2014 (1) TMI 337 - AT - Income Tax

Assessee's Appeal Allowed for Review, Time-Barred Reassessment and Deduction Issues Remanded

The appeal of the assessee was allowed for statistical purposes, and the issues regarding time-barred reassessment proceedings and computation of ... Validity of reassessment u/s 147 - Held that:- The ld. CIT(A) in his order without giving any reasons adjudicated the issue in a very cryptic manner and had upheld the reopening - The ld. CIT(A) had extracted all the facts and also called for Remand Report wherein the ld. AO has revised the figure of Rs.36,68,915/- to Rs.86,83,246 - The ld. CIT(A) had adjudicated the issue of reopening and had upheld the reopening of the assessment though admittedly the order could have been more in detail - The issue of reopening as also the issues in the appeal can be restored to the file of the ld. CIT(A) for passing a speaking order on the issue of reopening as also in regard to granting of the assessee opportunity to recompute the deduction u/s 80HHC of the Act, if the reopening was held against the assessee - The issue was restored for fresh adjudication. Issues:1. Time-barred reassessment proceedings.2. Computation of deduction under section 80HHC of the Income Tax Act, 1961.Analysis:1. The appellant raised concerns regarding the initiation of reassessment proceedings beyond the four-year period from the end of the relevant assessment year. The appellant argued that the Assessing Officer (AO) failed to specify any omission or failure on the part of the assessee for initiating the reassessment. The appellant also questioned the justification provided by the ld. CIT(A) for upholding the AO's actions without adequate explanation. The AO had computed indirect expenses related to export turnover of trading goods at Rs.3,668,915 for the purpose of deduction under section 80HHC of the Act. However, the ld. CIT(A) revised this amount to Rs.8,683,246 without providing a clear basis for the revision. The appellant contended that the claim for deduction under section 80HHC was supported by a certificate issued by a reputable firm of Chartered Accountants, Price Waterhouse. The appellant further disputed the prorated indirect cost of trading goods calculated by the AO based on total employment cost, traveling expenses, rent, and miscellaneous expenses, arguing that the figures were not in line with audited accounts and lacked a proper basis.2. The appellant also contested the consideration of rent and miscellaneous expenses by the AO in computing the indirect cost, highlighting discrepancies between the amounts considered and those in the audited accounts. Additionally, the appellant pointed out that no advertisement expenses were incurred during the relevant year for the export of goods outside India. The ld. CIT(A) directed the AO to adopt the revised figure of Rs.8,683,246 for indirect expenses related to export turnover of trading goods, leading to the recomputation of the deduction under section 80HHC accordingly. The appellant sought leave to modify the grounds of appeal as needed. During the hearing, the counsel emphasized two main issues: the time-barred reopening of the assessment without specifying any failure on the part of the assessee and the need to re-adjudicate the computation of deduction under section 80HHC if the reopening decision favored the assessee. The Bench requested explanations from the ld. DR regarding the figure of Rs.36,68,915 mentioned in the reasons recorded by the AO for reopening and the cryptic nature of the ld. CIT(A)'s order upholding the reopening. The ld. CIT(DR) defended the actions taken, stating that all facts were considered, and a revised figure of Rs.86,83,246 was proposed by the AO in the Remand Report. Ultimately, the issues in the appeal were restored to the ld. CIT(A) for re-adjudication, with instructions to provide a detailed order on the reopening issue and grant the assessee an opportunity to recompute the deduction under section 80HHC if necessary.In conclusion, the appeal of the assessee was allowed for statistical purposes, and the issues were remanded for further consideration and detailed adjudication by the ld. CIT(A).