M/s Jawand Sons, Ludhiana V. DCIT, Ludhiana

ITA 665/CHANDI/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60948 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-07-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 18-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Depreciation; Opportunity of being heard; Retrospective amendment; Bad and doubtful debts; Assessment record; Reassessment proceedings
• Section: 143(3); 80HHC; 80IB; 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI H.L. KARWA, VP AND SHRI T.R. SOOD, AM ITA NO. 664 & 665/CHD/2010 ASSESSMENT YEAR: 2003-04 & 2004-0 5 M/S JAWAND SONS V D.C.I.T. CIRCLE VI UDAY COMPLEX LUDHIANA DUGRI ROAD LUDHIANA AABFJ 8887 H (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SUDHIR SEHGAL RESPONDENT BY: SHRI N.K. SAINI DATE OF HEARING: 5.07.2012 DATE OF PRONOUNCEMENT: 13.07.2012 ORDER PER T.R. SOOD, A.M IN BOTH THESE APPEALS VARIOUS GROUNDS HAVE BEEN RA ISED BUT AT THE TIME OF HEARING THE LD. COUNSEL OF THE ASSESSEE SUBMITTE D THAT ONLY ISSUE INVOLVED IS THAT THE REVISIONARY ORDER PASSED U/S 263 IS TIME B ARRED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ORIGINALLY ASSESSEE FILED RETURN DECLARING INCOME OF RS. 1,04,02,357/-. IN THE RETU RN THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80HHC AMOUNTING TO RS. 1,76,54,394/- AND U/S 80IB AMOUNTING TO RS. 93,52,251/-. DURING THE ASSESSMENT PROCEEDI NGS U/S 143(3) WHILE EXAMINING THE DEDUCTION U/S 80HHC, IT WAS NOTICED T HAT THE ASSESSEE HAS NOT REDUCED THE GROSS INTEREST FROM BUSINESS PROFITS. AFTER DETAILED EXAMINATION AND FOLLOWING THE DECISION OF HON'BLE PUNJAB & HARY ANA HIGH COURT IN CASE OF RANI PALIWAL V CIT, 268 ITR 220, 90% OF GROSS INTER EST WAS REDUCED FROM BUSINESS PROFITS AND DEDUCTION U/S 80HHC WAS GRANTE D AT RS. 1,73,91,386/-. WHILE EXAMINING THE DEDUCTION U/S 80IB IT WAS FOUND THAT THE ASSESSEE HAS INCLUDED THE EXPORT INCENTIVES WITH DEPB PROFITS FO R THE PURPOSE U/S 80IB. IT WAS HELD FOLLOWING THE DECISION OF HON'BLE MADRAS H IGH COURT IN CASE OF CIT V. JAMEEL LEATHERS AND UPPERS, 246 ITR 97 THAT SUCH IN CENTIVES COULD NOT BE INCLUDED IN BUSINESS PROFITS FOR THE PURPOSE OF DED UCTION U/S 80IB. AFTER 2 REDUCING SUCH INCENTIVES THE DEDUCTION U/S 80IB @ 2 5% WAS HELD TO BE ALLOWABLE AT RS. 27,90,740/-. THE ASSESSEE MADE AN APPEAL CHALLENGING THE DISALLOWANCE OF PART OF DEDUCTION U/S 80IB ON ACCOU NT OF EXPORT INCENTIVES AND THE LD. CIT(A) ALLOWED PART RELIEF. 3. LATER ON THE DEPARTMENT ISSUED A NOTICE U/S 148 BECAUSE THE ASSESSEE HAD BEEN GRANTED EXCESSIVE DEDUCTION U/S 80HHC. TH E REASONS GIVEN FOR THIS WAS THAT THE ASSESSEE WAS DOING DIRECT AS WELL INDI RECT EXPORTS AND THE ASSESSEE WAS WRONGLY GRANTED DEDUCTION OF 90% ON EX PORT INCENTIVES BOTH IN RESPECT OF EXPORT TURNOVER AND SALE TO EXPORT HOUSE . IN THE REASSESSMENT PROCEEDINGS THE DEDUCTION U/S 80HHC WAS WORKED OUT AS UNDER: PROFIT OF THE BUSINESS 1,32,30,262/- 90% OF EXPORT INCENTIVES 2,36,21,435/- A) DEDUCTION AS A DIRECT EXPORTER PROFIT OF THE BUSINESS X ETO + 90% OF EXPORT INCENTIVES X ETO TTO TTO =1,32,30,262 X 2,78,03,618 + 2,36,21, 435 X 2,78,03,618 21,48,55,606 21,48,55,606 = 17,12,076 + 30,56,756 = 47,68,832 B) DEDUCTION AS A SUPPORTING MANUFACTURER = PROFIT OF THE BUSINESS X SALE TO EXPORT HOUSE TOTAL TURNOVER = 1,32,30,262 X 17,49,89,579 21,48,55,606 = 1,07,75,413 TOTAL DEDUCTION = A + B + 47,68,832 + 1,07,75,413 = 1,55,44,245 RESTRICTED TO 50% = 77,72,122 AGAINST THIS ORDER THE ASSESSEE FILED AN APPEAL BEF ORE THE LD. CIT(A) WHO ALLOWED THE APPEAL OF THE ASSESSEE. THE REVENUE FI LED THE APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD. CIT(A) WHICH CAME TO BE DISMISSED VIDE ORDER OF THE TRIBUNAL DATED 24.8.2009. 3 4. LATER ON UPON THE EXAMINATION OF THE ASSESSMENT RECORDS THE LD. COMMISSIONER WAS OF THE OPINION THAT THE ASSESSMENT ORDER PASSED U/S 143(3)/147 WAS ERRONEOUS AND PREJUDICIAL TO THE INT EREST OF THE REVENUE BECAUSE THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80I B AS WELL AS U/S 80HHC OF THE ACT AND THE ASSESSING OFFICER HAS FAILED TO VERIFY AND EXAMINE THE APPLICABILITY OF SECTION 80IB(13) R.W.S. 80IA(9) O F THE ACT. IN VIEW OF THIS FAILURE TO EXAMINE THE APPLICATION OF THIS PROVISION THE AS SESSMENT ORDER WAS CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE. IN RESPONSE TO THE SHOW CAUSE NOTICE IT WAS MAINLY CON TENDED THAT ONLY REASON FOR REOPENING THE ASSESSMENT WAS THAT PROFITS OF BUSINE SS AS ENVISAGED IN CLAUSE (BAA) OF EXPLANATION TO SUB-SEC 4C OF SECTION 80HHC FOR THE PURPOSE OF CALCULATION OF DEDUCTION IN RESPECT OF SALES MADE EXPORT HOUSE AS SUPPORTING MANUFACTURE AND SAME WAS REQUIRED TO BE CALCULATED AFTER REDUCING 90% OF DEPB REALIZATION AND OTHER INCOMES FOR COMPUTING TH E DEDUCTION U/S 80HHC RESULTING IN EXCESS DEDUCTION OF RS. 96,19,262/-. ULTIMATELY IN THE REASSESSMENT PROCEEDINGS THE DEDUCTION U/S 80HHC WA S REDUCED TO RS. 77,72,122/- AGAINST WHICH HE ASSESSEE FILED AN APPE AL BEFORE THE LD. CIT(A)-II, LUDHIANA WHO ALLOWED THE APPEAL AND DEDUCTION U/S 8 0HHC WAS DETERMINED AT RS. 1,43,93,733/-. THIS APPELLATE ORDER WAS CONFIR MED BY THE TRIBUNAL VIDE ORDER DATED 24.8.2009. THUS IT IS CLEAR THAT THE A SSESSING OFFICER FAILED TO VERIFY THE APPLICATION OF SECTION 80IB(13) R.W.S. 80IB(9). AT THE ORIGINALLY STAGE. DURING RE-ASSESSMENT PROCEEDINGS ONLY ISSUE WAS THA T PROFIT OF BUSINESS IN RESPECT OF SALES MADE TO EXPORT HOUSE AND INDIRECT EXPORT WAS WRONGLY CALCULATED WITHOUT REDUCING EXPORT INCENTIVES. IT WAS CONTENDED THAT IN VIEW OF THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF VIPIN KHANNA V CIT, 255 ITR 220, WHEREIN IT WAS HELD THAT WHEN THE ASSESSMENT IS REOPENED ONLY QUA ITEMS OF UNDER ASSESSMENT AND FINALITY OF THE ASSESSMENT PROCEEDINGS WITH REGARD TO OTHER ISSUES REMAIN UNDISTURBED. SI NCE THE DEDUCTION U/S 80IB AND 80HHC WAS ALLOWED BY THE ORIGINAL ASSESSMENT OR DER DATED 20.12.2005, THEREFORE, LIMITATION PRESCRIBED U/S 263(2) WOULD RUN FROM SAID DATE OF SAID 4 ASSESSMENT AND THUS THE ORDER PASSED U/S 263 IS TIM E BARRED. IT WAS FURTHER CONTENDED THAT RE-ASSESSMENT ORDER GOT MERGED WITH THE ORDER OF TRIBUNAL BECAUSE THE TRIBUNAL HAS ALLOWED THE FULL DEDUCTION WHICH WERE DENIED DURING ASSESSMENT PROCEEDINGS AND THEREFORE, SUCH ORDER I S NOT AVAILABLE FOR REVISION. IN ANY CASE ON THE APPLICABILITY OF SEC TION 80IB(13) R.W.S. 80IA(9), TWO VIEWS WERE POSSIBLE AND THEREFORE, ONE POSSIBL E VIEW WHICH WAS TAKEN BY THE ASSESSING OFFICER IS CORRECT. IN THIS REGARD R ELIANCE WAS PLACED ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN SCM CREATI ONS V ACIT, 304 ITR 319. 5 THE LD. COMMISSIONER AFTER EXAMINING THE SUBMISSI ONS OBSERVED THAT THERE COULD NOT BE ANY MERGER OF ASSESSMENT ORDER W ITH THAT OF THE ORDER OF THE TRIBUNAL BECAUSE THE ISSUE REGARDING APPLICABILITY OF SECTION 80IB (13) R.W.S. 801A(9) WAS NOT CONSIDERED IN REASSESSMENT PROCEEDI NGS AT ALL. IN THIS REGARD HE RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF STATE OF MADRAS V. MADURAI MILLS CO. LTD (1967) 19 STC 144: AIR 196 7 S.C 681, HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF SAT PAL SINGH V. AC IT, 274 ITR 172. AS FAR AS THE CONTENTION THAT TWO VIEWS ARE POSSIBLE HE OBSER VED THAT THIS THEORY WILL BE APPLICABLE ONLY WHEN THE ASSESSING OFFICER HAS TAKE N A PARTICULAR VIEW WHEREAS IN CASE BEFORE HIM THE ASSESSING OFFICER HAS FAILED TO EXAMINE THE APPLICABILITY OF SECTION 80IB(13) R.W.S. 801A(9). IN RESPECT OF THE ARGUMENTS REGARDING LIMITATION IT WAS OBSERVED THAT AS THERE WERE ERROR IN BOTH THE ORDERS I.E. THE ASSESSMENT ORDER AS WELL AS REASSESSMENT ORDER THEN THE SAME COULD HAVE BEEN EXAMINED DURING REASSESSMENT PROCEEDINGS. THE OBSERVATIONS IN THIS REGARD ARE AS UNDER:- THE ISSUES NO. 1 AND NO. 2 ARE CONSIDERED TOGETHER . THE QUESTION IS WHETHER WHEN THERE WAS ERROR IN BOTH THE ORDERS, OR IGINAL AND REASSESSMENT THE ASSESSING OFFICER WAS ELIGIBLE AND WITHIN LEGAL JURISDICTION TO CONSIDER THE APPLICABILITY OF 80IB( 13) R.W.S 80IA(9) IN THE REASSESSMENT PROCEEDINGS. EVEN THE HON'BLE PUNJAB & HARYANA HIGH COURT IN VIPPAN KHANNA V. CIT, 255 ITR 220 HAVE HEL D THAT FOR THE SAKE OF CLARIFICATION, WE MAY REPEAT THAT NOTHING O BSERVED BY US IN THIS CAE WOULD DEBAR THE ASSESSING OFFICER TO BRING TO T AX ANY OTHER ITEM OF INCOME WHICH MAY HAVE ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS U/S 147 OF THE ACT. THUS THE ASSESSING OFFICER WAS NOT AT ALL PREVENTED FROM EXA MINING THIS ISSUE IN THE REASSESSMENT PROCEEDINGS EVEN THOUGH IT WAS NOT ONE FOR THE REASONS FOR REOPENING THE ASSESSMENT. THE PROCEEDI NGS U/S 263 OF THE ACT HAS BEEN INITIATED AGAINST THE REASSESSMENT ORD ER AND FAILURE OF THE 5 ASSESSING OFFICER TO EXAMINE THE APPLICABILITY OF S ECTION 80IB(13) R.W.S. 80IA(9). THERE WAS NO CASE OF FINALITY OF THIS ISSUE IN ANY ORDER SINCE THIS ISSUE WAS NOT CONSIDERED AT ALL. THEREFORE, THE C ONTENTION OF THE ASSESSEES REPRESENTATIVE THAT THE IMPUGNED ISSUE H AD ATTAINED FINALITY IN THE EARLIER ORDER IS WITHOUT ANY BASIS AND IS IR RELEVANT. IT IS ALSO SETTLED THAT ONCE THE REASSESSMENT PROCEEDINGS ARE PENDING, THE ENTIRE ASSESSMENT IS OPEN AND IS NOT CONFINED TO SCOPE OF REASONS RECORDED FOR REOPENING THE ASSESSMENT. THE CONTENTION THAT PROCEEDINGS U/S 147 AND LIMITE D SCRUTINY AS PER SECTION 143(2)(I) WHICH WAS APPLICABLE UP TO MA Y 2003 WERE AT PAR AND WERE LEGALITY SAME IS MISCONCEIVED AND WITHOUT ANY LEGAL BASIS. THIS ARGUMENT OF THE ASSESSEES REPRESENTATIVE IS I RRELEVANT. THE ACTION U/S 263 HAS BEEN TAKEN WITH IN TWO YEARS FROM THE E ND OF THE FINANCIAL YEAR IN WHICH THE ORDER WAS PASSED. THUS THE FACTS ON RECORD CLEARLY SHOW THAT THE ASS ESSING OFFICER HAD FAILED TO EXAMINE THE APPLICABILITY OF SECTION 80IB(13) R.W.S. 80IA(9) IN THIS CASE WHICH H HE SHOULD HAVE DONE. THE FAIL URE OF THE ASSESSING OFFICER TO DO SO MAKES THE IMPUGNED ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HENCE THE ORDER OF THE ASSESSING OFFICER PASSED U/ S 143(3)/147 DATED FOR ASSESSMENT YEAR 2003-04 IS SET ASIDE ON T HE POINT AS DISCUSSED ABOVE AND THE ASSESSING OFFICER IS DIRECT ED TO PASS ORDER AFRESH ON MERITS AFTER GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT IN ORIGINAL ASSESSMENT DEDUCTION U/S 80HHC AS WELL AS 80IB WAS ALLOWED AFTER SOME MODIFICATION AND ISSUE REGARDING APPLICABILITY OF S ECTION 80IB(13) R.W.S. 801A(9) WAS NEVER CONSIDERED AT ALL. THE ASSESSMENT WAS REO PENED ONLY TO EXAMINE THE ISSUE REGARDING THE ALLOWLIABILITY OF DEDUCTION U/S 80HHC WITH REFERENCE TO INDIRECT EXPORT WHEREIN ACCORDING TO THE REVENUE T HE PROFIT HAD TO BE REDUCED BY INCENTIVE BEFORE ALLOWING THE DEDUCTION AGAINST INDIRECT EXPORTS, THEREFORE, IT IS CLEAR THAT THE ASSESSMENT WAS NEVER REOPENED FOR CONSIDERING APPLICABILITY OF SECTION 80IB(13) R.W.S. 801A(9). THEREFORE, THE LI MITATION WOULD RUN FROM ORIGINAL ORDER U/S 263(2) WHICH HAS BEEN PASSED ON 20.12.2005. IN THIS REGARD HE STRONGLY RELIED ON THE DECISION OF HON'BLE SUPRE ME COURT IN CASE OF CIT V. ALAGENDRAN FINANCE LTD (2007) 293 ITR 1. HE ALSO S UBMITTED THAT IN ANY CASE TWO VIEWS WERE POSSIBLE REGARDING APPLICATION OF SE CTION 801B(13) R.W.S. 80!A(9). IN THIS REGARD HE RELIED ON THE DECISION OF SCM CREATIONS V, ACIT (SUPRA). 6 7 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SU BMITTED THAT REASSESSMENT ORDER IS DEFINITELY ERRONEOUS AS WELL PREJUDICIAL TO THE INTEREST OF THE REVENUE BECAUSE THE ISSUE REGARDING APPLICABILI TY OF SECTION 80IB(13) R.W.S. 80IA(9) WAS NEVER EXAMINED BY THE ASSESSING OFFICER . SHE FURTHER SUBMITTED THAT ONCE THE ASSESSMENT WAS REOPENED THE ASSESSING OFFICER WAS DUTY BOUND TO EXAMINE ALL THE ISSUES AND IN THIS REGARD SHE RE LIED ON THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT V. SUN ENGINEE RING WORKS P. LTD., 198 ITR 297. 8 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. TH E FACTS OF THIS CASE ARE ALMOST IDENTICAL WITH THAT OF CIT V. ALAGENDRAN FIN ANCE LTD (SUPRA). IN THAT CASE THE RETURNS FOR ASSESSMENT YEARS 1994-95, 1995 -96 AND 1996-97 WERE FILED ON 23.11.94. 27.11.94, 26.11.97. THESE ASSES SMENTS WERE COMPLETED AND IN THE SAID ORDERS THE ASSESSEESS CLAIM REGARDING LEASE EQUALIZATION FUND WAS ACCEPTED. LATER ON THE ASSESSMENTS WERE REOPEN DED BY THE ASSESSING OFFICER ON MARCH 04, 2004 FOR EXAMINING (I) THE EX PENSES CLAIMED FOR SHARE ISSUE (II) BAD AND DOUBTFUL DEBTS (III) EXCESS DEPR ECIATION ON GAS CYLINDERS AND GOODS CONTAINERS. LATER ON THE COMMISSIONER INVOKE D JURISDICTION U/S 263 AND PASSED REVISIONARY ORDER DATED MARCH, 29, 2004 VIDE WHICH IT WAS HELD AS EXTRACTED BY HON'BLE SUPREME COURT.AT PAGE 4. IN SHORT, FROM THE EXAMPLE GIVEN IT IS THE DEPRECI ATION ON THE LEASED ASSETS THAT IS CLAIMED AS BOOK DEPRECIATION AND DIS ALLOWED IN THE COMPUTATION OF INCOME, THE ASSESSEE SOUGHT TO CLAIM IN THE FORM OF LEASE EQUALIZATION FROM THE LEASE RENTALS BY VIRTUE OF T HE GUIDELINES NOTE OF THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA. SINCE THE ASSESSEE HAS NOT GIVEN THE COMPLETE, THE METHOD ADOPTED BY THE ASSESSEE IN ARRIVING AT THE CORRECT PROFIT FOR THE CORRESPONDING YEAR CANNOT BE CHECKED. I CLEARLY FEEL THAT THE ORDERS BY THE ASSESSING OFFICER ARE PREJUDICIAL TO THE INTERESTS OF THE REVENUE AS THE LEASE RENTALS HAD NOT BEEN PROPERLY BROUGHT TO TAX. HENCE, ALL THE T HREE ASSESSMENTS ARE REOPENED U/S 263 AND THE ASSESSING OFFICER IS DIREC TED TO CHECK AND ASSESS THE LEASE RENTALS FROM LEASE EQUALIZATION FU ND, IF ANY, AND TO BRING TO TAX THE SAME FOR ALL THE ABOVE THREE YEARS. 9 AGGRIEVED BY THIS ORDER PASSED THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL OBSERVED THAT ACCEPTANCE OF CLAIM OF LEASE EQUALIZATION OF FUND IS AN ERROR IF AT ALL THEN T HE SAME WAS COMMITTED BY THE 7 ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT AND AC CORDINGLY LIMITATION WOULD START FROM ORIGINAL ASSESSMENT. THE REVENUE CHALLE NGED THE ORDER OF THE TRIBUNAL BEFORE THE HIGH COURT WHICH CONFIRMED THE ORDER OF THE TRIBUNAL. 10. THE MATTER TRAVELED TO HON'BLE SUPREME COURT WH ERE IT WAS URGED THAT IN VIEW OF THE EXPLANATION TO SUB-SECTION (3) OF SECTI ON 263 AND ALSO IN VIEW OF DOCTRINE OF MERGER, THE TRIBUNAL WAS WRONG IN PASSI NG THE IMPUGNED ORDER. ON BEHALF OF THE ASSESSEE IT WAS MAINLY CONTENDED THAT THE ISSUE REGARDING LEASE EQUALIZATION OF FUNDS WAS NOT SUBJECT MATTER OF TH E ASSESSMENT PROCEEDINGS AND THEREFORE, DOCTRINE OF MERGER WILL HAVE NO APP LICATION. THE HON'BLE APEX COURT DISCUSSED THE ISSUE IN DETAIL. REFERENCE WAS MADE TO THE DECISION OF HON'BLE SUPREME COURT IN CASE OF CIT V. SUN ENGINEE RING WORKS P LTD, HIND WIRE INDUSTRIES LTD V , CIT, 212 ITR 639, V. JAGANMOHAN RAO AND OTHERS V. CIT, 75 ITR 373. AFTER THE DISCUSSION IT HAS BEEN OBSERVED AS UNDER (OBSERVED IN CASE OF CIT V. SUN ENGINEERING WORKS P. LTD (SUP RA) AT PLACITUM 19 TO 22 OBSERVED AS UNDER: 19 IT WAS FURTHERMORE HELD (PAGE 320): AS A RESULT OF THE AFORESAID DISCUSSION, WE FIND T HAT, IN PROCEEDING U/S 147 OF THE ACT, THE ITO MAY BRING TO CHARGE ITE MS OF INCOME WHICH HAD ESCAPED ASSESSMENT OTHER THAN OR IN ADDIT ION TO THAT ITEM OR ITEMS WHICH HAVE LED TO THE ISSUANCE OF THE NOTICE U/S 148 AND WHERE REASSESSMENT IS MADE U/S 147 IN RESPECT O F INCOME WHICH HAS ESCAPED TAX, THE ITOS JURISDICTION IS CO NFINED TO ONLY SUCH INCOME WHICH HAS ESCAPED TAX OR HAS BEEN UNDER -ASSESSED AND DOES NOT EXTEND TO REVISING, REOPENING OR RECON SIDERING THE WHOLE ASSESSMENT OR PERMITTING THE ASSESSEE TO REAG ITATE QUESTIONS WHICH HAD BEEN DECIDED IN THE ORIGINAL AS SESSMENT PROCEEDINGS. IT IS ONLY THE UNDER-ASSESSMENT WHICH IS SET ASIDE AND NOT THE ENTIRE ASSESSMENT WHEN REASSESSMENT PRO CEEDINGS ARE INITIATED. THE ITO CANNOT MAKE AN ORDER OF REA SSESSMENT INCONSISTENT WITH THE ORIGINAL ORDER OF ASSESSMENT IN RESPECT OF MATTERS WHICH ARE NOT THE SUBJECT MATTER OF PROCEED INGS U/S 147 20 WE MAY AT THIS JUNCTURE ALSO TAKE NOTE OF THE FA CT THAT EVEN THE TRIBUNAL FOUND THAT ALL THE SUBSEQUENT EVENTS WERE IN RESPECT OF MATTERS OTHER THAN THE ALLOWANCE OF LEASE EQUALIZATION FUN D. THE SAID FINDING OF FACT IS BINDING ON US. THE DOCTRINE OF MERGER, THE REFORE, IN THE FACT SITUATION OBTAINING HEREIN CANNOT BE SAID TO HAVE A NY APPLICATION WHATSOEVER. IT IS NOT A CASE WHERE THE SUBJECT MAT TER OF REASSESSMENT AND THE SUBJECT MATTER OF ASSESSMENT WERE THE SAME. THEY WERE NOT. 21 IT MAY BE OF SOME INTEREST TO NOTICE E THAT A SI MILAR CONTENTION RAISED AT THE INSTANCE OF AN ASSESSEE WAS REJECTED BY A THREE JUDGE BENCH OF THIS COURT IN CIT V. SHRI ARBUDA MILLS LTD (1998) 231 ITR 50. 8 THIS COURT TOOK NOTE OF THE AMENDMENT MADE IN SECTI ON 263 OF THE ACT BY THE FINANCE ACT., 1989 WITH RETROSPECTIVE EFFECT FR OM JUNE 1, 1988, INSERTING EXPLANATION (C) TO SUB-SECTION (1) OF SEC TION 263 OF THE ACT STATING (PAGE 52). THE CONSEQUENCE OF THE SAID AMENDMENT MADE WITH RETROSPECTIVE EFFECT IS THAT THE POWERS U/S 263 OF THE COMMISSIONER SHALL EXTEND AND SHALL BE DEEMED ALWAY S TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERE D AND DECIDED IN AN APPEAL. ACCORDINGLY, EVEN IN RESPECT OF THE AFORESAID THREE ITEMS, THE POWERS OF THE COMMISSION ER U/S 263 SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXT ENDED TO THEM BECAUSE THE SAME HAD NOT BEEN CONSIDERED AND D ECIDED IN THE APPEAL FIELD BY THE ASSESSEE. THIS IS SUFFICIE NT TO ANSWER THE QUESTION WHICH HAS BEEN REFERRED. 22. WE, THEREFORE, ARE CLEARLY OF THE OPINION THAT IN A CASE OF THIS NATURE, THE DOCTRINE OF MERGER WILL HAVE NO APPLICA TION. THUS IT IS CLEAR FROM ABOVE THAT THE DOCTRINE OF ME RGER WOULD NOT BE APPLICABLE BECAUSE THE REASSESSMENT WAS CONFINED ONLY TO THE L EASE EQUALIZATION OF FUNDS. SIMILARLY IN CASE BEFORE US, REASSESSMENT W AS CONFINED ONLY TO THE ISSUE OF DEDUCTION U/S 80HHC WITH AND THE ASSESSMEN T WAS NOT REOPENED FOR THE PURPOSE OF EXAMINING THE APPLICATION OF SECTION 80IB(13) R.W.S. 80IA(9). IT IS CLEAR THAT MISTAKE AT ALL IS THERE REGARDING NON EXAMINATION OF APPLICATION OF SECTION 80IB(13) R.W.S. 80IA(9) WAS COMMITTED IN TH E ORIGINAL ASSESSMENT ORDER AND ACCORDINGLY LIMITATION WOULD START FROM SUCH A SSESSMENT ORDER WHICH WAS PASSED ON 20.12.2005. IN THIS SUB-SECTION LIMITATI ON PROVIDED FOR PASSING THE REVISIONARY ORDER IS TWO YEAR FROM THE END OF FINAN CIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED. SINCE THE ASSESSM ENT ORDER HAS BEEN PASSED ON 20.12.2005 AND THEREFORE, THE LIMITATION WOULD RUN FROM 1.4.2006 AND EXPIRE ON 31.3.2008 WHEREAS THE REVISION ORDER HAS BEEN PASSED ON 23.3.2010 WHICH IS CLEARLY BARRED BY LIMITATION. A CCORDINGLY WE QUASH THE ORDER PASSED BY THE COMMISSIONER. 12 IN THE RESULT, APPEALS FILED BY THE ASSESSEE FOR BOTH THE YEARS ARE ALLOWED. ORDER PRONOUNCED ON 13 .07.2012 SD/- SD/- (H.L. KARWA) (T.R. SOOD) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 13.07.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 9