. Supreme Court never prohibited by that decision conveying of information on facts to ITO. There is also nothing to indicate, as we have pointed out earlier, any point of law was communicated to ITO by audit party as their opinion so as to say that ITO followed that opinion. Nor can it be said that merely because ITO had adopted income as computed by audit party in reasons given by him that he did not apply his mind. At point of time of reopening what is to be seen is whether ITO had reason to believe that income had escaped assessment based upon information coming into his possession and whether that information was genuine and not pretence. We are convinced in this case that there are reasons to form belief that income had escaped assessment. Secondly, we do not know from where AAC has got material to hold that on basis of same information ITO had changed opinion, which suggests that raid conduct by ST Department and consequent assessment made upon assessee was available to ITO at time when original assessment was made. This appears to us to be factually incorrect. We are therefore of opinion that order of AAC is incorrect and we set aside his order. Since he had not gone into merits, we restore appeal to his file and direct him to discuss merits and then decide upon question as to whether business belonged to firm or to individual Suresh Chand and whether income of Rs. 70,000 computed by ITO was proper. cross objection is filed only by way of supporting original order. Noting is therefore to be discussed. It is therefore dismissed. In result, appeal filed by Department is allowed and cross objection is dismissed. *** INCOME TAX OFFICER v. SURESH CHAND RAMESH CHAND