TaxTMI 
TaxTMI 
2006 (4) TMI 511
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....'s representative attended during the course of the assessment proceedings and produced books of account comprising of cash book, ledger, purchase/sales registers, purchase invoices, sales bills, vouchers and bank statements and that the case was discussed with him. The Assessing Officer has, thereafter, discussed the trading results of the assessee in para 3 of his order and has mentioned that this year the rate of Gross Profit was much better at 39.07 per cent as compared to the last year's G.P. rate of 20.7 per cent. 2. The Commissioner of Income-tax, who assumed jurisdiction under section 263, issued a show-cause notice to the assessee on 17-1-2005, in which the assessee was intimated that the assessment order passed by the Assessing Officer was erroneous and prejudicial to the interests of the revenue on account of the following reasons: (i) As per notes to the P&L account, there was reduction in the value of closing stock following change in the method of valuation of closing stock as a result of which profit for the year was lower by Rs. 6,37,413. The Assessing Officer failed to take note of the above. (ii) Auditor's note to accounts also ind....
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....d necessary. It may be mentioned here that the total sum of Rs. 1,98,38,549 indicated in ground No. (iii) of the notice issued under section 263 is made up as under: DEPB Rs. 1,02,419 Special Import Licence Rs. 1,07,704 Duty Drawback Rs. 1,96,28,426 Rs. 1,98,38,549 3. In the backdrop of the abovementioned facts, the ld. counsel appearing on behalf of the assessee contended before us that complete details regarding computation of deduction under section 80HHC were filed before the Assessing Officer during the course of the assessment proceedings under section 143(3). In the computation of income filed with the return of income, it was mentioned that the deduction under section 80HHC was as per Form No. 10CCAC filed by the assessee. The statement of computation of income is at pages 1 to 3 of the Paper Book. In the profit and loss account, income received by the assessee from DEPB, special import licence and duty drawback, as per the details given above, were specifically indicated (copy at page 5 of the PB). The ld. counsel invited our attention to Form No. 10CCAC, copy of which is at pages 13 to 14 of the PB. In the Annexure to Form No. 10CCAC, ....
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.... proposition, reliance is also placed on the following ITAT decisions: (i) ITAT, Mumbai 'H' Bench in the case of Mrs. Khatiza S. Oomerbhoy [IT Appeal Nos. 3299 and 3300 (Mum.) of 2005, dated 27-2-2006]. (ii) P&G Enterprises (P.) Ltd. v. Dy. CIT [2005] 93 ITD 138 (Delhi). (iii) ITAT, Mumbai 'J' Bench Order dated 2-2-3005 in the case of Crown Frozen Foods in ITA No. 4242/Mum/2004. Inviting our attention to the Mumbai ITAT decision in the case of Crown Frozen Foods (supra), the ld. counsel submitted that the facts in that case are similar as in the present case. In that case also, the CIT invoked his jurisdiction under section 263 on the ground that deduction under section 80HHC was wrongly allowed by the Assessing Officer in respect of DEPB, duty drawback etc. In that case, the Tribunal observed that the assessee's claim for deduction under section 80HHC was supported by the following ITAT decisions: (i) Asstt. CIT v. Pratibha Syntex [1999] 106 Taxman 32 (Ahd.) (Mag.). (ii) Asstt. CIT v. Ashwini Fisheries Ltd. [2001] 77 ITD 561 (Mad.). (iii) Eastern Leather Products (P.) Ltd. v. Dy. CIT [1999] 68 ITD 358 (De....
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....The scope of the powers of the CIT under section 263 has been elaborately analyzed and discussed by ITAT, Mumbai in the case of Mrs. Khatiza S. Oomerbhoy (supra). In this order, the Tribunal considered the legal position as emerging from the following judgments: (i) Malabar Industrial Co. Ltd.'s case (supra). (ii) Gabriel India Ltd.'s case (supra). (iii) Girdharilal B. Rohra v. CIT [2004] 86 TTJ 177 (Mum.). (iv) Triveni Engg. Works Ltd. v. Dy. CIT [2003] 131 Taxman 32 (Del.) (Mag.).p> (v) ITAT, Mumbai 'I' Bench order dated 24-3-2004 in the case of Atlanta Agencies in IT Appeal No. 671 (Mum.) of 2003. (vi) ITAT, Mumbai 'H' Bench order dated 31-3-2005 in the case of Shri Bipin P. Shah v. ITO in IT Appeal No. 5992 (Mum.) of 2003. (vii) ITAT, Mumbai 'H' Bench order dated 31-3-2004 in the case of Shri Ambalal B. Patel in IT Appeal No. 5993 (Mum.) of 2003. (viii) ITAT, Mumbai 'A' Bench order dated 27-4-2004 in the case of Ausia Properties Development Ltd. in IT Appeal No. 3653 (Mum.) of 2003. After a detailed discussion, the Tribunal culled out the following fundamental prin....
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....ntioned here that similar issue has been decided in assessee's favour by the Mumbai ITAT in the case of Crown Frozen Foods (supra). In this case also, the Assessing Officer allowed deduction under section 80HHC of DEPB and duty drawback income, without giving any discussion on this issue in the assessment order. However, details were available on record and the Tribunal, following the Supreme Court decision in the case of Malabar Industrial Co. Ltd., held that the CIT had no jurisdiction to exercise his powers under section 263. The ld. CIT-DR has relied on the Gujarat High Court decision in the case of M.M. Khambathwala (supra) wherein it was held that even in the case where the issue is debatable, the CIT can exercise his powers under section 263. In our view, the ratio of this case stands diluted by the Supreme Court decision in the case of Malabar Industrial Co. Ltd. The Hon'ble Supreme Court, in this case, has clearly held that if the Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view with which the ld. CIT does not agree, the Assessing Officer's order cannot be treated....