'No Whisper Of Tangible Material': ITAT Delhi Quashes Reassessment Against Vedanta For AY 2010-11

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has quashed reassessment proceedings against Vedanta Limited for Assessment Year 2010-11. It held that the reopening beyond four years was without jurisdiction as it was not based on any fresh tangible material.

A coram of Judicial Member Pawan Singh and Accountant Member Brajesh Kumar Singh observed that “there is no whisper of any tangible material which came to the possession of the assessing officer subsequent to the passing of the assessment order u/s 143(3) of the Act on 28.01.2013 or there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment in the return of income for that assessment year in respect of the above two issues on which the assessment was reopened.”

Vedanta Limited, engaged in the manufacture and sale of aluminum and in commercial power generation, was originally assessed under Section 143(3) on January 28, 2013. During scrutiny, the Assessing Officer made a disallowance under Section 14A under the normal provisions. The claim of deduction under Section 80-IA was also examined during the original proceedings.

A notice under Section 148 dated December 23, 2016, was later issued to reopen the completed assessment. The recorded reasons stated that the Section 14A disallowance of about Rs. 2.06 crore was not added back while computing book profits under Section 115JB. It was also alleged that the non-claim of additional depreciation of about Rs. 15.49 crore resulted in excess deduction under Section 80-IA.

Vedanta Limited objected to the reopening. It stated that the notice was issued beyond four years from the end of the relevant assessment year. It contended that there was no failure to disclose fully and truly all material facts necessary for assessment. It argued that both issues were examined during the original scrutiny.

The tribunal noted that the first proviso to Section 147 was attracted. It found that the recorded reasons did not contain any allegation that income had escaped assessment by reason of failure on the part of Vedanta Limited to disclose fully and truly all material facts. It also found that the reopening was based entirely on material already available on record at the time of the original assessment.

The bench held that the reassessment amounted to a change of opinion on the same set of facts. It quashed the reassessment proceedings initiated by notice dated December 23, 2016. The other grounds raised by Vedanta Limited were rendered academic. The Revenue's cross-appeal was also dismissed as infructuous.