Pr Commissioner Of Income Tax 4 New Delhi vs Ntpc Ltd

$~5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
Date of decision: 7 Sep, 2026


# CNR No. DLHC011320362024
+ ITA 89/2026
PR COMMISSIONER OF INCOME TAX 4 NEW DELHI
.....Appellant
Through: Mr. Shlok Chandra, SSC with Ms.
Naincy Jain, Ms. Madhavi Shukla,
JSCs.
versus

NTPC LTD .....Respondent
Through: Mr. Ved Jain, Mr. Ishan Khandelwal
& Mr. Nischay Kantoor, Advocates.
CORAM:
HON'BLE MR. JUSTICE DINESH MEHTA
HON'BLE MR. JUSTICE RAJNEESH KUMAR GUPTA
J U D G M E N T
DINESH MEHTA, J. ( ORAL )
1. The appeal in hands emanates from order dated 14.02.2024 passed by
Income Tax Appellate Tribunal, Delhi Bench ‘E’, New Delhi (hereinafter
referred to as „Tribunal‟), whereby the Tribunal has upheld the order dated
25.09.2014 passed by the Commissioner of Income Tax (Appeals)
(hereinafter referred to as „CIT(A)‟) vide which the assessment order dated
28.03.2013, passed under Section 143(3) read with Section 147 of the
Income Tax Act, 1961 (hereinafter referred to as „the Act of 1961‟) had
been set aside.
2. Narrated precisely, the facts are that the appellant’s scrutiny
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assessment for the assessment year 2007-08 was made by the Assessing
Officer on 31.10.2007, whereafter a notice under Section 148 of the Act of
1961 was issued on 23.03.2012.
3. The initiation of said proceedings under Section 148 culminated into
an order of assessment dated 28.03.2013 passed under Section 143(3) read
with Section 147 of the Act of 1961, whereby additions on two counts were
made against the respondent-assessee (i) Oil and Gas Exploration expenses
of Rs. 7,70,00,000/- and (ii) preliminary expense of Rs. 9,89,12,000/-.

4. The respondent-assessee assailed the above referred assessment order
by way of an appeal before the CIT(A), who vide its order dated 25.09.2014,
set aside the reassessment proceedings by holding that the same were
nothing but mere change of opinion. The revenue assailed the order of the
Appellate Authority before the Tribunal by way of an appeal which appeal
was rejected by the Tribunal vide order under challenge.
5. Ms. Naincy Jain, learned Junior Standing Counsel for the department
submitted that the Tribunal has erred in rejecting department’s appeal
without considering merit of the additions. She contended that the Assessing
Officer has committed no error of law in making additions on the above-
mentioned 2 counts. Her argument has been that since the order of the
predecessor Assessing Officer (dated 27.02.2009) suffered from legal
infirmity, the subsequent Assessing Officer was justified in initiating
reassessment proceedings.
6. She highlighted that there are catena of judgments of this Court that
simply because the first assessment was made under Section 143(3) of the
Act of 1961, the Assessing Officer is not precluded from initiating
reassessment proceedings.
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Signing Date:08.09.2026
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7. Mr. Nischay Kantoor, learned counsel for the respondent-assessee, on
the other hand, submitted that the CIT(A) has recorded a clear finding that
during the course of reassessment proceedings under Section 143(3) of the
Act of 1961, the Assessing Officer had examined each aspect, including the
issues relating to the Oil and Gas Exploration expenses and the Preliminary
expenses and had issued a questionnaire in this regard and being satisfied,
did not made any addition.
8. He argued that it is wrong to contend that specific question was not
raised. He reiterated that the initiation of reassessment proceedings was
nothing but a mere change of opinion and fell foul to catena of decisions of
this Court and Hon’ble the Supreme Court.
9. Learned counsel placed for perusal of the Court, reasons for
reassessment recorded by the Assessing Officer on 23.03.2012 and
submitted that a simple look at the reasons shows that the same is a classic
case of change of opinion.
10. Heard learned counsel for the parties.
11. A copy of the reasons so produced by Mr. Nischay Kantoor, learned
Counsel for the respondent, is taken on record. The same is reproduced here
in-extenso for the sake of ready reference:
“The original return declaring an income of Rs. 3794,55,74,739/- was
filed on 30.10.2007. The revised return was filed on 31.10.2008
showing the total income of Rs. 2904,74,27,013/-. Assessment u/s
143(3) of the IT Act was made on 27.02.2009 at an income of Rs.
7786,34,59,000/-.
2. The scrutiny of the assessment record revealed following:-
(a) The assessee had claimed and allowed Rs. 7,70,00,000/- on
account of Oil and Gas exploration expenses. As this gave an
enduring benefit to the assessee, therefore, it should have been
capitalized and added back to the income of the assessee. This
mistake resulted in under assessment of income of Rs.
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Signing Date:08.09.2026
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7,70,00,000/- involving short levy of tax of Rs. 3,18,79,386/-.
(b) The assessee had debited preliminary expenses of Rs.
9,89,12,000/- under the head survey and investigation expenses
written off in the profit and loss account. These expenses were
deferred in 5 equal installments and after allowing 1/5th expenses
of Rs. 1,97,82,400/- for the year balance expense of Rs.
7,91,29,600/- should have been disallowed. The mistake resulted
in under assessment of income of Rs. 7,91,29,600/- involving
short levy of tax of Rs. 3,27,61,078/-.
(c) As per Schedule 25 of profit and loss account, Rs.
20,20,00,000/- was shown as prior period income of the assessee,
but the AO had added back Rs. 10,90,00,000/- only (after
adjusting prior period expenses) instead of Rs. 20,50,00,000/-. As
the assessee was following mercantile system of accounting, any
income, which is received or deemed to be received, or which
accrues during the previous year was to be added back to the
income of the assessee. Therefore, prior period income of Rs.
9,30,00,000/- (Rs. 20,20,00,000 Rs. 10,90,00,000) should have
been added back to the income of the assessee. The mistake
resulted in under assessment of income of Rs. 9,30,00,000/-
involving short levy of tax of Rs. 3,85,03,674/-.
3. I therefore, have reasons to believe that on account of failure on the
part of the assessee to disclose truly and fully all material facts
necessary for assessment for the A. Y. 2007-08, an income of Rs.
24,91,29,600/-, has escaped assessment within the meaning of proviso
to Section 147 of the Act.”

12. A simple look at the above-quoted reasons leaves no manner of doubt
that the Assessing Officer had initiated proceedings simply because he did
not agree with the view which his predecessor had taken.
13. On perusal of para 4.2 of the order of the CIT(A), we find that the
CIT(A) has recorded that the assessee had given answer to query nos. 7 & 8
during the course of filing its reply dated 24.02.2009 qua all the three
reasons for which the reassessment proceedings were initiated.
14. Simply because the CIT(A) has not reproduced or recorded the
corresponding question in its order dated 25.09.2014, it does not mean that
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the Assessing Officer had not put any question raised any query in this
regard.
15. We find ourselves unable to accept such contention of the revenue
that no question relating to those issues was asked during scrutiny
assessment. Had no question in this regard been put, the respondent-assessee
had no occasion or requirement of giving or filing such reply before the
Assessing Officer, during the assessment proceedings.
16. In view of the aforesaid and considering that the assessee had
furnished satisfactory reply and the Assessing Officer being satisfied with
the reply, furnished by the assessee during the course of scrutiny assessment,
had chosen not to make any addition, the subsequent incumbent in the
office, in our opinion, was not justified in initiating reassessment
proceedings.
17. According to us, both the Appellate Authorities were fully justified in
annulling the reassessment proceedings. We do not find any error in the
orders passed by the CIT(A) so also by the Tribunal.
18. The appeal is, therefore, rejected.




DINESH MEHTA
(JUDGE)


RAJNEESH KUMAR GUPTA
(JUDGE)

SEPTEMBER 7, 2026/ nk
Signature Not Verified
Digitally Signed
By:NAVEEN KUMAR
Signing Date:08.09.2026
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