DCIT Vs Sharada Erectors Private Limited (ITAT Pune)
ITAT Pune held that reopening of assessment under section 148 of the Income Tax Act based on audit objection is merely change of opinion and the same is impermissible in law. Accordingly, notice issued u/s. 148 is not valid and is liable to be quashed.
Facts- Post assessment u/s. 143(1), AO after analysis of the objections raised by the Revenue Audit Party held that the proportionate interest expenses of Rs.6,60,53,791/-cannot be allowed as deduction as per provisions of section 36(1)(iii) of the Act. He, therefore, issued a show cause notice u/s 148A(b) of the Income Tax Act. AO was not satisfied with the arguments advanced by the assessee. He noted that the loans and advances given to different parties for Rs.62,11,34,176/- and to the directors of Rs.5,23,76,000/- are not meant for business purposes. Since the assessee could not demonstrate that the loans / advances made are having direct nexus with the business purpose and the same has been given from interest bearing funds, he, therefore, computed the proportionate disallowance at Rs.6,60,53,791/-.
CIT(A) / NFAC quashed the reassessment proceedings as well as deleted the addition on merit. Being aggrieved, revenue has preferred the present appeal.
