INCOME TAX ACT, 1961

Sections 147 & 148

Reassessment - Notice issued under section 148 - Change of opinion - Validity of

In case of assessee reassessment proceeding was triggered on following two (2) grounds: (i) First, respondent/assessee had not deposited employer's and employees' contribution with statutory authorities administering Provident Fund and ESI fund, amounting to Rs. 14,12,034, as per provisions of section 43B read with section 36(1)(iv) (ii) Second, assessee had written off capital work-in- progress/process amounting to Rs. 1,83,14,900 in its profit and loss account, during period under consideration. In other words, according to the AO, since the petitioner had categorized the said amount as capital expenditure, it could not have been debited to the profit and loss account. Tribunal following the decision of Delhi High Court held that notice issued under section 148 is invalid and quashed conseqential assessment under section 147. Tribunal also directed AO to delete addition of Rs. 1,83,14,900. Held: A careful perusal of record would show that Tribunal ruled in favour of respondent/assessee for following reasons: (i) First, AO had not recorded his satisfaction that income chargeable to tax had escaped assessment. (ii) Second, reasons recorded did not advert to any tangible material which had triggered reassessment proceedings. (iii) Third, respondent/assessee had produced its books of account before AO, which were tested. (iv) Fourth, note appended to computation of income adverted to reason why capital work-in-progress/process had been expensed out, i.e., debited, to profit and loss account. Only reason that reassessment proceeding was triggered, was on account of an audit objection. Given this factual position, view taken by Tribunal that this was a case of change of opinion and, therefore, reassessment proceeding could not have been triggered merely on basis of audit objection, without any fresh tangible material was agreed with. No substantial question of law arose for consideration.

REFERRED :

FAVOUR : In favour of assessee.

A.Y. : 2002-03

IN THE DELHI HIGH COURT

RAJIV SHAKDHER & GIRISH KATHPALIA, JJ.

Pr. CIT v. Network Programme India Ltd.

ITA No. 862/2018

25 July, 2023

Appellant Through by: Aseem Chawla, Senior Standing Counsel & Pratishtha Choudhary & Aditya Gupta, Advocates.

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