2010 (10) TMI 1052 - HC - Income Tax

s.153A proceedings cannot overturn valid Section 80HHC deduction; s.263 revision not permissible without material showing error

The Commissioner of Income Tax (Central), Aayakar Bhavan, Nagpur Versus M/s. Murli Agro Products Ltd.

The Commissioner of Income Tax (Central), Aayakar Bhavan, Nagpur Versus M/s. Murli Agro Products Ltd. - TMI Issues:1. Justification of canceling the order of Commissioner of Income Tax under Section 263 of the Income Tax Act by the Income Tax Appellate Tribunal.Analysis:The judgment revolves around the primary issue of whether the Income Tax Appellate Tribunal was correct in canceling the order of the Commissioner of Income Tax passed under Section 263 of the Income Tax Act. The case pertains to the assessment year 1998-99, where the initial assessment order determined a loss of Rs. 43,02,246. Subsequently, a search action led to the Assessing Officer determining concealed income at Rs. 89,19,477. The Commissioner of Income Tax (A) later deleted the concealed income, restoring the total income at the original loss amount. However, the Commissioner of Income Tax invoked Section 263, contending errors in computation under Section 115JA and Section 80HHC of the IT Act in the assessment order passed under Section 153A. The Income Tax Appellate Tribunal set aside the Commissioner's order, leading to the present appeal by the revenue.The crux of the matter lies in the interpretation of Section 153A of the Income-tax Act. The court delves into the legislative intent behind the introduction of Sections 153A, 153B, and 153C by the Finance Act, 2003, to streamline assessment/reassessment procedures in search cases. Section 153A mandates the Assessing Officer to issue notices for six preceding assessment years post a search or requisition. The court clarifies that finalized assessments/reassessments do not abate under Section 153A, as confirmed by CBDT circular No. 8 of 2003. In the present case, the assessment for 1998-99 was finalized before the search, thus not impacted by Section 153A.Further, the court emphasizes that once an assessment attains finality, deductions allowed and losses computed also gain finality. In absence of new evidence contradicting prior reliefs, the Assessing Officer cannot disturb finalized assessments during Section 153A proceedings. The court finds no material suggesting errors in the Section 80HHC deduction, thereby invalidating the Commissioner's invocation of Section 263. Additionally, since the concealed income addition was deleted without directions on computing book profits, the Assessing Officer was bound to adhere to the Commissioner's order, precluding jurisdiction under Section 263.In conclusion, the court dismisses the appeal, upholding the Tribunal's decision to quash the Commissioner's order under Section 263. The judgment underscores the importance of adhering to statutory provisions and finalized assessments, barring unwarranted interference based on unsubstantiated claims of errors in deductions or income computations.