2023 (9) TMI 835 - ITAT HYDERABAD

Reopening of assessment u/s 147 - Interest free advance given to sister concerns - reassessment proceedings initiated on the basis of audit objection - proof of commercial expediency proved or not? - AO noted that assessee is paying interest @ 12.75% whereas no interest has been charged from the sister concern - HELD THAT:- We find in the case of Indian and Eastern Newspaper [1979 (8) TMI 1 - SUPREME COURT] has held that the opinion of internal audit party of the Income Tax Department on a point of law cannot be regarded as “information” within the meaning of section 147(b) - We find in the case of GMR Holdings Pvt. Limited [2018 (9) TMI 353 - HIGH COURT OF KARNATAKA AT BANGLORE] while deciding an identical issue has held that re-assessment proceedings u/s 147/148 of the Act cannot be undertaken on a mere change of opinion or audit objection raised by the internal auditors of the Department.

Similar view has been taken by the Mumbai Bench of the Tribunal in the case of Lionbridge Technologies Pvt. Limited [2020 (6) TMI 314 - ITAT MUMBAI] - The various other decisions relied upon by assessee also support his case to the proposition that re-assessment proceedings cannot be initiated on the basis of audit objections.

We hold that the reassessment proceedings initiated on the basis of audit objection are not valid in law and accordingly, the re-assessment proceedings are quashed. Since we quash the re-assessment proceedings initiated by the AO on the basis of the audit objections, therefore, the grounds raised by the Revenue challenging the deletion on merit become academic in nature and therefore, are not being adjudicated. Decided against revenue.