M/s. Asian Exim International, Jalandhar V. The Dy.Commissioner of Income-tax, Jalandhar

ITA 674/ASR/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9654 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-05-2016
• Assessment Year: 2001-2002
• Appeal Filed On: 14-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA
• Assessee Lawyers: SSH SUDHIR SEHGAL
• Keywords: Business income; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 80HHC; 80IB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NOS. 673 & 674(ASR)/2013 ASSESSMENT YEAR:2001-02 PAN: M/S. ASIAN EXIM INTERNATIONAL VS. THE ASSTT. COMM R. OF INCOME-TAX, JALANDHAR. RANGE-II, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: S/SH. SUDHIR SEHGAL & ANIL MIGLANI, A DV. RESPONDENT BY: SH.A.N. MISHRA, DR DATE OF HEARING: 12/05/2016 DATE OF PRONOUNCEMENT: 01/08/2016 ORDER PER A.D. JAIN, JM: THESE TWO APPEALS FILED BY THE ASSESSEE FOR THE AS SESSMENT YEAR 2001-02, ARE DIRECTED AGAINST TWO DIFFERENT ORDERS OF LD. CIT(A), JALANDHAR, EACH DATED 10.09.2013. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITA NO.673(ASR)/2013: 1. THAT THE ORDER OF THE LD. CIT(A) IS AGAINST LAW & FACTS OF THE CASE. 2. THAT THE LD. CIT(A) GRAVELY ERRED IN UPHOLDING T HE ORDER OF THE ASSESSING OFFICER U/S 154 READ WITH SECTION 260 OF THE INCOME TAX, DATED 14.09.2012 OF THE AO FOR THE ASSE SSMENT YEAR 2001-02. 2. THE APPEAL IN ITA NO.673(ASR)/2013 HAS BEEN FIL ED AGAINST THE ORDER OF THE CIT(A) UNDER SECTION 154 AND THE APPEA L IN ITA NO.674(ASR)/2013 HAS BEEN FILED AGAINST THE ORIGINA L ASSESSMENT ORDER. ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 2 2. THE APPLICATION FILED BY THE DEPARTMENT FOR ADJO URNMENT STANDS WITHDRAWN. 4. THE FACTS AS AVAILABLE FROM THE RECORD ARE THAT THE ASSESSEE FIRM IS DERIVING ITS INCOME FROM THE BUSINESS OF MANUFACTUR ING AND SALE OF TYRES AND TUBES. THE ASSESSEE FIRM FILED ITS RETURN OF INCOME ON 31.10.2001, WHEREIN, IT CLAIMED DEDUCTION UNDER SEC TIONS 80IB & 80HHC AT RS. 38,86,364/- AND RS. 1,23,97,951/- RESP ECTIVELY. THE AO DISALLOWED THE DEDUCTION UNDER SECTION 80IB CONS IDERING IT TO BE A TRADING CONCERN AND ALSO DISALLOWED PART OF 80 HHC AND RESTRICTED IT TO RS. 29,93,435/- AND ALSO DISALLOWE D SOME OTHER EXPENSES. ON APPEAL, CIT(A) VIDE HIS ORDER DATED 02 .09.2004 IN PARA-10, ALLOWED 80IB AND PARTIAL RELIEF OUT OF OTH ER DISALLOWANCES AND GAVE SPECIFIC DIRECTION FOR ALLOWING DEDUCTION COMPUTATION OF 80HHC WITHOUT REDUCING DEDUCTION CLAIMED U/S 80IB. WHILE GIVING APPEAL EFFECT TO THE ORDER OF THE LD. CIT (A), THE AO, AFTER APPLYING HIS MIND ALLOWED FULL DEDUCTION U/S 80 IB AND 80HHC AS CLAIMED BY THE ASSESSEE IN HIS RETURN. 4.1 THEREAFTER, THE AO VIDE HIS ORDER DATED 27.10. 2004 PASSED U/S 154, RECTIFIED THE APPEAL EFFECT ORDER AND AFTE R APPLYING HIS MIND, RECALCULATED THE DEDUCTION U/S 80IB AT RS. 39 ,03,446/- BEING 25% OF THE ENTIRE PROFITS INCLUDING THE DUTY DRAWBACK, EXPORT INCENTIVES AND INTEREST CONSIDERING THEM AS BUSINES S PROFITS AND ALSO CALCULATED THE DEDUCTION U/S 8OHHC AT RS.93,41 ,631/- AND ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 3 REDUCED. ON A RECTIFICATION FILED BY THE ASSESSEE REGARDING DEDUCTION UNDER SECTION 80HHC, THE AO AGAIN APPLIED HIS MIND AND PASSED A FRESH ORDER OF GIVING APPEAL EFFECT TO THE ORDER OF THE LD. CIT(A) WHEREIN HE AGAIN ALLOWED THE DEDUCTION U /S 80IB AT RS.39,03,446/- BEING 25% OF THE ENTIRE PROFITS INCL UDING THE DUTY DRAWBACK, EXPORT INCENTIVES AND INTEREST CONSIDERIN G THEM AS BUSINESS PROFITS. 4.2. AN APPEAL WAS FILED BEFORE CIT(A) BY THE ASSES SEE AGAINST THE ORDER OF AO, DATED 27.10.2004 U/S 154/155 AND THE L D CIT(A) IN HIS ORDER, DATED 23.02.2005 ALLOWED THE APPEAL OF T HE ASSESSEE & DIRECTED THE RECALCULATION OF DEDUCTION UNDER SECTI ON 80HHC. THE AO AGAIN GAVE EFFECT TO THE LATEST ORDER OF LD. CIT (A) AND AFTER APPLYING HIS MIND RECALCULATED THE DEDUCTION UNDER SECTION 80HHC AT RS. 1,23,97,951/- AND AGAIN ALLOWED THE DEDUCTIO N U/S 80IB AT RS. 39,03,446/- BEING 25% OF THE ENTIRE PROFITS INC LUDING THE DUTY DRAWBACK, EXPORT INCENTIVES AND INTEREST CONSIDERIN G THEM AS BUSINESS PROFITS. 4.3 THE DEPARTMENT FILED APPEAL AGAINST ORDER OF CI T(A) AND THE ITAT VIDE THEIR ORDER DATED 20.04.2007, UPHELD THE ORDER OF LD. CIT(A) THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S 8 0IB BEING A MANUFACTURING CONCERN AND ALSO HELD THAT BOTH THE D EDUCTIONS U/S 80IB AND 80HHC ARE ALLOWED INDEPENDENTLY. (COPY OF ITAT ORDER DATED 20.04.2007 PLACED ON RECORD). THE AO GAVE EFF ECT TO THE ORDER ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 4 OF ITAT AND AFTER APPLYING HIS MIND RECALCULATED TH E DEDUCTION UNDER SECTION 80HHC AND AGAIN ALLOWED THE DEDUCTION U/S 80IB AT 25% OF THE ENTIRE PROFITS INCLUDING THE DUTY DRAWBA CK, EXPORT INCENTIVES AND INTEREST CONSIDERING THEM AS BUSINES S PROFITS. THE DEPARTMENT ACCEPTED THE DECISION OF THE ITAT WITH R EGARD TO ALLOWABILITY DEDUCTION U/S 80IB BUT THE MATTER REGA RDING CALCULATION OF DEDUCTION U/S 80HHC WAS CARRIED TO P UNJAB & HARYANA HIGH COURT, CHANDIGARH AND THAT WAS ANSWERE D IN FAVOUR OF REVENUE. COPY OF HON'BLE HIGH COURT ORDER DATED 16.05.2012 IS PLACED ON RECORD. 4.4. THE AO VIDE HIS ORDER DATED 28.08.2012 GAVE A PPEAL EFFECT TO THE ORDER OF HON'BLE HIGH COURT. IN THIS ORDER THE AO WHILE COMPLYING THE DIRECTIONS OF THE HON'BLE HIGH COURT REDUCED THE DEDUCTION U/S 80HHC, BUT WRONGLY REDUCED THE DEDUCT ION U/S 80IB BY DEDUCTING DUTY DRAWBACK, EXPORT INCENTIVES AND INTEREST OUT OF BUSINESS PROFITS WHICH WAS NOT DIRECTED BY T HE HON'BLE HIGH COURT IN THEIR ORDER AND WAS NOT THE ISSUE BEFORE T HE HIGH COURT. COPY OF AO'S ORDER IS PLACED ON RECORD AND THE DETA ILED CALCULATION IS AT APB 60 & 61. A RECTIFICATION APPLICATION DAT ED 05.09.2012 WAS FILED BY THE ASSESSEE BEFORE THE AO WITH THE PR AYER TO ALLOW DEDUCTION U/S 80IB WITHOUT REDUCING DUTY DRAWBACK, EXPORT INCENTIVES OR INTEREST ON FDR FROM BUSINESS PROFITS AS IN THE ORDER OF HON'BLE HIGH COURT THERE IS NO DIRECTION TO REDU CE DUTY ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 5 DRAWBACK, EXPORT INCENTIVES OR INTEREST FROM BUSINE SS PROFITS TO COMPUTE DEDUCTION U/S 80IB AND ALSO TO RECALCULATE DEDUCTION UNDER SECTION 80 HHC. THE AO VIDE HIS ORDER DATED 1 4.09.2012 REJECTED THE PRAYER OF THE ASSESSEE TO ALLOW DEDUCT ION U/S 80IB WITHOUT REDUCING DUTY DRAWBACK, EXPORT INCENTIVES O R INTEREST ON FDR FROM BUSINESS PROFITS. HE RECALCULATED THE DEDU CTION UNDER SECTION 80HHC. 4.5. ON APPEAL AGAINST THE AO'S ORDER DATED 28.08. 2012, THE LD. CIT(A) VIDE HIS ORDER DATED 10.09.2013 IN ITA NO. 2 44/2012-13 UPHELD THE ORDER OF THE AO ON THE GROUND IN HIS PAR A 3.10 THAT THE AO GOT THE OCCASION TO EXAMINE THE CORRECTNESS OF D EDUCTION CLAIMED UNDER SECTION 80IB ONLY ON RECEIPT OF THE O RDER OF HON'BLE HIGH COURT. 5. THE ASSESSEE HAS FILED BOTH THE PRESENT APPEALS AGAINST THE AFORESAID ORDERS OF THE LD. CIT(A). 6. ON BEHALF OF THE ASSESSEE, AS ALSO IN THE WRITTE N SUBMISSIONS FILED, IT HAS BEEN STATED AS FOLLOWS: ON APPEAL AGAINST THE AO'S ORDER DATED 14.09.2012, THE LD. CIT(A) VIDE HIS ORDER DATED 10.09.2017 IN ITA N O. 257/2012-13 UPHELD THE ORDER OF THE AO BY RELYING O N HIS EARLIER ORDER OF THE SAME DATE. THE ASSESSEE NOW I N APPEAL BEFORE THE ITAT AGAINST BOTH THE ORDERS OF THE CI T(A). IT WAS SUBMITTED THAT THE CIT(A) WRONGLY HELD IN IT S ORDER DATED 10.09.2013 THAT AO NEVER HAD THE OCCASION TO EXAMINE ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 6 THE CORRECTNESS OF DEDUCTION CLAIMED BY THE ASSESSE E U/S 80IB OF INCOME TAX ACT, 1961, AS THE CALCULATION OF DEDUCTION U/S 80IB WAS DULY MADE BY THE AO, AFTER APPLYING HI S MIND WHILE GIVING APPEAL EFFECT TO ORDER OF CIT(A)'S ORD ER DATED 02.09.2004. THE ORDER TO GIVE APPEAL EFFECT TO THE ORDER OF CIT (A) WAS PASSED BY THE AO THREE TIMES AFTER APPLYING HIS MIN D (TWICE BY AO MR. R.G. KOHLI AND ONCE BY SUCCESSOR AO MR. R AVI BAJAJ) COPIES OF THE ORDERS OF THE AO ARE ENCLOSED AT PAGES 22 TO 26 OF PAPER BOOK. THE LD CIT(A) IN THE ORDER DAT ED 02.09.2004, NOT ONLY ALLOWED BOTH THE DEDUCTION U/S 80IB AND 80HHC, BUT ALSO DIRECTED THE AO TO ALLOW DEDUCT ION U/S 80HHC AND SECTION 80IB STRICTLY AS PER PROVISIONS M ENTIONED THEREIN. IN PARA 10 OF CIT(A)'S ORDER DATED 02.09.2 004, IT WAS HELD: THE SECTION 80HCC HAS PRESCRIBED A SET PRODUCE FOR CALCULATION OF DEDUCTION WHICH IS NOT SUBJECT TO DEDUCTION U/S 80IB. ACCORDINGLY, AO IS DIRECTED TO ALLOW DEDUCTION U/S 80HHC AND 80IB STRICTLY AS PER THE PROVISIONS MENTIONED THEREIN. CLEARLY THE LD CIT(A) GAVE DIRECTIONS TO ALLOW THE DECUTION AS PER PROVISIONS MENTIONED IN BOTH THE SECTION 80IB A ND 80HHC IN RESPECT OF ITS ALLOWABILITY AND CALCULATIO N AND THEN GIVE EFFECT TO THE ORDER. ACCORDINGLY THE AO APPLIE D HIS MIND AND ALLOWED THE DEDUCTION UNDER SECTION 80IB @ 25% ON THE BUSINESS PROFITS WITHOUT REDUCING THE DUTY DRAWBACK , EXPORT INCENTIVES AND INTEREST FROM THE NET PROFIT CONSID ERING THESE AMOUNTS AS BUSINESS INCOME. IT WAS SUBMITTED THAT THERE WERE DECISIONS OF VARIO US HIGH COURTS IN FAVOUR AND AGAINST WHEREIN IT IS HELD THA T WHETHER ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 7 DUTY DRAWBACK, EXPORT INCENTIVES AND INTEREST ARE B USINESS INCOME AND DEDUCTION UNDER SECTION 80IB IS ALLOWABL E, THEREFORE, THE THEN AO APPLIED HIS MIND AND ALLOWED THE DEDUCTION UNDER SECTION 80IB ON THE ENTIRE BUSINES S PROFITS. THE ID. CIT(A) IS WRONG IN HOLDING IN PARA 3.10 OF HIS ORDER THAT THE AO HAD GOT OCCASION TO EXAMINE THE CORRECT NESS OF DEDUCTION CLAIMED BY ASSESSEE ON RECEIPT OF ORDER D ATED 16.05.2012 OF HON'BLE PUNJAB & HARYANA HIGH COURT, WHEREAS THE AO HAD ALREADY ALLOWED THE DEDUCTION U/ S 80HHC AFTER APPLYING HIS MIND IN EARLIER APPEAL EFF ECT ORDER. THE AO WHILE GIVING EFFECT TO CIT(A)'S ORDER DATE D 02.09.2014 IN HIS ORDER U/S 154/155 DATED 19.01.201 5 CLEARLY WHILE SHOWING HIS CALCULATIONS, CALCULATED DEDUCTION U/S 80IB AND GAVE EFFECT TO THE RELIEF OF EXPENSES ALLOWED BY CIT(A) WHICH SHOWS THAT HE RECONSIDERED THE CALCULA TION OF 80IB AND THEN ALLOWED DEDUCTION U/S 80IB @25% OF HI S RECALCULATED PROFITS. SO IT IS ALTOGETHER WRONG TO SAY THAT AO DID NOT GET THE OCCASION TO EXAMINE THE CORRECTNESS OF DEDUCTION U/S 80IB OF INCOME TAX ACT, 1961. AFTER C OMPLETING THE CALCULATION OF 801B THEN HE CAME TO THE CALCULA TION OF DEDUCTION U/S 80HHC. IT IS FURTHER SUBMITTED THAT IN THE AO'S ORDER DA TED 19.01.2005 U/S 154/155 OF INCOME TAX ACT, 1961, HE CLEARLY MENTIONED AS UNDER 'THE LD. CIT(A) HAS DIRECTED THAT DEDUCTION U/S 80I B AND 80HHC SHOULD BE COMPUTED AS PER PROVISIONS MENTIONE D THEREIN. THEREFORE, THE DEDUCTION U/S 80IB IS TO BE COMPUTED AN INCOME DETERMINED U/S 143(3) WHICH COMES TO RS. 39,03,446/- AS AGAINST RS. 38,86,364/- CLAIMED BY T HE ASSESSEE IN THE COMPUTATION OF INCOME. FURTHER, AS PER THE PROVISIONS OF ABOVE SUB-SECTION, DEDUCTION IN RESPE CT OF PROFIT ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 8 OF RS. 39,03,446/- ALLOWED U/S 80IB IS NOT TO BE AL LOWED UNDER ANY OTHER PROVISIONS OF CHAPTER VIA WHICH INC LUDES U/S 80HHC ALSO.' THESE FACTS MENTIONED BY THE AO IN HIS ORDER CLEARL Y CLARIFY THAT THE CALCULATION OF DEDUCTION U/S 80IB WAS MADE BY THE AO AFTER DUE CONSIDERATION OF THE PROVISIONS OF THE SECTION. IT IS CORRECT THAT AT THE TIME OF FRAMING ASSESSM ENT VIDE ORDER DATED 22.03.2004 U/S 143(3) OF INCOME TAX ACT , 196, THE AO DISALLOWED 80IB IN FULL AND HE DID NOT GET C HANCE TO CALCULATE THE DEDUCTION U/S 80IB BUT AFTER THE MATT ER WENT TO CIT(A), THE CALCULATION OF DEDUCTION U/S AS PER PRO VISIONS CONTAINED THEREIN. THE AO WHILE GIVING EFFECT TO TH IS ORDER DATED 02.09.2004 CONSIDERED CALCULATION OF DEDUCTIO N U/S 80IB GAVE ITS EFFECT AS PER THE PROVISIONS OF THE S ECTION OF INCOME TAX ACT. AFTER THAT THIS ISSUE WAS NOT RAISE D IN ANY OF THE ORDERS, THEREFORE GIVING FINALITY TO THIS ISSUE . IT HAS BEEN HELD BY THE PUNJAB & HARYANA HIGH COU RT IN CIT VS. MOHAN LAI KAUSAL (1978) 114 ITR 583 (P8H ) THAT THE INCOME TAX AUTHORITIES SITUATED WITHIN THE JURI SDICTION OF A PARTICULAR HIGH COURT ARE BOUND BY ITS DECISION. ONCE HIGH COURT HAS GIVEN ITS ORDER, ALL THE SUBORDINATE AUTH ORITIES HAVE TO FOLLOW ACCORDINGLY. THE ORDERS ARE BINDING ON AL L THE SUBORDINATE AUTHORITIES. IN THE CASE BEFORE THE HON 'BLE HIGH COURT, THE AO GAVE EFFECT TO THE ORDERS OF THE HIGH COURT NOT IN THE MANNER AS PREPARED BY THE HIGH COURT WHICH I S NOT LEGAL. THE DEPARTMENT CARRIED FORWARD THE ONLY ISSUE REGARDING CALCULATION OF DEDUCTION U/S 80HHC AFTER REDUCING DEDUCTION U/S 80IB FROM THE PROFITS TO HIGH COURT. IT IS SUBMITTED THAT AS PER SECTION 260(1A), WHER E THE HIGH COURT DELIVERS A JUDGMENT IN AN APPEAL FILED B EFORE IT U/S 260A, EFFECT SHALL BE GIVEN TO THE ORDER PASSED ON THE APPEAL BY THE AO ON THE BASIS OF CERTIFIED COPY OF JUDGMENT AS LAID DOWN IN THE INCOME TAX ACT, 1961. WHEN THE ISS UE IS NOT MENTIONED AT ALL IN THE ORDER AT HIGH COURT THEN TH ERE IS NO QUESTION OF GIVING ANY KIND OF EFFECT TO THE ISSUE. AS THE ISSUE REGARDING THE QUANTUM OF 80IB IS NOT PART OF ORDER OF HIGH COURT THE ORDER OF THE AO ON THIS ISSUE IS ILLEGAL AND A NULLITY. THE AO ALSO VIDE ORDER DATED 14.09.2012 WRONGLY REJECTED THE APPLICATION OF THE ASSESSEE U/S 154 ME NTIONING THAT THE CALCULATION OF DEDUCTION U/S 80IB HAS BEEN DONE AS ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 9 PER DIRECTIONS OF CIT(A) WHEREAS THE ORDER OF APPEA L EFFECT HAD ALREADY BEEN GIVEN BY THE AO AFTER CIT(A)'S ORDER. PASSING OF ANOTHER ORDER IN THE PRESENCE OF AN EARLIER ORDER I S A NULLITY. IN ORDER DATED 02.09.2004 THE LD. CIT(A) GAVE DIREC TION AS TO CALCULATION OF U/S 80HHC AND 80IB AND GIVING EFFECT TO ITS DIRECTION. ITO CALCULATED DEDUCTION U/S 80IB WI THOUT DEDUCTING DUTY DRAWBACK & EXPORT INCENTIVES. THIS CALCULATION OF U/S 80IB WAS CORRECT AND FINAL. THIS WAS NOT EVEN ISSUE OF ANY APPEAL AFTER THAT WHILE GIVING DE CISION LD. CIT(A) ORDER DATED 23.02.2005. IT WAS NOWHERE SPECI FIED TO RECALCULATE DEDUCTION U/S 80IB AFTER DEDUCTING DUTY DRAWBACK AND EXPORT INCENTIVES. THE LD. CIT(A) IN T HIS ORDER SPECIFIED IN REGARD TO DEDUCTION U/S 80IB THAT RELI EF ALLOWED BY THE APPELLATE AUTHORITY AT RS. 167094/- AND WAS ALLOWED AT RS. 73978/- AND THE RELIEF AS ALLOWED BE SUBSTIT UTED WHICH WILL REQUIRE RECOMPUTATION OF DEDUCTION U/S 80IB OF INCOME TAX ACT. SO, CLEARLY THE COMPUTATION OF DEDUCTION U/S 80IB W AS CONSIDERED AND THE ONLY CHANGE LD. CIT(A) WANTED TO BE DONE AS PER DEDUCTION U/S 80IB IS FOR THE UNALLOWED RELI EF OF THE EXPENSES AND SPECIFICALLY NOTHING ELSE. IN ITAT'S ORDER DATED 20.04.2007 CALCULATION OF DEDUCTION U/S 80IB WAS NOT AN ISSUE AND NOWHERE IT WAS WRITTEN THAT IT IS CALCULATED WRONGLY SO IT IS COMP LETELY AGAINST THE ORDERS OF CIT(A) DATED 23.02.2005 AND I TAT'S ORDER DATED 20.04.2007 TO RECALCULATE THE DEDUCTION U/S 80IB BECAUSE MAY BE IT IS NOT CLEARLY WRITTEN THAT DEDUC TION U/S 80IB IS CALCULATED CORRECTLY AND NO CHANGE IS REQUI RED. THE ORDER IS SILENT ABOUT THAT WHICH MEANS NO CHANGE IS REQUIRED TO BE MADE. 1. THE ISSUE REGARDING DEDUCTION ALLOWABLE U/S 80IB HAS DULY ATTAINED FINALITY AFTER THE ORDER OF THE HON'BLE ITAT. 2. THIS ISSUE WAS NEVER RAISED BEFORE HON'BLE HIGH COURT BY THE DEPARTMENT. 3. AO GRAVELY ERRED BY GOING BEYOND HIS POWERS WHILE GIVING APPEAL EFFECT ORDER TO THE HON'BLE HIGH COURT'S ORDER BY REDUCING THE QUANTUM OF ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 10 DEDUCTION U/S 80IB WHICH IS ILLEGALLY CONFIRMED BY THE CIT(A). 4. THE ISSUE RAISED BY THE AO WHILE FRAMING ASSESSMENT U/S 143(3) VIDE ORDER DATED 22.03.2004 WAS THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION OF 80IB CLAIMING IT TO BE A NON- MANUFACTURING CONCERN. 5. THE DEDUCTION OF 80IB WAS ALLOWED BY CIT(A) DECLARING IT TO BE A MANUFACTURING CONCERN. 6. THE CASE WAS WHEN TAKEN UPTO THE ITAT WHICH IS THE HIGHEST FACT FINDING AUTHORITY. HERE, BEFORE ITAT THE ISSUE REGARDING ALLOWABLITIY OF 80IB GAVE FINALITY AND WAS ALLOWED BY THE ITAT CONFIRMING THE ASSESSEE TO BE A MANUFACTURING CONCERN. 7. THE CLEAR CONTROVERSY CREATED BY AO WAS REGARDING THE QUESTION OF 80IB IS ALLOWED OR NOT. 8. THE CALCULATION OF 80IB OR THE QUANTUM OF 80IB' S DEDUCTION WAS NO WHERE MENTIONED BY ANY AUTHORITY AT ALL IN ANY ORDER. 9. THE ONLY ISSUE BEFORE HIGH COURT WAS ONLY REGARDING CALCULATION OF 80HHC. 10. AT THE TIME OF EXECUTING/IMPLEMENTING THE ORDE R OF HIGH COURT AO MOULDED THE ORDER IN HIS OWN WAY AND RAISED THE QUESTION OF CALCULATION OF 80IB WHICH WAS NO WHERE THE PART OF THE ISSUE AND THIS ACT IS NOT LEGAL AND ABSOLUTE BEYOND THE AUTHORITY ACT BY THE AO. 11. THE ISSUE WHICH HAS GAINED FINALITY AT THE ITA T LEVEL CANNOT BE RAISED AGAIN. IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ARTS AND CRAFTS EXPORTS IT WAS HELD THAT DECISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR EARLIER YEARS ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 11 HOLDING THAT HE ASSESSEE IS ENGAGED IN MANUFACTURING ACTIVITY AND THUS ENTITLED TO DEDUCTION U/S 80IB HAVING BEEN ACCEPTED BY THE REVENUE, QUESTION RAISED BY THE REVENUE CONTESTING THE ORDER OF THE TRIBUNAL WAS NOT ENTERTAINED. 12. THAT THE CIT(A) ERRED IN UPHOLDING THE ORDER O F AO IGNORING THAT IN THE APPEAL EFFECT ORDER ONLY DIRECTIONS CONTAINED IN THE APPELLATE ORDERS ARE TO BE FOLLOWED AND OWN OPINION JUDGMENT OR NEW ISSUE CANNOT BE RAISED BY THE AO AT THIS STAGE. 13. THE AO BEING A LOWER AUTHORITY HAVE TO GIVE EF FECT TO THE ORDER OF THE HIGHER AUTHORITY AS PER THE DIRECTIONS GIVEN BY THAT AUTHORITY GOING BEYOND THE ORDERS OF THE HIGH COURT IS NOT ONLY OUT OF THE JURISDICTION OF AO BUT ALSO UNJUST FOR THE ASSESSEE AS WELL. 14. THAT WITHOUT PREJUDICE TO THE ABOVE, THE CIT(A ) WRONGLY UPHELD THE ORDER OF AO WHICH IS LEGAL AND VOID AS TO ERRED IN NOT ALLOWING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE PASSING THE ORDER AS IT HAD EFFECT OF INCREASING THE TAX LIABIL ITY OF ASSESSEE. 7. BEFORE US, IN ITA NO. 673/ASR/2013, THE LD. CIT( A) HAS HELD AS FOLLOWS: 6.1. IT IS TO BE NOTED THAT THE ASSESSEE FIRM HAS A LSO FILED APPEAL AGAINST THE APPEAL EFFECT ORDER DATED 28.08.2012 WH ICH IS ALSO THE SUBJECT MATTER OF RECTIFICATION APPLICATION UNDER R EFERENCE WHICH HAS BEEN PARTLY ACCEPTED AND PARTLY REJECTED AND THE AS SESSEE FIRM IS IN ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 12 APPEAL AGAINST THIS ORDER ALSO. THE APPEAL FILED B Y THE ASSESSEE AGAINST THE APPEAL EFFECT ORDER DATED 28.08.2012 HA S ALREADY BEEN DISMISSED BY ME VIDE MY ORDER OF EVEN DATE IN APPEA L NO.244/12- 13/CIT(A)/JAL. IN VIEW OF APPEAL ORDER DATED 10.09. 2013 IN APPEAL NO.244/12-13/CIT(A)/JAL. IN THE CASE OF THE ASSESSE E FIRM ITSELF FOR THE YEAR UNDER REFERENCE, THE APPEAL FILED BY THE A SSESSEE IN MY OPINION DESERVES TO BE REJECTED. ACCORDINGLY, THE G ROUNDS OF APPEAL NO. 2 AND 2.1 TAKEN BY THE ASSESSEE ARE, THEREFORE, DISMISSED. 8. BOTH THE AFORESAID ORDERS OF THE LD. CIT(A) HAVE BEEN PASSED ON THE SAME DATE, I.E., 10.09.2013. 9. FROM THE ABOVE OBSERVATIONS MADE BY THE LD. CIT( A), EVIDENTLY, THERE IS AN INCREASE IN THE TAX LIABILITY OF THE AS SESSEE, WHICH HAS COME ABOUT AS A RESULT OF THE CIT(A)S ORDER. NOW, IT IS TRITE THAT IN SUCH A SITUATION, WHEN THE TAX LIABILITY OF THE ASSESSEE I S LIKELY TO RESULT FROM A PARTICULAR ORDER, AN OPPORTUNITY OF BEING HEARD IS REQUIRED TO BE AFFORDED TO THE ASSESSEE, AS A PRINCIPLE OF NATURAL JUSTICE, BEFORE SUCH INCREASE IN TAX LIABILITY IS BROUGHT ABOUT. 10. AN ALTERNATIVE CONTENTION HAS ALSO BEEN RAISED, I.E., THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE AOS ORDER WITHOU T ALLOWING AN OPPORTUNITY TO THE ASSESSEE BEFORE PASSING AN ORDER WHEREBY THE TAX LIABILITY OF THE ASSESSEE HAS BEEN INCREASED. 11. THE LD. DR, ON HIS TURN, HAS PLACED STRONG RELI ANCE ON THE IMPUGNED ORDERS, CONTENDING THAT THE ASSESSEES CAS E NOWHERE IS THAT THE CALCULATION MADE BY THE AO WAS WRONG. 12. HAVING HEARD BOTH THE PARTIES IN THE LIGHT OF T HE MATERIAL PLACED ON RECORD, WE FIND THAT IN THE LD. CIT(A)S ORDER, WHI CH IS THE SUBJECT MATTER ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 13 OF APPEAL IN ITA NO.674(ASR)/2013 BEFORE US, THE LD . CIT(A) HAS OBSERVED AS FOLLOWS: 5.22. I HAVE CONSIDERED THE APPEAL EFFECT ORDER DAT ED 28.08.2012 AS WELL AS ASSESSEE FIRMS SUBMISSIONS ON THE ISSUE. I N VIEW THE REASONS AND DISCUSSION MADE IN THE PRECEDING PARAGR APHS, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE ASSESSING OF FICER. I AM, THEREFORE, OF THE OPINION THAT THE ASSESSING OFFICE R HAS CORRECTLY CALCULATED THE ALLOWABLE DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 TO THE ASSESSEE AND THE CALCULATION HAS BEEN D ONE IN ACCORDANCE WITH THE PROVISIONS OF LAW AND ALSO AS PER LAID DOWN PRINCIPLES. I AM ALSO OF THE OPINION THAT NATURAL J USTICE HAS NOT BEEN VIOLATED IN THIS CASE AS THE ALLOWABLE DEDUCTION HA S BEEN COMPUTED STRICTLY WITH LAW AND LAID DOWN PRINCIPLES. MOREOVE R, THE ASSESSEE FIRM GOT THE CHANCE OF BEING HEARD WHEN THE APPLICA TION FOR RECTIFICATION WAS FILED. IN THE RESULT, GROUNDS OF APPEAL NO. 2 & 2.1 TAKEN BY THE ASSESSEE FIRM ARE, THEREFORE, DISMISSE D. 13. IN THE PRESENT CASE, THE ORDERS OF THE LD. CIT( A) DO NOT EVINCE THE ASSESSEE HAVING BEEN PROVIDED ANY OPPORTUNITY OF HE ARING BEFORE ENHANCING THE ASSESSMENT. 14. FURTHER, IN THE LD. CIT(A)S ORDER, WHICH IS TH E SUBJECT MATTER OF APPEAL, IN FACT, AS RIGHTLY CONTENDED, ANY ORDER EN HANCING THE ASSESSMENT WITHOUT GRANT OF OPPORTUNITY WOULD NOT B E AN ORDER PASSED IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE W HICH ARE THE VERY BULWARK OF THE LEGAL SYSTEM OF OUR COUNTRY. AS PER THE NATURAL JUSTICE PRINCIPLE OF AUDI ALTEREM PARTEM, NOBODY CAN BE PUT TO PREJUDICE WITHOUT HEARING THEM. 15. IN VIEW OF THE ABOVE, WE DEEM IT APPROPRIATE TO REMIT THIS MATTER TO THE FILE OF THE LD. CIT(A), TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW, ON AFFORDING DUE AND ADEQUATE OPPORTUNITY OF HEARING T O THE ASSESSEE. THE ITA NO.S 673 & 674(ASR)/2013 A.Y. 2001-02 14 ASSESSEE SHALL , NO DOUBT, CO-OPERATE IN THE FRESH PROCEEDINGS BEFORE THE LD. CIT(A) 16. IN THE RESULT, BOTH THE APPEALS ARE TREATED, AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01/08/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 01/08/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S., ASIAN EXIM INTERNATIONAL, JALAND HAR. 2. THE DCIT, R-II, JLR 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.