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The AO in (2021) 439ITR719 ( Vedanta case) reopened a completed assessment for the sole reason that there is nothing in the ITR or accompanying financials or details or explanations furnished during original assessment as to withholding of taxes on certain expenditure on foreign currency reported in the financials such as interests, professional and consultancy fees and other payments.

In this case the reopening was initiated within 4 years so the assessee rushed with the arguments citing change of opinion and went on to refer to more than 100 judgements citing various principles under the law.

On the contrary the Court held that facts play a major role in reopening and the taxpayer should not shy away from participation and further explaining that the reasons recorded are incorrect and that it holds materials to establish the contrary.

Importantly the tax audit report certification on section 40(a) is also not considered as any good an indication of whether tax is deducted or not on the reported expenditure despite the fact that the audit clause call upon the tax auditor to report instances where payment are made to non-resident on which tax is not deducted. The Court is instead lead by a view that what is recorded by the tax auditor in his report is company certified amounts without any independent examination

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