Rajkamal Agro Industries Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad Quashes Reassessment Based Solely on Audit Objection: No Independent Application of Mind by AO
The Ahmedabad Bench (SMC) of the ITAT allowed the assessee’s appeal for AY 2015-16 by quashing the reassessment proceedings initiated under section 147. The Tribunal held that the reopening was based entirely on audit objections and reflected borrowed satisfaction, without any independent application of mind by the Assessing Officer.
On the first issue of alleged excess depreciation due to capital subsidy, the Tribunal noted that the subsidy was not even received in the relevant year, the audit objection itself was marked “not accepted” by the AO, and no addition was ultimately made on this issue—demonstrating lack of belief regarding escapement of income.
On the second issue of alleged undervaluation of closing stock of hulled sesame seeds, the ITAT observed that the audit party had exceeded its jurisdiction by applying its own formula to rework stock valuation, and the AO merely reproduced these observations verbatim in the reasons for reopening. Since the matter involved only reappreciation of existing records and no new tangible material, the reopening was held to be invalid. Consequently, the reassessment order was quashed and the assessee’s appeal was allowed
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
