ITAT Quashes Reopening After 4 Years as Shortage Claim Was Already Examined

Ravindrabhai Shah Vs DCIT (ITAT Ahmedabad)

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, allowed the assessee’s appeal against the order of the Addl./JCIT(A) for Assessment Year 2011-12 arising from reassessment under Sections 143(3) read with 147 of the Income-tax Act, 1961.

The assessee had originally filed a return declaring income of Rs. 26,52,630, and the assessment was completed under Section 143(3). Subsequently, the Assessing Officer issued a notice under Section 148 on 30.03.2018, reopening the assessment to examine the deduction of Rs.20,43,758 claimed as shortage rate difference expenditure. The reassessment resulted in an addition of Rs. 16,16,261 under Section 37 on account of shortage rate difference, which was confirmed by the Addl. CIT(A).

Before the Tribunal, the assessee raised an additional legal ground contending that the reopening beyond four years was based merely on a change of opinion. The assessee submitted that the issue of shortage rate difference had already been specifically examined during the original assessment through a notice issued under Section 142(1) dated 21.08.2013, and a detailed reply dated 30.08.2013 had explained that shortages and rate differences arose in the ordinary course of the transportation business due to factors such as weighbridge differences, theft, pilferage, leakage, valve leakage, evaporation and subsequent debit notes issued by customers. The assessee also stated that similar claims had been consistently allowed in earlier years.