Tribunal Upholds Assessment Reopening & Deduction Entitlement

The Tribunal upheld the department's reopening of assessments under section 147(b) based on information from CIT(A)-VII, Calcutta, indicating non-exporter status. The Tribunal found the Assessing Officer's action justified, reversing the CIT (Appeals)'s decision. Regarding deduction under section 80HHC, the Tribunal upheld the assessees' entitlement, considering them as the real exporters who fulfilled necessary conditions. Appeals for the assessment years 1983-84 and 1984-85 for M/s. Cham Marine Products (P.) Ltd. and the assessment year 1985-86 for M/s. Cham Trading Organisation were partly allowed, while the appeal for the assessment year 1986-87 for M/s. Cham Marine Products (P.) Ltd. was dismissed.

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Issues Involved:
1. Justifiability of invoking provisions of section 147(b) of the Income-tax Act.
2. Entitlement to deduction under section 80HHC of the Income-tax Act.

Issue-Wise Detailed Analysis:

1. Justifiability of Invoking Provisions of Section 147(b):

The department contended that the reopening of assessments under section 147(b) was justified based on information received from the CIT(A)-VII, Calcutta, indicating that the assessees were not exporters within the meaning of the Indian Customs Act, 1962, and the export-import policy. The department argued that this information was sufficient to resort to the provisions of section 147(b), citing cases such as R.B. Bansilal Abirchand Firm v. CIT, Ambalal Jivabhai Patel v. ITO, and Purushottam Das Bangur v. WTO.

The assessees argued that the Assessing Officer did not make any independent inquiry before issuing the notice under section 148, relying solely on a letter from the CIT(A)-VII, Calcutta, which did not constitute "information" as required under section 147(b). They cited the Supreme Court's decision in Indian and Eastern Newspaper Society v. CIT, which held that an opinion of the Audit party on a point of law could not be regarded as "information."

The Tribunal concluded that the information received from CIT(A)-VII, Calcutta, constituted valid "information" for reopening the assessments under section 147(b), as it was received from an external source and was sufficient to form a belief that income had escaped assessment. The Tribunal reversed the CIT (Appeals)'s decision, holding that the Assessing Officer's action was justified.

2. Entitlement to Deduction under Section 80HHC:

The department's main contention was that the deduction under section 80HHC could not be allowed to the assessees as it had already been claimed by M/s. Pieco Electronics and Electricals Ltd. (Philips). The CIT (Appeals) had allowed the deduction to the assessees on the grounds that the foreign exchange was directly received by them in their bank accounts and that they were the real exporters.

The assessees argued that they were entitled to all export incentives, including the deduction under section 80HHC, as per their agreement with Philips. They contended that they had exported goods directly to foreign buyers and received the foreign exchange in their bank accounts. They also referred to the appellate order of the CIT (Appeals), Calcutta, which denied the claim of Philips for the section 80HHC relief.

The Tribunal upheld the CIT (Appeals)'s decision, concluding that the assessees were the real exporters and entitled to the deduction under section 80HHC. The Tribunal noted that the assessees had fulfilled the necessary conditions for claiming the deduction, including exporting goods out of India and receiving sale proceeds in convertible foreign exchange. The Tribunal also highlighted that the agreement between the assessees and Philips indicated that all export incentives would be availed by the assessees, and the foreign exchange had been received by them directly.

Conclusion:

The appeals for the assessment years 1983-84 and 1984-85 in the case of M/s. Cham Marine Products (P.) Ltd. and the appeal for the assessment year 1985-86 in the case of M/s. Cham Trading Organisation were partly allowed, while the appeal for the assessment year 1986-87 in the case of M/s. Cham Marine Products (P.) Ltd. was dismissed.

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