ACIT Vs Chinraj Shanthi (ITAT Chennai)
From Audit Note to Dead Notice: 148 Notice Struck Down by ITAT- Audit Objection Can’t Reopen Past: Change of Opinion Is Not ‘Reason to Believe’: Reassessment Quashed
In ACIT, Central Circle (I/c), Salem Vs. Chinraj Shanthi, ITA No.2037/Chny/2025 & CO No.81/Chny/2025, AY 2012-13, order dated 31.12.2025, Chennai ITAT dismissed Revenue’s appeal & upheld quashing of reassessment initiated u/s 147 r.w.s. 148 beyond four years. Original assessment was completed u/s 143(3) on 14.11.2014. Subsequently, AO reopened assessment on 31.03.2019 alleging undervaluation of closing stock of jewellery amounting to about ₹3.29 crore, solely based on Revenue Audit objection, without any fresh tangible material.
Tribunal noted that during original scrutiny proceedings, Assessee had furnished complete details of closing stock valuation, including quantities & valuation method, through letter dated 15.05.2014 with Annexure-X, which were examined by AO before completing assessment u/s 143(3) without any addition on this issue. Reopening after four years on same material was held to be a clear change of opinion & based on borrowed satisfaction. Relying on CIT v. Kelvinator of India Ltd. (320 ITR 561)(SC), Tribunal held that in absence of fresh tangible material & failure on part of Assessee to make true & full disclosure, reassessment was invalid. Accordingly, reopening was quashed, Revenue’s appeal dismissed & Assessee’s Cross Objection treated as infructuous.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
