The ITO, Ward-5(3), Surat V. Mohd.Juned Dadani, Surat

ITA 4518/AHD/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9129 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-12-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 24-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S WELL AS
• Assessee Lawyers: AGAINST OF LEARNED CO MMISSI
• Keywords: Reason to believe; Reassessment proceedings
• Section: 142(1); 80HHC; 195; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH D DD D BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT, , , , JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI SHRI SHRI SHRI N.S.SAINI N.S.SAINI N.S.SAINI N.S.SAINI, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING : 22-12-2010 DRAFTED ON:23-1 2-2010 ITA NO. 4518 /AHD/ 2007 ASSESSMENT YEAR :2003-04 THE INCOME TAX OFFICER, WARD 5(3), ROOM NO.315, AAYAKAR BHAVAN, MAJURA GATE, SURAT. VS. SHRI MOHMED JUNED DADANI, PROP.OF JAINEE EXPORTS, 10/2424,SILK HOUSE MARKET, CHOWK BAZAR, SURAT. PAN/GIR NO. : ABBPD6503 H (A PPELLANT ) .. ( RESPONDENT ) ITA NO. 246 /AHD/ 2008 ASSESSMENT YEAR :2003-04 SHRI MOHMED JUNED DADANI, PROP.OF JAINEE EXPORTS, 10/2424,SILK HOUSE MARKET, CHOWK BAZAR, SURAT. VS. THE INCOME TAX OFFICER, WARD 5(3), ROOM NO.315, AAYAKAR BHAVAN, MAJURA GATE, SURAT. B Y REVENUE : SHRI U. B. MISHRA, D.R. B Y ASSESSEE : SHRI S.N. DIVATIA. O R D E R O R D E R O R D E R O R D E R PER BENCH :- THESE ARE THE CROSS APPEALS FILED BY THE REVENUE A S WELL AS BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS)-III, SURAT, DATED 22-10-2007. 2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE NOTICE UNDER SECTION 148 WAS ISSUED BY RECORDING THE FOLLOWING R EASONS:- OFFICE OF THE INCOME TAX OFFICER, WARD 5(3), ROOM NO. 606A, AAYAAKAR BHAVAN, MAJURA GATE, SURAT. - 2 - NO.SRT/ITO/WD.5(3)/147/2005-06 DATE: 20-01-2006. TO SHRI MOHMED JUNED DADANI 10/2424 OPP. SILK HOUSE MARKET, CHOWK BAZAR, SURAT . SIR, SUB:- ASSESSMENT PROCEEDINGS UNDER SEC. 147 OF THE ACT FOR ASSESSMENT YEAR 2003-04 REASONS RECORD ED FOR RE-OPENING U/S. 147 OF THE ACT REGARDI NG REF:- YOUR AUTHORISED REPRESENTATIVES LETTER DT. 6-1-2006. ----- PLEASE REFER TO THE ABOVE. 2. AS PER YOUR REQUEST, I AM GIVING HEREWITH THE RE ASONS RECORDED BY THE ASSESSING OFFICER FOR RE-OPENING YOUR CASE UNDER SE C. 147 OF THE ACT FOR ASSESSMENT YEAR 2003-04:- IN THE ABOVE CASE, RETURN DECLARING TOTAL INCOME O F RS.1,82,745/- WAS FILED ON 29-11-2003 AFTER CLAIMING THE DEDUCTI ON OF RS.1,82,746/- U/S. 80HHC. ON VERIFICATION OF THE SAID RETURN, IT IS NOTICED THAT WHILE COMPUTING THE DEDUCTION U/S. 80HHC, THE ASSESSEE HA S CONSIDERED DEPB LICENSE INCOME OF RS.29,85,543/- AND EXCISE DUTY RE FUND OF RS.22,35,799/-. IF THESE TWO EXPORT INCENTIVES ARE EXCLUDED FROM THE INCOME OF THE ASSESSEE, THERE WILL BE A LOSS FROM T HE EXPORT BUSINESS AND CONSEQUENTLY THE ASSESSEE WILL NOT BE ENTITLED TO G ET DEDUCTION U/S. 80HHC OF THE I. T. ACT,1961. 2. IT IS IMPERATIVE THAT DEDUCTION U/S. 80HHC OF THE A CT HAS TO BE COMPUTED WITHIN THE PARAMETERS OF THE PROVISIONS OF SECTION 80AB OF THE I. T. ACT, 1961. IN OTHER WORDS, IF THERE IS INSUFF ICIENT PROFIT FROM THE EXPORT BUSINESS AFTER SETTING OFF THE EXPORT INCENT IVES, THE ASSESSEE WILL NOT BE ELIGIBLE FOR DEDUCTION U/S. 80HHC OF THE I. T. ACT, 1961. THIS FINDS SUPPORT FROM THE DECISION OF THE HONBLE SUPREME CO URT OF INDIA IN THE CASE OF IPCA LABORATORY LTD., 266 ITR 530. THE CBDT , NEW DELHI ALSO VIDE ITS LETTER NO. D.O. NO.275/50/2004-IT (B) DATE D 6-7-2004 ISSUED DIRECTIONS TO REOPEN CASES, WHEREIN DEDUCTION U/S. 80HHC HAS BEEN CLAIMED EVEN IF THERE IS A LOSS FROM THE EXPORT BUS INESS. 3. IN VIEW OF THE ABOVE, I HAVE REASON TO BELIEVE T HAT INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT TO THE EXTENT OF RS.1,82,746/-. ACCORDINGLY, ISSUE NOTICE U/S. 148 O F THE I. T. ACT, 1961. 3. YOUR CASE IS FIXED FOR HEARING ON 27-01-2006 AT 11.00 A.M. YOU ARE, THEREFORE, REQUESTED TO ATTEND THE OFFICE OF THE UN DERSIGNED ON THE ABOVE DATE AND SUBMIT THE REMAINING DETAILS AS PER QUESTIONNAIRE D ATED 25-10-2005. THIS LETTER - 3 - MAY PLEASE BE TREATED AS NOTICE UNDER SEC. 142(1) O F THE ACT FOR NECESSARY COMPLIANCE. YOURS FAITHFULLY, SD/- (NARPAT SINGH) INCOME TAX OFFICER WARD 5(3), SURAT. 3. WE FIND THAT IN THE ORDER PASSED IN PURSUANCE TO THE ABOVE NOTICE, NO DISCUSSION IN THE ASSESSMENT ORDER HAS B EEN MADE IN RESPECT OF ALLOWABILITY OF DEDUCTION UNDER SECTION 80HHC OF THE ACT. WE ALSO FIND THAT THE LEARNED ASSESSING OFFICER HAS ALLOWED THE EXACTLY THE SAME AMOUNT OF `.1,82,746/- AS DEDUCTIO N UNDER SECTION 80HHC WITHOUT ANY DISCUSSION IN THE ASSESSM ENT ORDER FOR WHICH HE EARLIER FELT THAT THE SAME WAS NOT ALLOWAB LE AND FOR ONLY WHICH HE INITIATED REASSESSMENT PROCEEDINGS. IN VIE W OF THE ABOVE FACT WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE RECENT DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CIT VS. JET AIRWAYS (I) LTD., (2010) 195 TAXMAN 117 (BOM.) WHER EIN THE HON'BLE BOMBAY HIGH COURT AFTER CONSIDERING THE DEC ISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. ATLAS CYCLE INDUSTRIES (1989) 180 ITR 319 AND THE DECISIO N OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. SHRI RA M SINGH (2008) 306 ITR 343 (RAJ.) HELD AS UNDER:- IF UPON THE ISSUANCE OF A NOTICE UNDER SECTION 148 (2), THE ASSESSING OFFICER ACCEPTS THE OBJECTIONS OF THE ASS ESSEE AND DOES NOT ASSESS OR REASSESS THE INCOME WHICH WAS TH E BASIS OF THE NOTICE, IT WOULD NOT BE OPEN TO HIM TO ASSES S INCOME UNDER SOME OTHER ISSUE INDEPENDENTLY. 4. WE THUS FIND THAT IN THE INSTANT CASE NO ASSESSM ENT WAS MADE IN RESPECT OF INCOME FOR WHICH THE LEARNED ASS ESSING OFFICER RECORDED REASONS TO BELIEF TO ISSUE NOTICE UNDER SE CTION 148(2) OF THE ACT. MOREOVER, WE FIND THAT NO DISCUSSION ALSO WAS MADE IN THE IMPUGNED ORDER ABOUT THAT INCOME. THUS WE FIND THAT THE INCOME IN RESPECT OF WHICH REASSESSMENT NOTICE WAS ISSUED BY THE LEARNED ASSESSING OFFICER WAS NOT FOUND BY HIM AS INCOME ES CAPED FROM ASSESSMENT. THEREFORE IN VIEW OF THE ABOVE SETTLED POSITION OF LAW - 4 - THE ORDER UNDER APPEAL IS WITHOUT JURISDICTION AND BAD IN LAW. WE THEREFORE, CANCEL THE REASSESSMENT ORDER UNDER APPE AL AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 5. IN VIEW OF OUR ABOVE FINDING THE OTHER GROUNDS O F APPEAL OF THE ASSESSEE IN THE APPEAL AND THE GROUNDS OF APPEA L OF THE REVENUE IN ITS APPEAL HAVE BECOME INFRUCTUOUS AND O NLY ACADEMIC IN NATURE AND REQUIRES NO ADJUDICATION BY US. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 23 RD DAY OF DECEMBER, 2010. SD/- SD/- (MUKUL SHRAWAT ) ( N.S. SAINI ) JUDICIAL MEMBER A CCOUNTANT MEMBER DATED: AHMEDABAD,23 RD DAY OF DECEMBER, 2010 COMPILED AND COMPARED BY: PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD - 5 - DATE INITIALS 1. DRAFT DICTATED ON 23-12-2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 23-12-2010 ----- -------------- 3. DRAFT PROPOSED & PLACED 23-12-2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 23-12-2010 ---------- --------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 23-12-2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 23-12-2010 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 23-12-2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- A.R. 9. DATE OF DISPATCH OF ORDER ---------------- ---- ----------------