PR. COMMISSIONER OF INCOME TAX -LTU, NEW DELHI vs. SRF LTD.

The Principal Commissioner impugns the judgment of the Income Tax Appellate Tribunal [‘ITAT’] dated 03 April 2018 and has proposed the following questions for our consideration:- “2.1 Whether the Ld. ITAT erred in quashing the reassessment proceedings on the basis of an additional evidence in the form of letter dated 14.05.2008 allegedly written by the AO without verifying authenticity of the letter and examining the context in which the letter was written and solely for the reason that the word ‘settled’ used in the letter was sufficient to quash the reassessment proceedings? 2.2 Whether the Ld. ITAT erred in law in quashing the reassessment proceedings ignoring that the reopening was based on fresh tangible material in the form of Audit objections, which aspects had not been considered at the time of original Assessment? 2.3 Whether the Ld. ITAT in the facts and circumstances of the case erred in law in quashing the reassessment proceedings on the ground of change of opinion then the grounds raised in the audit objections which formed basis of reopening were not even considered by the Ld. ITAT at the time of original assessment? 2.4 Whether the Impugned Order of the Ld. ITAT suffers from the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 12/03/2024 at 11:20:15

The dispute itself emanates from the initiation of proceedings referable to Section 147 of the Income Tax Act, 1961 [‘Act’]. While dealing with the aforesaid and disagreeing with the view which was taken by the Commissioner of Income Tax (Appeals) [‘CIT(A)’], the ITAT had observed as follows:- “8. We have heard both the parties and perused the material available on record. It is pertinent to note that the issues raised in the reopening was already examined in the audit objections and vide letter dated 14.05.2008, the Assessing Officer submitted that the audit observation be treated as settled. Thereafter on the same issues the reason for re-opening were recorded on 23.05.2008. Thus, the reopening itself is not on any tangible material. The entire record was examined during the regular assessment and the CIT(A) has not properly examined this aspect. Thus the finding of the CIT(A) regarding reopening u/s 147 is not correct. The Ld. DR relied upon the decision of the Hon'ble Supreme Court in case of CIT Vs. PVS Beedis Pvt. Ltd 237 ITR 13 wherein it is held that re- opening of case u/s 147 (B) on basis of factual information given by internal audit party was valid in law. It is pertinent to note that the Hon'ble Supreme Court ratio is not applicable in the present case as in the present case audit objection was finally settled by the Assessing Officer on the issue where the assessee was asked questionnaire under regular assessment. The factual aspect of the Hon'ble Supreme Court decision is totally different from this particular case. The audit objection raised by the Assessing Officer was dealt by the Assessing Officer by giving the finding that the issue is settled, it will no more remain as audit objection. In this particular case despite settling audit objection the Assessing Officer again by giving reasons on the same issue in a different manner amounts to change of opinion. Therefore, the CIT(A) is not correct in holding that the re-opening is justified. Since the re-opening This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 12/03/2024 at 11:20:15

As is evident from a perusal of the aforesaid communication, the Deputy Commissioner had categorically found upon due verification that the expenses incurred were in the normal course of business and thus allowable under Section 36(1)(iii) of the Act. 5. Viewed in that backdrop and in the absence of any other material, in our considered opinion, the ITAT had rightly found that there was no justification to invoke Section 147 of the Act. The appeal fails to raise any substantial question of law. It shall consequently stand dismissed on the aforesaid terms.