India Exposition Mart Ltd. Vs DCIT (ITAT Delhi)
ITAT Delhi: Reopening on basis of audit objection – Matter remanded to CIT(A) to ascertain AO’s independent belief; Dissenting view quashes reopening as change of opinion
Delhi ITAT in the case of M/s India Exposition Mart Ltd. vs. DCIT delivered a split verdict on the validity of reassessment proceedings initiated u/s 147 on the basis of an audit objection regarding the write-off of ₹1.81 crore in respect of an abandoned Phase-III project.
Original assessment order u/s 143(3) was passed on 09.12.2011. The only addition made by AO was a disallowance of ₹1,06,500/- out of guest house rent. During the year, Assessee had an opening balance of ₹1.75 crore under the head “Work in progress – Phase-III (superstructure)” & also incurred expenses of ₹6.26 lakh on the project. The entire balance of capital work in progress was written off in the Profit & Loss a/c for F.Y. 2008-09, out of which ₹1.70 crore was debited as consultancy charges.
On 25.02.2013, the Revenue Audit raised an objection that the write-off of capital work in progress amounting to ₹1,81,70,947/- was not allowable as it was neither a revenue expenditure nor pertaining to the AY in question. AO issued notice u/s 148 dt 10.03.2014 & thereafter passed a reassessment order u/s 143(3) r.w.sec.147 dt 18.02.2015 disallowing the amount of ₹1,81,26,000/- & initiating penalty proceedings u/s 271(1)(c).
