TaxTMI 
TaxTMI 
2012 (12) TMI 207
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....claimed excess deduction u/s 80HHC and therefore the assessment was reopened after recording the following reasons:- "During the year under consideration the assessee has claimed deduction amounting to Rs.48,31,566/- u/s.80IB of the I.T. Act However, on the same profit, assessee has claimed deduction amounting to Rs.60,23,163/- u/s.80HHC of the I.T. Act. As per sub section 13 of section 801B read with sub section 9 of section 80IA. "...... where any amount of profits and -gains of an undertaking or of an enterprise in the case of an assessee is claimed and allowed under this section for any assessment year, deduction to the extent of such profits and gains should not be allowed under any other previsions of this Chapter under the heading "C - Deductions in respect of certain incomes....." Therefore deduction u/s. 80HHC should be allowed on that profit of business is computed after reducing deduction u/s.80IB from total profit of business. Assessee failed to do so. It led to excess claim of deduction u/s 80HHC. So I have reason to believe that income chargeable to tax has escaped assessment." 3. The AO proceeded to reopen the assessment by noting the following fac....
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....nation for this assessment." 2.1 Assessee replied on the Issue of reopening by letter dated 23- 03-2006 which is quoted as under: "Notices u/s. 143(2)/142(1) were issued on dated 05/09/2005 and with these notices, assesses was supplied with the reasons recorded for reopening the case u/s. 147 of the I.T. Act. In the submission dated 15/10/2005, your kind attention was drawn to the decision of Supreme Court in the case of Sun Engineering Works 198 ITR 297 wherein the Apex Court has observed that what is set-aside in the assessment is only the previous under assessment and not the whole original assessment. Where the re-assessment is made under this section in respect of income which has escaped tax, the AO's jurisdiction under this section is confined to such income which has escaped assessment and does not extend to revision, re-opening or re-considering the whole assessment. Therefore, in view of these propositions, the assessee will be required to justify the claim under section 80HHC which has been considered to be excessive. Further with regard to assessment u/s. 143(1) your kind attention was drawn to the case of Anderson Marine & Sons Pvt. Ltd. reported in 266 ITR 69....
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....: 1. 121ITR69(AP) 2. 142/877 (Madras) 3. 188/612(Kerala) 4. 176/529 (SC) From the above, it can be seen that in the reopened assessment, any issue can be looked into, particularly, when assessment was not completed u/s. 143(3) of I.T. Act. Assessee further cited the decision of Bombay high court reported in 266 ITR 694 where intimation u/s. 143(1) was held to be an order. The assessee's reliance on this decision is misplaced because this decision relates to CIT's order u/s.263 revising intimation u/s. 143(1). It was held by the court that the intimation is an order on 'self assessment. However, it is nowhere held that it is assessment order. In fact for 263 only 'order' is required and not assessment. Therefore this decision does not help assessee. Assessee again asked for disposing its objection to the reopening. In fact with the show cause letter dated 17-3-2006 assessee was clearly communicated that after reopening of the assessment on the issue of excess claim u/s.80HHC, dealt earlier, survey action resulted in wrong claims made under sec.801B and also highlighted non maintenance of proper records. Since assessment was already opened, another reopening o....
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....nation 2(b) and subsequently survey was conducted on 21.02.2006. During survey evidence relating to incorrect claim of deduction u/s 80IB and non maintenance of records was found. The AO informed the assessee that since the assessment was already reopened no separate reopening was done for deduction u/s 80IB. The AO relied on the decision of Gujarat High Court in the case of Praful Chunilal Palel reported in ;236 ITR 832. The AO further stated that once the assessment is reopened it is open for all the issues and is not restricted to a particular issue. Thus the AO disposed off the objections of the appellant by a speaking order. The decision of the Hon'ble Supreme Court in G K N Driveshaft case has not been violated. The fin>t ground of appeal is rejected. The second ground of appeal is that the reassessment proceedings are required to be confined to issues for which re-opening has been made. The arguments of the counsel for the appellant are devoid of any merit. The AO has clearly mentioned in the assessment order that the case was reopened for one reason namely excessive deduction u/s 80HHC. However subsequently due to survey u/s 133 A escapement of income on account of oi....
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....aimed excess deduction u/s 80HHC, therefore, the AO had reason to believe that income chargeable to tax has escaped assessment but while passing the order u/s 143(3) read with section 147, the claim of deduction u/s 80HHC was not disturbed and the AO accepted the returned income claiming the deduction u/s 80HHC of the Act . Once this was done, the AO has no jurisdiction to go on making further additions, while the same has been done by the AO in this case. For making this submission, he relied on the following case law:- 1. CIT vs. Shri Ram Singh (2008) 306 ITR 343 (Raj) 2. CIT vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom) 3. Ranbaxy Laboratories Ltd. vs. CIT (2011) 336 ITR 136 (Delhi) 4. ACIT vs. Major Deepak Mehta (2012) 65 DTR (Chhattisgarh) 237 6. On the other hand, the learned DR supported the orders of the AO and the learned CIT(A). 7. We have heard both the parties and perused the records. We have also gone through various decisions relied upon by the learned counsel of the assessee. We find that the AO noticed that the assessee has claimed excess deduction u/s 80HHC and therefore the assessment was reopened after recording the reasons stated abo....
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....o believe" to have escaped assessment, was found to have been explained, his jurisdiction came to a stop at that, and he did not continue to possess jurisdiction, to put to tax, any other income, which subsequently came to his notice, in the course of reassessment proceedings, which were found by him, to have escaped assessment.- CIT vs. Atlas Cycle Industries (1989) 180 ITR 319 (P&H) concurred with; Asstt. CIT vs. Rajesh Jhaveri Stock Brokers (P) Ltd, (2007) 210 CTR (SC) 30 : (2007) 291 ITR 500 (SC) and Jagan Nath Singhal vs. Dy. CIT (2000) 242 ITR 554 (P&.H) distinguished." In the case of CIT vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom), the Hon'ble Bombay High Court has held as under:- "The effect of s. 147 as it now stands after the amendment of 2009 can be summarized as follows: (i) The AO must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year; (ii) Upon the formation of that belief and before he proceeds to make an assessment, reassessment or recomputation, the AO has to serve on the assessee a notice under sub-s. (1) of s. 148; (iii) The AO may assess or reassess such income, which he has reason to believe, has....
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.... section as having escaped assessment. If upon the issuance of a notice under s. 148(2), the AO accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently. Parliament when it enacted the provisions of s. 147 w.e.f. 1st April, 1989 clearly stipulated that the AO has to or reassess the income which he had reason to believe had escaped assessment and also any other income chargeable to tax which came to his notice during the proceedings. In the absence of the assessment or reassessment of the former, he cannot independently assess the latter. (Para 14) Parliament, when it enacted the Expln. 3 to s. 147 by the Finance (No. 2) Act, 2009 clearly had before it both the lines of precedent on the subject. The precedent dealt with two separate questions. When it effected the amendment by bringing in Expln. 3 to s. 147, Parliament stepped in to correct what it regarded as an interpretational error in the view which was taken by certain Courts that the AO has to restrict the assessment or reassessment proceedings only to the issues in respect of whic....