PCIT Vs NK Proteins Pvt. Ltd (Gujarat High Court)
Summary: The Gujarat High Court considered the Revenue’s appeal under section 260A of the Income-tax Act, 1961 arising from the Income Tax Appellate Tribunal order dated 12.11.2024 for A.Y. 2009-10. The assessee-company was engaged in manufacturing edible and non-edible oil products and byproducts. The original assessment under section 143(3) was completed on 29.12.2011. The source records total income at Rs. 22,55,48,605/- in paragraph 3.1, while paragraph 7 records Rs. 22,55,48,602/-.
A notice under section 148 was issued on 09.03.2015 beyond four years from the end of the relevant assessment year. The recorded reasons concerned two matters: an alleged short computation of disallowance under section 14A read with Rule 8D, and an alleged income of Rs.244.98 crores said to have been received from National Stock Exchange Ltd. (NSEL) through so-called paper trade. In reassessment, however, the Assessing Officer made a disallowance of Rs.13,89,08,810/- under section 43(5) read with section 73 and section 40A(2)(b), along with excess disallowance of Rs.1,04,652/- under section 14A.
The assessee challenged the reopening before the CIT(Appeals), pointing out that no addition had ultimately been made on either recorded reason. The CIT(Appeals) found that the NSEL figure of Rs.244.98 crores related to an addition in the assessee’s own case for A.Y. 2011-12 and that the assessee had not carried out NSEL transactions in the year under consideration. The CIT(Appeals) also noted that the original section 14A disallowance had been deleted by the Ahmedabad ITAT because the assessee had not received exempt dividend income. On the second reopening reason, the CIT(Appeals) found that the notice was issued beyond four years, the recorded reasons did not allege failure by the assessee to disclose truly and fully all material facts, and no new tangible material had been brought on record. The reassessment was therefore treated as invalid.
