M/s. Classic Exports, Kanpur V. ACIT, Kanpur

ITA 760/LKW/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9140 (ITAT-LUCKNOW)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 23-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VERMA
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice
• Section: 80HHC; 234B; 154; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, B - BENCH, LUCKNOW. BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI, ACCOUNTANT MEMBER I.T.A.NO.760(LKW.)/2010 A.Y.: 2001-02 M/S. CLASSIC EXPORTS, VS. THE ACIT (3), 7/260A, SWAROOP NAGAR, KANPUR. KANPUR. PAN AACFC0410C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT SHUKLA, ADVOCATE RESPONDENT BY : SHRI ANADI VERMA, SR.D.R. O R D E R PER H.L.KARWA, VICE PRESIDENT THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A), MUZAFFARNAGAR HOLDING CONCURRENT JURISDI CTION OF CIT(A)-II, KANPUR DATED 24.9.2010 RELATING TO THE ASSESSMENT Y EAR 2001-02. 2. IN THIS APPEAL, THE ASSESSEE HAS TAKEN THE FOLLO WING GROUNDS: 1. BECAUSE THE LD. AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN DISALLOWING THE DEDUCTION UNDER SECTION 80 HHC FOR SUM OF RS.1,58,997/- IN THE PROCEEDINGS UNDER SECTI ON 154, WITHOUT APPRECIATING THAT SUCH A RECTIFICATION OF A N ORDER PASSED UNDER SECTION 251/143(3) DATED 07.04.2004, G IVING EFFECT OF CIT(A) ORDER DATED 22.03.2004 WAS BEYOND THE SCOPE AND JURISDICTION OF SECTION 154 AS THE ISSUE RELATI NG TO SUCH AN DISALLOWANCE UNDER SECTION 80HHC WAS NOT THE SUBJEC T MATTER OF APPEAL BEFORE THE CIT(APPEALS) UNDER SECTION 251 . 2 2. BECAUSE, THE LD.CIT (APPEALS) HAS ERRED IN LAW A ND ON FACTS IN CONFIRMING THE DISALLOWANCE OF DEDUCTION UNDER S ECTION 80HHC FOR SUM OF RS.1 ,58,997/- WITHOUT APPRECIATIN G THAT:- I) THE DEDUCTION UNDER SECTION 80HHC AMOUNTING TO RS.1,58,997/- RELATED TO A PAYMENT OF BILL NO.740 D ATED 26.02.2000 WHICH WAS A PART OF EXPORT TURNOVER FOR THE FINANCIAL YEAR 1999-2000, RELEVANT TO ASSESSMENT YE AR 2000-01, AND SUCH A CLAIM STOOD DULLY ALLOWED AS PE R INFORMATION GIVEN IN FORM NO.10CAAC; II) SUCH A DEDUCTION HAD NO CO-RELATION WITH THE T URN OVER OF ASSESSMENT YEAR 2001-02; III) THE CLAIM OF DEDUCTION UNDER SECTION 80HHC RE LATING TO BILL NO.740, WAS CLAIMED AFTER GIVING A QUALIFICATI ON IN FORM NO.10CCAC THAT IT HAD APPLIED FOR EXTENSION OF TIME FROM THE APPROPRIATE AUTHORITY, WHICH ALSO GRA NTED SUBSEQUENTLY AND THEREFORE, SUCH A CLAIM WAS ALLOWA BLE IN THE ASSESSMENT YEAR 2000-01 ONLY; IV) THERE WAS NO DISPUTE OR ISSUE WITH REGARD TO A NY SALE BILL OR ITS REALIZATION AND THEREFORE,THE VIEW TAKEN BY THE CIT(APPEALS) AFTER NOTING ALL THESE FACTS IS WHOLLY ERRONEOUS AND DESERVED TO BE DISMISSED. 3. BESIDES LD.CIT(APPEALS) DESPITE NOTING THE FACT THAT THE CLAIM OF DEDUCTION UNDER SECTION 80HHC FOR THE SALE PROCE EDS OF EXPORT AS PER BILL NO.740, DATED 26.2.2000 PERTAINE D TO ASSESSMENT YEAR 2000-01, ARRIVED AT A WRONG CONCLUS ION THAT THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE DE DUCTION UNDER SECTION 80HHC BY PASSING RECTIFICATION ORDER UNDER SECTION 154, AGAINST ORDER PASSED UNDER SECTION 251 /143(3) FOR THE ASSESSMENT YEAR 2001-02 AND THEREFORE, SUCH A C ONCLUSION IS NOT ONLY ERRONEOUS IN LAW BUT ALSO ON FACTS, WHI CH DESERVES TO BE VACATED. 4. BECAUSE IN ANY CASE, ENTIRE DEDUCTION OF 80HHC W AS DULY VERIFIED AND ALLOWED NOT ONLY FROM THE STAGE OF ASS ESSING OFFICER BUT ALSO FROM THE APPELLATE STAGE FOR THE ASSESSMENT 3 YEAR 2001-02, AND SUCH A DISPUTE OR CLAIM WAS NEIT HER THE SUBJECT MATTER OF DISPUTE IN THE ORIGINAL ASSESSMEN T ORDER NOR IN THE APPELLATE ORDER, THEREFORE, DISALLOWANCE OF RS.1,58,997 ON ACCOUNT OF ALLEGED EXCESS DEDUCTION UNDER SECTIO N 80HHC IS BEYOND THE SCOPE AND JURISDICTION OF RECTIFICATION PROCEEDINGS UNDER SECTION 154. 5. BECAUSE THE ORDER APPEALED IS CONTRARY TO THE FA CTS, LAW AND PRINCIPLES OF NATURAL JUSTICE. 3. ALL THE ABOVE GROUNDS RELATE TO ONLY ONE ISSUE. IN THIS CASE, DURING THE COURSE OF AUDIT, THE REVENUE AUDIT PARTY RAISED AN OBJECTION THAT WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE, DEDUCTI ON UNDER SECTION 80HHC OF THE INCOME-TAX ACT,1961 (IN SHORT THE ACT) AM OUNTING TO RS.1,58,997 HAS BEEN ALLOWED IN EXCESS WHICH RESULTED IN SHORT LEVY OF TAX AND INTEREST UNDER SECTION 234B AMOUNTING TO RS.1,14,036. ACCORD ING TO THE REVENUE AUDIT PARTY, THE ASSESSEE REALISED THE PAYMENT OF B ILL NO.740 DATED 26.2.2000 FOR RS.1,98,746 ON 14.5.2001. SINCE THE BILL PERTAINED TO THE PRECEDING ASSESSMENT YEAR 2000-01, THEREFORE, DEDUC TION UNDER SECTION 80HHC AMOUNTING TO RS.1,14,036 WAS ALLOWED IN EXCE SS. THUS, THE AO ISSUED NOTICE UNDER SECTION 154 THE ACT WHEREIN TH E MISTAKE APPARENT ON THE FACE OF RECORD WAS POINTED OUT TO THE ASSESSEE AND IT WAS REQUIRED TO FILE OBJECTIONS, IF ANY TO THE PROPOSED RECTIFICATION. HOWEVER, ON THE DATE FIXED FOR COMPLIANCE, NO COMPLIANCE WAS MADE. THEREFORE, THE AO HELD THAT THE ASSESSEE HAD NO OBJECTION TO THE PROPOSED RECTIFICA TION UNDER SECTION 154 AND EXCESS DEDUCTION UNDER SECTION 80HHC EARLIER AL LOWED AT RS.1,58,997 WAS DENIED DEDUCTION AND INCOME WAS RECOMPUTED AT R S.19,15,084. THE ORDER UNDER SECTION 154 WAS PASSED BY THE AO ON 12. 4.2005. 4. ON APPEAL, THE LD.CIT(A) UPHELD THE ORDER OF THE AO. 4 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. SHRI AMIT SHUKLA, ADVOCATE, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE SAID BILL NO.740 DATED 26.2.2000 RELATED TO EXPORTS MADE IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2000-01, THE EFFECT, IF ANY, RELATI NG TO DEDUCTION CLAIMED, WOULD RELATE TO ASSESSMENT YEAR 2000-01 AND NOT A. Y.2001-02. SHRI AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE DEDUCTION IN A.Y. 2000-01 WAS SUBJECT TO EXTENSION REQUESTED BY THE ASSESSEE TO THE APPROPRIATE AUTHORITY WITH REGARD TO THE SAID BILL AND THE SAID FACT WAS MENTIONED IN THE REMARK COLUMN OF ANNEXURE-A TO FOR M LNO.10CCAC FILED FOR CLAIMING OF THE SAID DEDUCTION. AS SUCH, THE LE GAL REQUIREMENT FOR CLAIMING THE DEDUCTION IN ASSESSMENT YEAR 2001-02 STOOD SATISFIED. SHRI AMIT SHUKLA, LD. COUNSEL FOR THE ASSESSEE ALSO P OINTED OUT THAT AS PER CERTIFICATE ISSUED BY CANARA BANK (OVERSEAS BRANCH ) IT HAS BEEN CERTIFIED THAT THE BILL STOOD FULLY REALIZED AS OF NOW. ACCOR DING TO THE LD. COUNSEL FOR THE ASSESSEE, ALL LEGAL REQUIREMENTS WERE MET WITH AND AS SUCH THERE WAS NO DISCREPANCY/ NON-FULFILMENT OF REQUIREMENTS FOR CLA IMING DEDUCTION UNDER SECTION 80HHC IN A.Y.2000-01. HE FURTHER SUBMITTE D THAT DEDUCTION UNDER SECTION 80HHC IN A.Y. 2001-02 RELATES TO TURNOVER M ADE IN PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2001-02 AND BILL NO .740 DATED 26.2.2000 HAS NO RELEVANCE WITH SO FAR AS THE DEDUCTION IS C ONCERNED FOR 2001-02. IT SEEMS THAT BOTH THE AUTHORITIES BELOW HAVE PASSED T HE RESPECTIVE ORDERS IN ABSENCE OF THE ASSESSEE. IN OTHER WORDS, DUE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE HAS NOT BEEN GIVEN BY THE AUTHORITIES BELOW. OTHERWISE ALSO; THE CONTENTION RAISED BY SHRI AMIT SHUKLA, LD. COU NSEL FOR THE ASSESSEE NEEDS TO BE VERIFIED AT THE LEVEL OF THE AO. CONSID ERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) 5 AND RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE ABOVE CONTENTION OF THE ASSESSEE, PARTICULARLY THE AVERMENTS MADE IN GROUNDS NO.2 AND 3 (SUPRA). THE AO SHOULD PASS A SPEAKING ORDER AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 6. FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED . THE ORDER PRONOUNCED IN THE OPEN COURT ON 7.3.201 1. SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT MARCH 7TH ,2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R.,ITAT, LUCKNOW. SRIVASTAVA.