IN THE HIGH COURT OF DELHI AT NEW DELHI 
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   ITA 223/2012  
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 COMMISSIONER OF INCOME TAX        ..... Appellant 
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 Through: Mr.Sanjeev Sabharwal, Sr.Standing 
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 Counsel 
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 versus 
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 EXXON MOBIL LUBRICANTS PVT LTD      ..... Respondent 
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 Through: Ms.Shashi M. Kapila with Mr.Pravesh 
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 Sharma, Advs. 
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 CORAM: 
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 HON'BLE MR. JUSTICE SANJIV KHANNA 
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 HON'BLE MR. JUSTICE R.V.EASWAR 
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 O R D E R 
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      13.04.2012 
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 Revenue by this appeal under Section 260 A of the Income Tax Act, 
 1961 (for short ?Act?) impugns order dated 14.07.2011 passed by the 
 Income Tax Appellate Tribunal in the case of Exxon Mobil Lubricants Pvt. 
 Ltd.  The appeal pertains to the assessment year 2003-04. 
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 Two additions were subject matter of appeal before the Tribunal. 
 The first addition was on account of disallowance of Rs. 81,99,692/- 
 towards provision made for advertising and publicity expenses. The said 
 addition was made pursuant to the order passed by the Commissioner of 
 Income Tax under Section 263 of the Act dated 28.03.2008.  The aforesaid 
 order of the Commissioner under Section 263 of the Act dated 28.03.2008 
 was set aside by the Tribunal vide order dated 02.04.2009.  The decision 
 of the Tribunal has been upheld by this Court in ITA No. 248/2010 decided 
 on 05.07.2011. We, therefore, need not examine and go into this aspect. 
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 The Assessing Officer had also invoked Section 147/148 of the Act 
 and had made an addition of Rs. 49,48,000/- on account of disallowance of 
 write-off of inventory, observing that the assessee could not explain why 
 the difference between physical stock and book stock had arisen.  The 
 claim of the respondent-assessee was that the difference in inventory was 
 written off on the basis of the actual physical closing stock in the 
 depots and the closing stock as per assessee?s books of account. 
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 The CIT (Appeals) deleted the said addition on two grounds.  He 
 examined the matter on merits and found that the assessee is a joint 
 venture between the Indian Oil Corporation Limited and Mobil Petroleum 
 Company Incorporated.  The assessee was engaged in the business of 
 importing, blending and marketing branded lubricants.  The company had to 
 set up a lubricant blending facility in Uttar Pradesh.  However, before 
 the blending facility could come up, it was utilizing facilities owned by 
 Indian Oil Corporation Limited. The lubricants were supplied to the 
 depots of both the respondent-assessee and Indian Oil Corporation 
 Limited.  In these circumstances, there was no accurate reconciliation of 
 the stock.  Subsequently, when actual physical stock inventory was 
 undertaken the difference between the stock mentioned in the books and 
 the physical stock was noticed. After referring to the details,  first 
 appellate authority deleted the addition holding that in the present case 
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 there was difference in the inventory recorded in the books and the actual physical stock. The reconciliation resulted in the difference and 
 the assessee was justified in writing off  Rs. 49,48,000/- in view of the 
 difference in the actual stock and the stock recorded in the books.  The 
 CIT (Appeals) has discussed the aforesaid aspect in great detail 
 including the manner in which the stock was transferred for sale to both 
 the assessee and Indian Oil Corporation Limited. 
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 The CIT (Appeals) also observed that the Assessing Officer was not 
 right and should have furnished and given ?reasons to believe? for 
 reopening to the assessee.  As noticed above, in the present case the 
 assessment proceedings were re-opened under Section 147/148 of the Act. 
 The assessee had repeatedly asked for ?reasons to believe? by different 
 letters but Assessing Officer contrary to law did not furnish and give 
 the said reasons.  The CIT (Appeals) made adverse comments about the 
 conduct of the Assessing Officer and held that it is a case of ?mere 
 change of opinion? and this is not permitted and allowed. 
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 Revenue preferred an appeal before the Tribunal on merits as well 
 as on the finding that jurisdictional pre-conditions for reopening of 
 assessment under Section 147/148 of the Act were not satisfied.  Tribunal 
 has dismissed the appeal on both grounds. Tribunal has agreed with the 
 findings on merits given by the CIT (Appeals) with regard to write off of 
 inventory.  On the second ground it agreed that the Assessing Officer had 
 failed to supply reasons  for reopening and has observed that this 
 renders the re-assessment process invalid.  We need not examine the 
 second aspect in view of the findings recorded by the Tribunal on the 
 first ground deleting the addition on merits.  We may however notice that 
 the Revenue in this appeal has not enclosed copy of the reasons to 
 believe.  It also appears that before the Tribunal the reasons to believe 
 were not furnished. 
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 We have referred to and discussed the findings of the CIT (Appeals) 
 and the Tribunal.  The findings are factual.  The Assessing Officer had 
 not observed or stated that the shortage of stock was due to clandestine 
 sale etc. 
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 In view of the aforesaid observations, we do not think any 
 substantial question of law arises for consideration. The appeal is 
 dismissed. 
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 SANJIV KHANNA, J 
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 R.V.EASWAR, J 
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 APRIL   13, 2012/mb 
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 $ 10 
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