Audit Objection as Basis for Reopening

Explanation (1) to section 148 talks of five circumstances in which for the purpose of
section 148 and 148A, would suggest that income chargeable to tax has escaped
assessment. One of the circumstances is with reference to an audit objection to the
effect that the assessment of the assessee for the said assessment year has not
been made in accordance with the provisions of the Act. Therefore if the audit
objection is not for the relevant assessment year or is a case where it cannot be said
to be not in accordance with the provisions of the Act, the same cannot be a basis
for reopening. For example, if the Assessing Officer has followed an order of an
appellate authority while the audit party has a view different from that of the appellate
authority it would not be possible to say that the audit objection is one which brings
out a case of assessment which is framed and which is not in accordance with the
provisions of the Act. Thus in effect one will have to see that the twin conditions (a)
audit objection being for the relevant year and (b) the assessment has been made
and which is not in accordance with the provisions of the Act. On this basis one can
also urge that if no assessment has been framed but a return of income has been
accepted u/s.143(1) no assessment has been made and the said clause in
Explanation (1) to section 148 cannot be invoked.