2026 (8) TMI 1578

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....ct') by which the appeal of the appellant was dismissed. 2. Facts of the case may be summarized as that the appellant company filed its return of income for AY 2005-06, on 31.10.2005 showing total income at Rs. 10,25,309/-. Subsequently, the Learned AO noticed that in the Profit & loss a/c for the year under consideration the appellant has debited trade discount of Rs. 1,69,94,870/- and cash discount of Rs. 17,00,110/- whereas in the ledger account of these two expenses, the amount of expenditure shown is of Rs. 24,50,901/- and Rs. 12,98,786/- respectively. Accordingly, the appellant booked inflated expenditure amounting to Rs. 1,45,43,969/- and Rs. 4,01,324/- respectively. The Learned AO further noticed that an amount of Rs. 1,66,397/- ....

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....reopened only on the basis of audit objection raised by the Revenue audit party, on the reasons mentioned in the assessment order itself and Learned AR submitted that it is established principle of law that audit objections being only an information and reassessment notice based on said audit objection only, is not sustainable in the eyes of law and for this purpose, the Learned AR relied upon the judgment passed by the Hon'ble Delhi High Court in the case of FIS Global Business Solutions India (P) Ltd. v. ACIT 408 ITR 75 (Del), of which relevant extract of para 5 & 6 reads as under: "5. Carlton overseas (P.) Ltd. (supra) emphasizes reliance by the revenue on a subsequent audit report, cannot be considered as tangible material. The....

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....of the Act." 7. The Hon'ble High Court of Delhi in the case of Carlton Overseas (P.) Ltd. v. ITO [2010] 188 Taxman 11 (Delhi), held as under: "9. We find that the arguments on behalf of the petitioner are well founded and it must succeed. The Audit Report merely gives an opinion with regard to the non-availability of the deduction both under section 80-JA and under section 80HHC and that the deduction under section 80-IA was not deducted from the profits of the business while computing deduction under section 80HHC. Clearly, therefore, there was no new or fresh material before the Assessing Officer except the opinion of the revenue Audit Party." 8. On the basis of above, there is materials substance in the argument advanced o....