Agni Steels Pvt. Ltd. Vs DCIT (ITAT Chennai)
Audit Objection is not Tangible Material – Reopening Without Fresh Evidence is Review in Disguise – ITAT Chennai Quashes 147
Assessee engaged in manufacture of TMT bars, appealed against order of CIT(A)- for AY 2014-15. appeal, though delayed by 217 days, was admitted as Tribunal found sufficient cause for condonation.
Dispute arose from reopening of assessment u/s 147. Originally, assessment was completed u/s 143(3) on 18.12.2017, wherein deduction u/s 80IA was partly disallowed. Subsequently, AO issued notice u/s 148 on 31.03.2021 (i.e., after four years), citing two reasons:
- Disallowance of ₹22.41 lakh u/s 80IA, being proportionate director’s remuneration that, as per audit objection, should be allocated to windmill income.
- Disallowance of ₹61.91 lakh u/s 37, being payment to TNEB for a dedicated feeder line, claimed as revenue expenditure but treated by AO as capital in nature.
Assessee contended that reopening was invalid as there was no tangible material beyond what was already available in the original records.Reasons recorded by AO were based solely on P&L account, computation of income & receipt from TNEB, all of which were furnished in the original assessment. Thus, the reopening amounted to a mere change of opinion, barred by the first proviso to Sec. 147. Reliance was placed on the Supreme Court ruling in CIT v. Kelvinator of India Ltd. (320 ITR 561) and the Madras High Court ruling in Indian Syntans Investments Pvt. Ltd. (2025), which held that reassessment cannot be used as a tool for review.
