ACT 25(1), MUMBAI V. C.K. BABARIYA (HUF), MUMBAI

ITA 5391/MUM/2011

• Counselvise Citation: 539119914 RSA 2011
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 19-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARSARTH NAIK
• Assessee Lawyers: SANJIV M SHAH
• Section: 154; 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI RAJENDRA (A.M.) ITA NO. 5391/MUM/2011 ASSESSMENT YEAR : 2002-03 ASST. COMMISSIONER OF INCOME TAX -25(1), C-11, PRATYAKSHAKAR BHAVAN, R. NO. 202, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI. 400 051. VS. C.K. BABARIYA (HUF), PROP. M/S AVADH DIAMONDS, SINLITE SHOPPING CORNER, DAHISAR (EAST), MUMBAI- 68. PAN : AAAHB 0316 G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI PARSARTH NAIK ASSESSEE BY : SHRI SANJIV M. SHAH DATE OF HEARING 05-06-12 DATE OF PRONOUNCEMENT 13-06-12 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER DATED 9-5-2011 PASSED BY THE LD. CIT (A) - 35, MUMB AI FOR THE A.Y. 2002- 03. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE AN HUF IS ENGAGED IN THE BUSINESS OF TRADER, MANUFACTURER AND EXPORT OF DIAMONDS. HE ALSO ENGAGED IN THE BUSINESS OF DIAMONDS CUTTING , POLISHING AND LABOUR JOB. THE RETURN WAS FILED DECLARING TOTAL IN COME OF RS.15,24,116/-. HOWEVER, THE ASSESSMENT AFTER ALLOWING DEDUCTION U/ S 80HHC OF THE ITA NO. 5391/MUM/2011 2 INCOME TAX ACT, 1961 (THE ACT) RS. 13,25,793/- WAS COMPLETED AT AN INCOME OF RS. 17,25,070/- VIDE ORDER DTD. 27-2-200 4 PASSED U/S 143(3) OF THE ACT. SUBSEQUENTLY, THE A.O. ISSUED NOTICE U /S 154 OF THE ACT PROPOSING TO RECTIFY THE MISTAKE THAT THERE WAS WRO NG ALLOWANCE OF DEDUCTION U/S 80HHC OF THE ACT. ACCORDING TO THE A .O. THE ASSESSEE DID NOT SUBMIT ANY REPLY TO THE NOTICE U/S 154. HE, THE REFORE, PASSED THE IMPUGNED ORDER IN WHICH HE HELD THAT THERE WAS NO P ROOF TO SHOW THAT THE ASSESSEE BROUGHT SALE PROCEEDS IN FOREIGN CONVE RTIBLE EXCHANGE INTO INDIA WITHIN THE STIPULATED TIME. HE FURTHER HELD THAT THERE WAS NO DETAIL IN THE RECORDS TO SHOW THAT THE ENTIRE TURNOVER WAS EXPORT TURNOVER ONLY. HE WAS OF THE OPINION THAT NECESSARY INFORMATION FO R CLAIM OF DEDUCTION U/S 80HHC IS NOT AVAILABLE ON RECORD AND, THEREFORE , PASSED THE IMPUGNED ORDER DISALLOWING THE DEDUCTION U/S 80HHC OF THE ACT AND DETERMINED THE REVISED TOTAL INCOME AT RS. 28,49,90 3/- VIDE ORDER DTD. 31-3-2008 PASSED U/S 154 OF THE ACT. 3. ON APPEAL THE LD. CIT(A) OBSERVED THAT THE A.O. DID NOT SUBMIT THE REMAND REPORT FOR A PERIOD OF TWO YEARS. HE FURTH ER OBSERVED THAT IT IS SEEN FROM FORM NO. 10 CCAC SUBMITTED ALONG WITH THE RETURN OF INCOME, THE CHARTERED ACCOUNTANT HAS CERTIFIED THAT THE DED UCTION U/S 80HHC WAS COMPUTED ON THE BASIS OF SALE PROCEEDS RECEIVED BY THE APPELLANT IN CONVERTIBLE FOREIGN EXCHANGE. ACCORDINGLY, HE HELD THAT THE A.O. EXCEEDED HIS JURISDICTION BY PASSING THE IMPUGNED ORDER WHIC H DOES NOT FALL WITHIN THE PURVIEW OF SECTION 154 AND, THEREFORE, HE CANCE LLED THE SAME. ITA NO. 5391/MUM/2011 3 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS OF AP PEAL: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(A) ERRED IN CANCELLING THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 154 OF THE INCOME-TAX ACT DATED 31-03 -2008, IN WHICH THE DEDUCTION OF RS. 13,25,793/- ALLOWED UNDER SECTION 80HHC IN THE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE INCOME TAX ORDER DATED 27- 02-2004 WAS RECTIFIED. (II) THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 5. AT THE TIME OF HEARING THE LD. D.R. SUPPORTS THE OR DER OF THE A.O. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE WHILE RELYING ON THE ORDER OF THE LD. CIT(A) ALSO RELIED ON THE D ECISION OF THE HONBLE MADRAS HIGH COURT IN CIT VS. SESHASAYEE PAPER & BOA RDS LTD. (2006) 283 ITR 200 (MAD) WHEREIN IT HAS BEEN HELD THAT QUA NTUM OF DEDUCTION U/S 80HHC BEING A DEBATABLE ISSUE, CANNOT BE CONSID ERED IN RECTIFICATION U/S 154 OF THE ACT. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THERE IS NO DISPUTE THAT THE ASSESSEE IS AN EXPORTER. THE A.O. IN THE ORIGINAL ASSESSMENT PROCEEDING U/S 143(3) HAS ALLOWED THE DE DUCTION U/S 80HHC OF THE ACT ON THE BASIS OF CHARTERED ACCOUNTANTS R EPORT IN FORM 10 CCAC FILED ALONG WITH THE RETURN OF INCOME. THE A. O. U/S 154 DISALLOWED THE SAME ON THE GROUND THAT THERE WAS NO PROOF TO S HOW THAT THE ASSESSEE BROUGHT SALE PROCEEDS IN FOREIGN CONVERTIB LE EXCHANGE INTO INDIA ITA NO. 5391/MUM/2011 4 WITHIN THE STIPULATED TIME AND THAT THERE WAS NO DE TAIL IN THE RECORDS TO SHOW THAT THE ENTIRE TURNOVER WAS EXPORT TURNOVER O NLY. 8. IN T.S. BALARAM, ITO VS. VOLKART BROTHERS AND OT HERS (1971) 82 ITR 50 (SC) IT HAS BEEN OBSERVED THAT (HEADNOTE): A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE APPARENT FROM THE RECORD. 9. IN SESHASAYEE PAPER & BOARDS LTD. (SUPRA) THEIR LORDSHIPS FOLLOWING THE DECISION IN CIT VS. NAMEEL LEATHERS & UPPERS (2005) 273 ITR 350 (MAD) HELD THAT THE ISSUE WITH REGARD TO TH E DEDUCTION U/S 80HHC CANNOT BE CONSIDERED U/S 154 OF THE ACT AS TH E SAME IS A DEBATABLE ISSUE. 10. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS WE A RE OF THE OPINION THAT THE ISSUE OF DEDUCTION U/S 80HHC CANNOT BE CON SIDERED U/S 154 OF THE ACT AS THE SAME IS A DEBATABLE ISSUE AND NOT A MISTAKE APPARENT FROM THE RECORD AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDINGS OF THE LD. CIT(A) IN HOLDING THAT THE A.O. HAS EXCEEDE D HIS JURISDICTION BY PASSING THE IMPUGNED ORDER WHICH DOES NOT FALL WITH IN THE PURVIEW OF SECTION 154. THE GROUNDS TAKEN BY THE REVENUE ARE T HEREFORE REJECTED. ITA NO. 5391/MUM/2011 5 11. IN THE RESULT, REVENUES APPEAL STANDS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 13.6.2012. SD/- (RAJENDRA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 13 TH JUNE, 2012. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 25, MUMBAI 4. COMMISSIONER OF INCOME TAX (A) 35, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH C, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI