1998 (10) TMI 66 - HC - Income Tax

Court upholds notice for re-examining deduction under section 80HHC based on potential income discrepancies.

The court upheld the notice u/s 148 for re-examining the deduction under section 80HHC, based on valid reasons related to potential income escaping ... Reassessment, Exports, IPRS, Incentive Money Issues involved: Petition for quashing notice u/s 148 of the Income-tax Act, 1961 regarding escaped assessment for the assessment year 1992-93.Summary:The petitioner, a partnership firm engaged in manufacturing and export, filed returns claiming deduction u/s 80HHC. Discrepancies in deduction allowed led to appeals and orders by the Commissioner of Income-tax (Appeals). Subsequently, a notice u/s 148 was issued by the Assessing Officer to re-examine the deduction under section 80HHC for the assessment year 1992-93. The petitioner challenged the notice on grounds of jurisdiction and finality of appellate orders.The petitioner argued that the Assessing Officer lacked jurisdiction to reopen assessment as the matter had been adjudicated upon by the appellate authority and reached finality. The Revenue did not challenge the first appellate order, thus the Assessing Officer could not nullify its effect through reassessment based on a change of opinion.On the other hand, the respondents contended that the reasons recorded by the Assessing Officer for issuing the notice were explicit and justified, indicating income had escaped assessment due to wrongly allowed deductions. The suspicion arose from discrepancies in raw material usage and incentive claims, not previously examined by the assessing authority or appellate body.The court found the reasons for issuing the notice under section 148 to be valid, as they pertained to new material regarding raw material utilization and incentive claims that had not been previously considered. The petitioner was directed to explain the utilization of imported raw material and the correctness of the deduction claimed under section 80HHC. Consequently, the writ petition was dismissed for lack of merit.In conclusion, the court upheld the notice u/s 148 for re-examining the deduction under section 80HHC, based on valid reasons related to potential income escaping assessment due to discrepancies in raw material utilization and incentive claims.