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BHARGAV D. KARIA, NIRAL R. MEHTA
Principal Commissioner Of Income Tax 3 – Appellant
Versus
N K Industries Ltd. – Respondent
JUDGMENT :
Bhargav D. Karia, J.
1. Heard learned advocate Mr.Karan Sanghani for the petitioner.
2. By this petition under Article 227 of the Constitution of India, the petitioner has challenged order dated 25th January, 2023 passed by Income Tax Appellate Tribunal, B Bench, Ahmedabad (for short ‘the Tribunal’) in Miscellaneous Application No.128/Ahd/2021 in ITA No.132/Ahd/2019.
3. The brief facts of the case are as under.
3.1 The respondent – assessee filed return of income on 30th December, 2006 for A.Y. 2006-07 declaring total income at Rs. Nil.
3.2 The case was re-opened and order under Section 143(3) read with Section 147 of the Income Tax Act, 1961 (for short ‘the Act’) was passed on 14th December, 2011, wherein tax was computed on the book profit of Rs.13,07,83,251/-.
3.3 The respondent–assessee being aggrieved preferred appeal before the CIT(A). The appeal was allowed by CIT(A) by order dated 23rd July, 2012.
3.4 The Assessing Officer passed an order giving effect of the CIT(A) and determined the book profit at Rs. Nil on 23rd August, 2012.
3.5 It is the case of the petitioner–Revenue that revenue audit party noticed that waiver of principal amount of loan of Rs.16,17,43,729/- being
The court affirmed that audit objections must directly relate to the assessment in question for exceptions in CBDT Circulars to apply, impacting the validity of appeals based on tax effect.
The court established that accepted audit objections necessitate a merits-based review of appeals, overriding the low tax effect dismissal under CBDT circulars.
Rectification orders under Section 154 of the Income Tax Act cannot be based on audit opinions or debatable issues, as they do not constitute a mistake apparent on the record.
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