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2016 (9) TMI 1038 - GUJARAT HIGH COURTReopening of assessment - deduction under Section 80IB - Held that:- The claim of deduction under Section 80IB of the Act was examined by the Assessing Officer. The matter was verified from the records and only thereafter the claim was accepted as it is. It may be that in the process, the Assessing Officer committed an error in allowing deduction with respect to several amounts which may not be eligible for such deduction. The erroneous decision of the Assessing Officer is widely different from nonconsideration of an issue at the time of assessment. It therefore cannot be stated that this issue was not scrutinized by the Assessing Officer during the original assessment. Disallowance of interest expenditure - objection of audit party - Held that:- On the vital issue of disallowance of interest expenditure, the Assessing Officer was not convinced about the audit objection. She gave her brief but precise reasons for her stand. In the case of Indian and Eastern Newspaper Society V/s Commissioner of Income-Tax, New Delhi [1979 (8) TMI 1 - SUPREME Court] held that the opinion of the audit party on a point of law cannot be regarded as information enabling the income tax officer to initiate reassessment proceedings. In the same judgment, however, it was clarified that the audit party does not possess the power to pronounce on the law, it nevertheless may draw the attention of ITO to it. In case of Commissioner of Income-Tax V/s P.V.S.Beedies Pvt.Ltd.,[1997 (10) TMI 5 - SUPREME Court] it was found that the audit party had merely pointed out the fact which was overlooked by the income tax officer in the assessment. It was observed that there is no dispute that the audit party is entitled to point out a factual error or omission in the assessment. Reopening the case on the basis of factual error pointed out by the audit party is permissible under the law. The present case falls in the former category where the audit party not only brought a certain issue to the notice of the Assessing Officer but compelled her to issue notice of reopening despite her clear opinion that the issue was not valid and that there has been no escapement of income on the grounds so urged by the audit party. - Decided in favour of assessee.
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