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Judgment
This assessee’s appeal for assessment year 2013-14, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2026-27/1088610612(1), dated 23.04.2026 involving proceedings under section 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Heard both the parties. Case file perused.
It transpires at the outset during the course of hearing that the assessee/appellant herein presses for its first and foremost substantive ground challenging validity of the impugned reopening set into motion by the learned Assessing Officer after recording his following reasons to believe that its taxable income had escaped assessment; reading as under:
“1. Brief details of the Assessee
As per records available, the assessee is a firm. Assessee filed return of income for A.Y. 2013-14 electronically declaring loss of Rs 14,16,642/-. Later on the case was selected for scrutiny assessment and assessment for the A.Y.2013-14 was completed u/s 143(3) of the act on 01.06.2016 at loss of Rs. 10,88,750/-.
2. Brief details of information collected/ received by the AO
Assessee firm has purchased raw material and capital goods(as shown in bills attached with assessment records). Assessee firm has not reduced any amount of CENVAT/custom duty or any other indirect tax from total figure of purchases made during the year year. As per Column No 22(a) of Form 3CD- Tax Audit report, the charted accountant has certified that sale tax, custom duty or any other indirect tax, levy, cess, impost etc has not been passed through the profit and loss account. Assessee firm has reduced the amount of excise duty of Rs 11,75,243/- from total figure of sales and the same has resulted into under assessment to the extent of Rs 11,75,243/-
3. Analysis of information collected/received
Case records & submission furnished by the assessee were carefully perused and information gathered in para 2 was found correct.
4. Enquiries made by the AO as sequel to information collected/ received:
Information gathered in Para 2 was carefully examined. Financials of the assessee company were reconciled and information gathered in para 2 was found correct as per assessment records. This has resulted in under assessment of income.
5. Findings of the AO
On the basis of information gathered & analysed, findings were made that during the year under consideration, the assessee was required to add the amount of excise duty of Rs 11,75,243/- in the total figure of sales. TAX DEPART Thus, income of Rs. 11,75,243/- chargeable to tax has escaped assessment for the Α.Υ. 2013-14
6. Basis of forming reason to believe and details of escapement of income
Assessee has reduced the amount of excise duty of Rs 11,75,243/- from the total figure of sales and same resulted into reduction in sales amounting to Rs 11,75,243/-
I have reason to believe that the income to the extent of Rs. 11,75,243/-chargeable to tax on any other income which comes to my notice subsequently in the course of assessment proceedings u/s 147, has escaped assessment for the A.Y. 2013-14 within the meaning of section 147 of the Income Tax Act, 1961. In order to assess the above income, I proceed to initiate proceedings u/s 147 of the I.T. Act, 1961 in the case for A.Y. 2013-14.
7.Seventh paragraph will include escapement of income chargeable to tax in relation to any assets (including financial interest in any entity located outside India).
Income to the extent of Rs. 11,75,243/- chargeable to tax or any other income which comes to my notice subsequently in the course of assessment proceedings u/s 147, has escaped assessment for the A.Y. 2013-14
8. Applicability of the provisions of section 147/ 151 to the facts of the case:
In this case a return of income was filed for the year under consideration and regular assessment u/s 143(3) was made on 01.06.2016 at loss of 10,88,750/-, Since, 4 years from the end of the relevant year has expired in this case, the requirements to initiate proceeding u/s 147 of the Act are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above (refer paragraph above). I have carefully considered the assessment records containing the submissions made by the assessee in response to various notices issued during the assessment/reassessment proceedings and have noted that the assessee has not fully and truly disclosed the material facts necessary for his assessment for the year under consideration as the assessee has to add excise duty of Rs 11,75,243/- in the total sales and it is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s 147 of the Act.
It is true that the assessee has filed a copy of annual It is true that the assessee has filed a copy of report and audited P&L A/c and balance sheet along with return of income where various information/ material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of accounts, annual report, audited P&L A/c and balance sheet or other evidence as mentioned above, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the then AO and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of section 147 of the Act. Explanation 1 of section 147 of the Act reads as under:-
"Explanation 1.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :-
(a)where income chargeable to tax has been underassessed; or
(b)where such income has been assessed at too low a rate; or
(c)where such income has been made the subject of excessive relief under this Act or under the Indian Income-tax Act, 1922 (11 of 1922); or
(d)where excessive loss or depreciation allowance has been computed.
It is evident from the above discussion that in this case, the issues under consideration were never examined by the AO during the course of regular assessment. This fact is corroborated from the contents of notices issued by the AO u/s 143(2)/ 142(1) and order sheet entries dated recorded during the 143(3) proceedings. It is important to highlight here that material facts relevant for the assessment on the issue under consideration were not filed during the course of assessment proceeding and the same may be embedded in annual report, audited P&L A/c, balance sheet and books of account in such a manner that it would require due diligence by the AO to extract these information. For aforestated reasons, it is not a case of change of opinion by the AO.
In this case more than four years have lapsed from the end of the assessment year under consideration. Hence necessary sanction to issue the notice u/s 148 has been obtained separately from Pr. Commissioner of Income Tax as per the provisions of section 151 of the Act OME TAX DEPART The above reasons has been duly approved by the Competent Authority.”
Suffice to say, the Revenue could hardly dispute that the Assessing Officer had framed his section 143(3) assessment in the assessee’s case on 06.01.2016 for the impugned assessment year 2013-14. And that he thereafter initiated the reopening herein on 28.03.2021 i.e. beyond the period of four years from the end of the relevant assessment year i.e. AY: 2013-14, after observing that the assessee had not disclosed its particulars in the said former round “fully” and “truly” all the material facts.
This being the clinching factual position, I hereby notice that the learned assessing authority had gone by the assessee’s details reducing a sum of Rs.11,75,243/- under the excise duty/VAT, which is sought to be treated as an instance of income escaped assessment. There is further no denial on the Revenue’s part that no other reason has been quoted for initiating the impugned reopening pinpointing the assessee’s specific failure in such an instance of applicability of section 147 read with provisos thereto. I quote case laws HCL Technologies Vs. DCIT, (2017) 397 ITR 469 (Del.), Discovery Communication Inc Vs. Addl. CIT, (2024) 168 taxmann.com 567 (Del) and Oracle India Pvt. Ltd. Vs. ACIT (2017) 397 ITR 480 (Delhi) to reject the Revenue’s vehement contentions supporting the impugned reopening in very terms. The same is hereby quashed therefore.
All other remaining pleadings between the parties stand rendered academic.
This assessee’s appeal is allowed.