FRESENIUS KABI ONCOLOGY LIMITED,NEW DELHI vs. COMMISSIONER OF INCOME TAX (APPEALS)-26, NEW DELHI

Against the aforesaid reassessment order, assessee filed appeal before the CIT(A) and the CIT(A) vide order dated 17.02.2025 upheld the disallowances made by the assessing officer. Accordingly, the assessee is in appeal and at the time of hearing, learned counsel has primarily argued on Ground No.2 whereby the initiation of reassessment proceedings on the basis of audit objection and without any tangible material have been challenged.

We have given thoughtful consideration to the material on record and gone through the copy of reasons available at Page 2-5 of the paper book and we find that sources of information, Assessing Officer mentioned is that the audit objections received in the Office of Assessing Officer and leading to the reopening itself. Assessing Officer mentioned that the audit objections had mentioned the two issues the same could not be deducted while calculating the book profit. No other information/material, much less any tangible material, has been adverted to by the Assessing Officer in the ‘reasons to believe’ and such practice of reopening on the basis of audit objections alone with has not been appreciated by Hon’ble Supreme Court for which reliance be placed by ld. Counsel on the decision of CIT Vs. PVS Beedies (P) Ltd:[1999] 237 ITR 13 (SC). We find Assessing Officer has not acted on to P a g e | Fresenius Kabi Oncology Limited (AY: 2011-12) initiate reassessment independently believing income escaped assessment but merely relied the audit report and that itself is fatal for department’s case.

Then Ld. Counsel has demonstrated before us on the basis of reply dated 30.01.2015 filed during assessment proceedings wherein assessee submitted new claims in the revised Return of Income that assessee had specifically disclosed, inter alia, the deductions claimed in the revised return of income in respect of bad debts written off through ‘provision for bad and doubtful debt’ amounting to Rs.6,47,93,000/- and expenditure incurred out of ‘provision for other’ amounting to Rs.91,74,039/- while computing book profits u/s 115JB of the Act, which form the very basis for initiating impugned reassessment proceedings. In support of the said claim, assessee duly annexed copy of revised and original computation of income along with ITR, necessary supporting documents i.e., CA Certificate, financials, etc in the reply dated 30.01.2015. Copy of original computation and revised computation of income finds place @ page no. 21-23 and 47-49 respectively, of the paper book. Further, CA Certificate i.e., Form No. 29B finds place @ page no. 128-130 of the paper book.

Further admittedly, the assessment u/s 143(3) of the Act was concluded on 20.03.2015 and four years from the end of the relevant assessment year i.e., AY 2011-12 expired on 31.03.2016. However, notice was issued on 31.03.2018, which is beyond the period of four years and in terms of proviso to Section 147 of the Act, it was necessary to mention as to what was overt act of assessee which led to escapement of income by reason of failure on the part of the assessee to disclose fully and truly all material facts. Assessee had made disclosure in notes of accounts about bad debts written off and expenditure utilized during the year. The revised return of income mentioned all amount withdrawn from reserve or provisions. There is absolutely no word about any failure on the part of the assessee to disclose fully and truly the material facts relevant to the two issues.