M/S Doddanavar Brothers (MO), Belgaum V. DCIT, Central Circle-2, Belgaum

ITA 25/PAN/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5227 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 13-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONAL L SONKAVDE
• Assessee Lawyers: P DINESH
• Keywords: Business income; Search and seizure; Question of law; Difference of opinion; Onus to prove
• Section: 143(3); 80HHC; 153A; 260A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 25/PNJ/2013 : (ASST. YEAR : 200 4 - 0 5 ) M/S. DODDANAVAR BROTHERS (MO), DODDANAVAR COMPOUND, NEAR FORT, P.B. ROAD, BELGAUM (APPELLANT) PAN : AABFD2165J VS. DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 2, BELGAUM. (RESPONDENT) APPELLANT BY : P. DINESH, ADV. RESPONDENT BY : SMT. SONAL L. SONKAVDE, DR DATE OF HEARING : 06/08/2013 DATE OF PRONOUNCEMENT : 06 /0 9 /2013 O R D E R PER D.T. GARASIA : 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY CIT(A) - VI, BANGALORE DT. 24.12.2012 FOR A.Y. 2004 - 05 BY RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS CONTRARY TO LAW. 2. THE LEARNED CIT(APPEALS) ERRED IN AFFIRMING THE ORDER OF THE DCIT PASSED UNDER SECTION 154 OF THE INCOME TAX ACT, INSPITE OF THERE BEING NO INFIRMITY WHATSOEVER IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT. 3. THE FIN DING OF THE LEARNED CIT(APPEALS) THAT THE ISSUE OF DEDUCTION UNDER SECTION 80HHC IS NOT A DEBATABLE ONE, CANNOT BE SAID TO BE BASED 2 ITA NO. 25/PNJ/2013 (ASST. YEAR : 2004 - 05) ON ANY MATERIAL ON RECORD. FURTHER, THE SAID FINDING IS IN CONTRAVENTION OF THE PRECEDENTS CITED. THE APPELLANT RELIES ON T HE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. NAMEEL LEATHERS & UPPERS (2005) 195 CTR 284 (MAD) AND CIT VS. SESHASAYEE PAPER & BOARDS LTD. (2006) CTR 269 (MAD). 4. THE LEARNED CIT( APPEALS) ERRED IN NOT RELYING ON THE DECISION OF THE CIT VS. MAGNUM EXPORT P. LTD. (2003) 183 CTR (CAL) 75 AND IN THE CASE OF MURALI EXPORT HOUSE & OTHERS VS. CIT (2000) 159 CTR (CAL) 427 WHICH HELD THAT FILING OF AUDIT REPORT FOR THE PURPOSE OF SECTION 80 HHC OF THE IT ACT IS NOT A MANDATORY PROCEDURE AND SUB - CALUSE (4) THEREOF IS ONLY A DECLARATORY PROVISION. 5. IT IS A SETTLED PRINCIPLE OF LAW BY REASON OR CATENA OR DECISION OF THE HON'BLE APEX COURT THAT WHERE THE LAW PROVIDES A PARTICULAR THING TO BE DON E IN A PARTICULAR MANNER, IT SHALL BE DONE IN THAT MANNER ALONE OR ELSE IT SHALL NOT BE DONE. THE INCREASED UNDISCLOSED INCOME ON ACCOUNT OF ADDITIONAL STOCK HAS RESULTED IN INCREASED CLOSING STOCK AS ON 31.03.2004 AND IN TURN RESULTED INTO INCREASE IN BO OK PROFITS. THEREFORE, THE APPELLANT CLAIMED DEDUCTION UNDER SECTION 80HHC OF RS.68,22,612/ - BY CONSIDERING THE REVISED PROFITS OF BUSINESS. THE APPELLANT RELIES ON THE DECISION IN THE CASE OF CIT VS. BAWA SKIN COMPANY (2007) 294 ITR 537 (P&H) IN THIS BE HALF AND THE SAME IS ON ALL FOURS TO THE FACTS OF THE CASE. 6. THE LEARNED CIT(APPEALS) ERRED IN BRUSHING ASIDE THE CASE OF THE APPELLANT MERELY RELYING ON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SARLA HANDICRAFTS (P) LTD. VS. ADDL. CI T (2008) 296 ITR 94 IN WHICH THE FACTS ARE PURELY DISTINGUISHABLE. 7. THE LEARNED CIT(APPEALS) OUGHT TO HAVE APPRECIATED THAT THERE WAS NO APPARENT MISTAKE IN THE ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT AND THE QUANTUM OF DEDUC TION UNDER SECTION 80HHC OF THE ACT WAS A DEBATABLE ISSUE, THE PROVISIONS OF SECTION 154 OF THE ACT WERE INAPPLICABLE AS HELD BY THE HON'BLE APEX COURT IN THE CASE OF T.S. BALARAM, ITO, COMPANY CIRCLE IV, BOMBAY VS. VOLKART BROTHERS AND OTHERS, (1971) 82 I TR 50 (SC) AND SEVERAL LATER CASES AND ACCORDINGLY SHE OUGHT TO HAVE CANCELLED THE ORDER IN TOTO. 2. ALL THE GROUNDS ARE INTERCONNECTED. HENCE, DISPOSED OFF BY THIS COMMON ORDER. 3 ITA NO. 25/PNJ/2013 (ASST. YEAR : 2004 - 05) 3. THE ASSESSEE IS ENGAGED IN MINING ACTIVITIES. THE ORIGINAL RETURN OF I NCOME U/S 139(1) WAS FILED ON 31.10.2004 DECLARING TOTAL INCOME OF RS.1,61,87,460/ - AFTER CLAIMING DEDUCTION OF RS.35,23,973/ - U/S 80HHC OF THE INCOME TAX ACT AS CERTIFIED BY A CHARTERED ACCOUNTANT IN FORM 10CCAC. SUBSEQUENTLY, A SEARCH WAS CONDUCTED ON 2 6.7.2006 IN THE CASE OF DODDANAVAR GROUP OF CASES AND PROCEEDINGS U/S 153A WAS INITIATED. IN RESPONSE TO THE NOTICE U/S 153A, THE ASSESSEE FIRM HAS FILED RETURN OF INCOME ON 11.1.2007 DECLARING TOTAL INCOME OF RS.3,13,40,290/ - AND CLAIMING DEDUCTION U/S 8 0HHC AT RS.68,22,612/ - WITHOUT ANY BASIS. THE ASSESSMENT WAS COMPLETED U/S 143 R/W SEC. 153A OF THE INCOME TAX ACT ON 29.12.2008 ASSESSING THE TOTAL INCOME AT RS.3,18,76,606/ - . IN MAKING THE ASSESSMENT U/S 153A AND ALLOWING RS.69,39,365/ - , A SUM OF RS.34 ,15,392/ - WAS ALLOWED IN EXCESS U/S 80HHC OVER THE ORIGINAL CLAIM OF DEDUCTION U/S 80HHC OF RS.35,23,973/ - . THEREFORE, AN ORDER U/S 154 OF THE INCOME TAX ACT WAS PASSED ON 14.2.2012 AND INCOME WAS REVISED AT RS.3,52,91,998/ - WITHDRAWING THE EXCESS CLAIM U /S 80HHC ALLOWED TO THE ASSESSEE. THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS DISMISSED THE APPEAL. 4. THE LD. AR SUBMITTED THAT THE AO HAS PASSED THE ORDER U/S 143 R/W SEC. 153 OF THE ACT. IN THE ORIGINAL ASSESSMENT ORDER WHICH WAS PASSED ON 29.12.2008 ON TOTAL INCOME OF RS.3,18,76,606/ - WHILE CONCLUDING THE ASSESSMENT, THE DEDUCTION CLAIMED U/S 80HHC OF RS.3 8 ,23,973/ - IN THE ORIGINAL RETURN WHICH WAS SUPPORTED BY CERTIFICATE U/S 10CCAC ENCLOSED TO THE AUDIT REPORT WAS ENHANCED TO RS.69,39,365/ - . THIS WORKING WAS DONE BY THE AO ON HIS OWN IN VIEW OF FULL CONSIDERATION OF DECLARATION U/S 132(4). AT THE TIME OF FILING THE RETURN OF INCOME IN RESPONSE TO NOTICE U/S 153A, THE ASSESSEE NEITHER ENCLOSED ANY CERTIFICATE NOR GIVEN ANY WORKING IN SUPPORT OF CLA IM OF DEDUCTION U/S 80HHC AT RS.68,22,612/ - . THE DEDUCTION U/S 80HHC IS AVAILABLE ONLY ON FULFILMENT OF CERTAIN CONDITIONS SPECIFIED THEREIN AND THERE CANNOT BE ANY 4 ITA NO. 25/PNJ/2013 (ASST. YEAR : 2004 - 05) PRESUMPTION THAT A SUM OF RS. 1.84 CRORE TOWARDS UNDISCLOSED CLOSING STOCK FOUND AT THE TI ME OF SEARCH REPRESENTS THE INCOME OF EXPORTS. ONCE THAT IS NOT SO, THE ASSESSEE CANNOT BE HELD TO BE ENTITLED TO ADD THE INCOME DECLARED OR DEDUCTED ON ACCOUNT OF SEARCH AND SEIZURE TO THE INCOME FROM BUSINESS FOR THE PURPOSE OF CALCULATING THE DEDUCTION U/S 80HHC. RELYING ON THE JUDGEMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SARLA HANDICRAFTS (P) LTD. VS. ADDL. CIT, 296 ITR 94 THE AO PASSED THE ORDER U/S 154A. DURING THE COURSE OF HEARING THE LD. AR BROUGHT OUR NOTICE THE ORDER OF HON'BLE RAJASTHAN HIGH COURT DT. 29.1.2013 IN THE CASE OF CIT VS. M/S. HASWANI ARTS, 352 ITR 579 WHEREIN THE HON'BLE RAJASTHAN HIGH COURT HAS HELD THAT ANY EXCESS STOCK FOUND DURING THE COURSE OF SURVEY AND SURRENDERED AS BUSINESS INCOME OF THE ASSESSEE DU RING THE ASSESSMENT YEAR, THE SAME BEING PROFIT OF BUSINESS FOR THE RELEVANT ASSESSMENT YEAR WERE ELIGIBLE FOR DEDUCTION U/S 80HHC TO THE EXTENT PRESCRIBED UNDER SUB - SECTION (1B) OF SEC. 80HHC OF THE SAID ACT. THE LD. AR SUBMITTED THAT AS PER THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT, THIS DEDUCTION U/S 80HHC IS A DEBATABLE ISSUE. THERE ARE TWO CONTRARY DECISIONS OF TWO HIGH COURTS. THEREFORE, IT CANNOT BE REVISED U/S 154 OF THE ACT. DURING THE COURSE OF THE HEARING, THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. MAGNUM EXPORTS (P) LTD., 262 ITR 10 (CAL) WHEREIN IT IS HELD THAT FILING OF AUDIT REPORT AT THE STAGE OF TRIBUNAL IS NOT FATAL TO THE CLAIM OF DEDUCTION U/S 80HHC. IN THE INSTANT CASE THE ASSESSEE HAS FILED THE REVISED AUDIT REPORT BEFORE US. THEREFORE, AO AND CIT(A) ARE NOT JUSTIFIED IN RECTIFYING THE ORDER U/S 154 OF THE ACT. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER OF THE CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT THE ASSESSMENT WAS COMPLETED U/S 143(3) R/W SEC. 153A ON 29.12.2008 ON TOTAL INCOME OF RS. 3,18,76,606/ - . WHILE CONCLUDING THE ASSESSMENT, THE DEDUCTION 5 ITA NO. 25/PNJ/2013 (ASST. YEAR : 2004 - 05) CLAIMED U/S 80HHC OF RS.38,23,973/ - IN THE ORIGINAL RETUR N SUPPORTED BY CERTIFICATE OF CHARTERED ACCOUNTANT UNDER FORM 10CCAC. THERE WAS A SEARCH IN THE CASE OF DODDANAVAR GROUP OF CASES ON 26.7.2006 AND PROCEEDINGS U/S 153A WERE INITIATED. IN RESPONSE TO THE NOTICE ISSUED U/S 153 A , THE ASSESSEE HAS FILED RETU RN OF INCOME ON 11.1.2007 DECLARING TOTAL INCOME OF RS.3,13,40,290/ - AND CLAIMED DEDUCTION U/S 80HHC AT RS.68,22,612/ - WITHOUT ANY CERTIFICATE OF CHARTERED ACCOUNTANT UNDER FORM 10CCAC . THE ASSESSMENT WAS COMPLETED U/S 143(3) R/W SEC. 153 A OF THE INCOME TAX ACT ON 29.12.2008 ASSESSING THE TOTAL INCOME AT RS.3,18,76,606/ - . IN MAKING THE ASSESSMENT U/S 153 A AND ALLOWING RS. 69,39,365/ - , A SUM OF RS.34,15,392/ - WAS ALLOWED IN EXCESS U/S 80HHC. THEREFORE, THE AO HAS PASSED THE ORDER UNDER SEC . 154 OF THE I.T ACT ON 14.2.2012 AND INCOME WAS REVISED AT RS.3,52,91,998/ - BY WITHDRAWING THE EXCESS CLAIM U/S 80HHC ALLOWED TO THE ASSESSEE. THE AO WAS OF THE VIEW THAT THE DEDUCTION U/S 80HHC HAS BEEN ALLOWED OVER AND ABOVE WHAT WAS ORIGINALLY CLAIMED IN THE RETURN OF INCOME WHICH WAS ACCOMPANIED BY CERTIFICATE OF C.A CERTIFYING THE DEDUCTION U/S 80HHC ALLOWABLE TO THE ASSESSEE. THE AO MADE MISTAKE IN RE - WORKING THE ALLOWANCE U/S 80HHC. THE AO WAS OF THE VIEW THAT AS PER THE DECISION OF THE HON'BLE P UNJAB & HARYANA HIGH COURT IN THE CASE OF SARLA HANDICRAFTS (P) LTD. VS. ADDL. CIT REPORTED IN 296 ITR 94 (P&H) THE ASSESSEE IS NOT ENTITLED FOR ADDITIONAL DEDUCTION U/S 80HHC ON ACCOUNT OF ADDITIONAL INCOME OFFERED DURING THE SEARCH ON THE ACCOUNT OF DEFI CIT STOCK. THE AO HAS RELIED ON THE DECISION OF THE HON'BL E PUNJAB & HARYANA HIGH COURT AND RECTIFIED THE ORDER U/S 154 OF THE INCOME TAX ACT WITHDRAWING THE EXCESS DEDUCTION OF RS.34,15,392/ - U/S 80HHC. THE LD. AR DURING THE COURSE OF THE HEARING HAS D RAWN OUR ATTENTION TO THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. HASWANI ARTS, 352 ITR 579 ( SUPRA ) IN WHICH IT IS HELD AS UNDER : 6 ITA NO. 25/PNJ/2013 (ASST. YEAR : 2004 - 05) WE ARE UNABLE TO ACCEPT THIS SUBMISSION. DEDUCTION UNDER SECTION 80HHC OF THE ACT IS AVAILABLE ON LY ON SHOWING FULFILMENT OF THE CONDITIONS SPECIFIED THEREIN AND THERE COULD BE NO PRESUMPTION THAT SURRENDER MADE ON ACCOUNT OF UNEXPLAINED STOCKS REPRESENTED EXPORT INCOME. THE ASSESSEE WAS UNABLE TO GIVE ANY EXPLANATION. THERE COULD BE NO PRESUMPTION THAT THE ADDITIONAL AMOUNT SURRENDERED REPRESENTED INCOME FROM EXPORTS. DEDUCTION UNDER SECTION 80HHC OF THE ACT CAN BE CLAIMED ONLY ON SHOWING FACTS WHICH MAKE THE ASSESSEE ELIGIBLE FOR THE DEDUCTION. THE BURDEN TO PROVE THESE FACTS WAS ON THE ASSESSEE AND NOT ON THE REVENUE. THE JUDGEMENT RELIED UPON IS ON ITS OWN FACTS AND NOT IN RESPECT OF CLAIM FOR DEDUCTION UNDER SECTION 80HHC OF THE ACT. IN ANY CASE, FROM THE FACTS OF THE PRESENT CASE, THE ASSESSEE CANNOT BE HELD TO BE ENTITLED TO CLAIM INCOME S URRENDERED AS A RESULT OF UNEXPLAINED STOCKS AS INCOME FROM EXPORTS. ACCORDINGLY, WE DO NOT FIND THAT ANY SUBSTANTIAL QUESTION OF LAW ARISES IN THE APPEAL. THE APPEAL IS DISMISSED. 12. IN THE PRESENT CASE, THE FINDINGS ON THE CONTRARY ARE IN FAVOUR OF RESPONDENT - ASSESSEE AND NOT IN FAVOUR OF REVENUE; AND IT HAS BEEN CATEGORICALLY HELD BY THE TWO APPELLATE AUTHORITIES BELOW THAT THERE IS NO CASE MADE OUT AGAINST THE RESPONDENT ASSESSEE THAT THERE WAS ANY VIOLATION OF CONDITIONS PRESCRIBED UNDER SECTION 8 0HHC OF THE ACT. THE SAID FINDINGS OF FACTS ARE INDISPUTABLY BINDING ON THIS COURT UNDER SECTION 260A OF THE ACT WHILE DEALING WITH SUBSTANTIAL QUESTION OF LAW ALREADY FRAMED AS QUOTED ABOVE AS ARISING OUT OF THE ORDER OF THE LEARNED TRIBUNAL. THEREFORE, THE FINDINGS OF FACTS AND STAGE OF THE PRESENT APPEAL BEFORE US ARE DIAGONALLY OPPOSITE THE FACTS BEFORE THE PUNJAB AND HARYANA HIGH COURT. 13. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE LEARNED ITAT WAS JUSTIFIED IN ALLOWING THE DEDUCTION UNDER SECTION 80HHC OF THE ACT ON THE EXCESS STOCK VALUATION OF RS.10,49,066/ - FOUND DURING THE COURSE OF SURVEY AND SURRENDERED AS BUSINESS INCOME OF THE ASSESSEE DURING THE ASSESSMENT YEAR; AND THE SAME BEING TREATED AS PROFITS OF BUSINESS FOR THE RELEVANT ASSESSMENT YEAR, WERE ELIGIBLE FOR THE DEDUCTION UNDER SECTION 80HHC TO THE EXTENT PRESCRIBED UNDER SUB - SECTION (1B) OF SECTION 80HHC OF THE SAID ACT. THE APPEAL OF THE REVENUE, THEREFORE, IS LIABLE TO BE DISMISSED AND THE SUBSTANTIAL QUESTION OF LAW, FRAMED ABOVE, IS ACCORDINGLY ANSWERED IN FAVOUR OF THE RESPONDENT - ASSESSEE AND AGAINST THE APPELLANT - REVENUE. 14. IN VIEW OF ABOVE, THE PRESENT APP EAL OF THE REVENUE IS HEREBY DISMISSED. NO COSTS. 7 ITA NO. 25/PNJ/2013 (ASST. YEAR : 2004 - 05) WE FIND THAT AS PER THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80HHC IF THE INCOME IS ENHANCED ON ACCOUNT OF ADDITIONAL INCOME OFFERED DURING THE SEARCH ON ACCOUNT OF DEFICIT STOCK FOUND DURING THE SEARCH. A CONTRARY DECISION IS GIVEN BY THE HON'BLE RAJASTHAN HIGH COURT WHEREIN IT I S HELD THAT IF THE ASSESSEE DECLARES ADDITIONAL STOCK DURING THE COURSE OF SEARCH, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80HHC FOR THIS ADDITIONAL BUSINESS INCOME. DURING THE COURSE OF THE HEARING, THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF TH E HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. MAGNUM EXPORTS (P) LTD., 262 ITR 10 (CAL) WHEREIN IT IS HELD THAT FILING OF AUDIT REPORT AT THE STAGE OF TRIBUNAL IS NOT FATAL TO THE CLAIM OF DEDUCTION U/S 80HHC. IN THE INSTANT CASE THE ASSESSEE HAS F ILED THE REVISED AUDIT REPORT BEFORE US. WE ARE OF THE VIEW THAT THERE IS A DIFFERENCE OF OPINION BETWEEN THE JUDGES OF THE HON'BLE HIGH COURTS ON THE PRINCIPAL QUESTION WHETHER THE ASSESSEE IS ENTITLED FOR A DEDUCTION U/S 80HHC ON ACCOUNT OF ADDITIONAL INCOME OFFERED DURING THE SEARCH ON ACCOUNT OF DEFICIT STOCK FOUND DURING THE SEARCH . WE FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SOUTH INDIAN BANK LTD., 294 ITR 304 (SC) HAS HELD AS UNDER : RECTIFICATION DEBATABLE ISSUE INTEREST FOR BROKEN PERIOD ON PURCHASE OF SECURITIES - CUM - INTEREST - ASSESSEE - BANK PAID INTEREST FOR BROKEN PERIODS IN RESPECT OF GOVERNMENT SECURITIES BOUGHT BY IT FOR WHICH DEDUCTION WAS ALLOWED ORIGINALLY - LATER, AO INVOKED THE PROVISIONS OF S. 154 AND WITHDREW THE DEDUCTION ON THE GROUND THAT SUCH DEDUCTION WAS NOT PERMISSIBLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION - NOT JUSTIFIED - THIS WAS A DEBATABLE QUESTION - THIS IS ALSO EVIDENT FROM THE FACT THAT THERE WAS DIFFERENCE OF OPINION BETWEEN THE JUD GES OF THE HIGH COURT ON THE PRINCIPAL QUESTION - HENCE, THERE WAS NO ERROR ON THE FACE OF THE RECORD WHICH COULD BE RECTIFIED UNDER S.154 CIT VS. SOUTH INDIAN BANK LTD. (1999) 153 CTR (KER) 563 : (2000) 241 ITR 374 (KER) AFFIRMED. 8 ITA NO. 25/PNJ/2013 (ASST. YEAR : 2004 - 05) WE ARE OF THE VIEW THAT THERE IS A DIFFERENCE OF OPINION BETWEEN JUDGES OF HIGH COURT ON THE PRINCIPLE QUESTION THAT WHEN ASSESSEE DECLARED ADDITIONAL STOCK DURING THE COURSE OF SEARCH WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER 80HHC FOR THIS ADD ITIONAL BUSINESS INCOME DECLARED DURING THE COURSE OF SEARCH. AS PER THE DECISION OF PUNJAB AND HARYANA HIGH COURT ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER 80HHC IF THE INCOME IS ENHANCE ON ACCOUNT OF ADDITIONAL INCOME OFFERED DURING THE SEARCH ON ACCO UNT OF DEFICIT STOCK FOUND DURING THE SEARCH. THE HONBLE RAJASTHAN HIGH COURT HAS CONSIDERING THE DECISION OF PUNJAB & HARYANA HIGH COURT HELD THAT EXCESS STOCK FOUND DURING THE COURSE OF SURVEY AND SURRENDER AS BUSINESS INCOME OF THE ASSESSEE DURING THE ASSESSMENT YEAR THE SAME BEING TO BE TREATED AS PROFIT OF BUSINESS FOR THE RELEVANT ASSESSMENT YEAR ARE ELIGIBLE FOR DEDUCTION U/S 80HHC TO THE EXTEND PRESCRIBED UNDER SUB SECTION (1B) OF SECTION 80HHC OF THE ACT. AS PER THE DECISION OF HONBLE SUPREME COU RT WHEN THERE IS DEBATABLE ISSUE ON PRINCIPLE QUESTIONS IT CANNOT BE CONSIDERED AS ERROR ON PHASE OF RECORD WHICH CANNOT BE RECTIFIED U/S 154 OF THE ACT. THEREFORE, WE ARE OF THE VIEW THAT THERE WAS NO ERROR ON THE FACE OF THE RECORD WHICH CAN BE RECTIFIED U/S 154 OF THE ACT. WE RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 06 /0 9 /201 3 . SD/ - (P.K. BANSAL) ACCOUNTANT MEMBER SD/ - (D.T.GARASIA) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 06 /0 9 / 2013 *SSL* 9 ITA NO. 25/PNJ/2013 (ASST. YEAR : 2004 - 05) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA