Appeal dismissed as Tribunal's decision on tax demand deletion didn't raise substantial legal question.

The High Court dismissed the appeal filed by the assessee, as the Tribunal's decision to delete the tax demand under section 80HHC during processing under section 143(1)(a) did not raise a substantial question of law under section 260A of the Income-tax Act, 1961. The High Court held that the proceedings under sections 143(3) and 154 are separate, and the Tribunal's decision did not explicitly allow the entire claimed deduction, leading to the dismissal of the appeal.

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Issues:
Appeal under section 260A of the Income-tax Act, 1961 against the order of the Income-tax Appellate Tribunal pertaining to the assessment year 1995-96.

Analysis:
The assessee filed a return of income declaring "nil income," which was selected for scrutiny. A revised return was filed later, showing a gross total income of Rs. 60,60,858, with a deduction of Rs. 49,18,171 under section 80HHC. The income was assessed at Rs. 11,42,867 under section 143(1)(a) of the Act, resulting in a tax demand of Rs. 10,21,710. This addition was confirmed by the Commissioner of Income-tax (Appeals) but later deleted by the Tribunal, which held that no disallowance can be made under section 80HHC during processing under section 143(1)(a).

The assessment was completed under section 143(3) of the Act, assessing the income at Rs. 11,42,686 by allowing a deduction of Rs. 49,18,171 under section 80HHC. The Assessing Officer, in a subsequent order under section 154/143(3), revised the demand to "nil" based on the Tribunal's decision. The assessee claimed that the full deduction under section 80HHC should be allowed, but the Assessing Officer disagreed, stating that the Tribunal did not explicitly allow the entire claimed deduction.

The Commissioner of Income-tax (Appeals) declined to interfere with the computation, leading to an appeal by the assessee, which was dismissed by the Tribunal. The assessee argued that the Assessing Officer should have considered the claim under section 80HHC from the revised return, but the High Court found no ground to differ with the previous decisions. It was noted that the proceedings under sections 143(3) and 154 are separate and independent, and the appeal did not raise a substantial question of law under section 260A of the Act.

Therefore, the High Court concluded that the appeal filed by the assessee was not maintainable and dismissed it, as the order of the Tribunal did not give rise to a question of law, let alone a substantial one within the scope of section 260A of the Income-tax Act, 1961.

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