ACIT Vs Rishabh Diamond Pvt Ltd. (ITAT Mumbai)
ITAT Mumbai held that the internal audit memo is outside the scope and ambit of the term “information” as provided in Explanation 1 to section 148 of the Act, prior to its amendment by the Finance Act, 2022. Accordingly, reopening of proceedings liable to be quashed.
Facts- Revenue has preferred the present appeal mainly contesting that the CIT(A) erred in not considering the amendment of Explanation 1 (ii) of section 148 of the Income Tax Act with effect from 01.04.2022 which specifies any audit objection and not only the C&AG audit objection thereby including the internal audit objection within the meaning of information for the purpose of section 148 which suggests that the income chargeable to tax has escaped assessment and the fact that the notice under section 148 of the Act in the case was issued on 27.07.2022.
Conclusion- Held that we find no merits in the submission of the Revenue that the amended provisions of Explanation 1 to section 148 of the Act, w.e.f. 01.04.2022 are applicable in the present case. Since the internal audit memo has been found to be outside the scope and ambit of the term “information” as provided in Explanation 1 to section 148 of the Act, prior to its amendment by the Finance Act, 2022, we are of the considered view that the learned CIT(A) has rightly quashed the re-assessment proceedings. Accordingly, we find no infirmity in the impugned order passed by the learned CIT(A) on this aspect of the invocation of jurisdiction under section 147 of the Act. Accordingly, we are of the considered view that the notice issued under section 148 of the Act is void ab initio and bad in law and therefore is rightly quashed. Consequently, the entire reopening proceedings and the assessment order passed under section 147 r.w.s. 144B of the Act is also quashed.
