TaxTMI 
TaxTMI 
2004 (5) TMI 54
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....itioner filed its return of income for the assessment year 1991-92 ending March 31, 1991, on December 31, 1991, showing the total income of Rs. 1,22,56,440 arrived at after claiming an aggregate deduction of Rs. 7,82,43,801 under Chapter VI-A of the Act including a deduction of Rs. 7,74,92,451 under section 80HHC of the Act. The return was accompanied by a copy of the audited accounts as well as tax audit report required to be filed under section 44AB of the Act. The claim for deduction under section 80HHC of the Act was supported by a report from an accountant under sub-section (4). Initially, an intimation was issued under section 143(1)(a) of the Act. Subsequently, respondent No. 1 selected the case of the petitioner for scrutiny. After scrutiny of the return, annexures and documents filed along with the return as well as during the course of discussion, respondent No. 1, by an order dated March 22, 1994, assessed the income of the petitioner to be Rs. 1,43,70,410. While doing so respondent No. 1 modified certain figures of income and also modified the figure of deduction under section 80HHC of the Act to Rs. 8,64,11,622. An appeal filed by the petitioner before the Commissioner....
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....hing which has no linkage with the export activity. In the case of CIT v. Kantilal Chhotalal [2000] 246 ITR 439 even the re-assortment charges (which is incidental to the diamond export business) were held as not includible in the business profits for the purpose of section 80HHC deduction. Taking into consideration the ratio laid down by the Bombay High Court the profits of the assessee from the above mentioned business is required to be omitted. (iii) During the year, the sale of vessels is of Rs. 1,83,83,986 and the profit from the same is determined at 30 per cent. of Rs. 55,15,195. The services receipt are Rs. 13,78,53,269 and the profit from the same is determined at Rs. 6,89,634. The shipping agency fees are at Rs. 2,76,476 and the profit at 50 per cent. is determined at Rs. 1,38,238. Thus, the total profit included in the business profit is Rs. 7,45,80,067. Because of this, the excess deduction under section 80HHC at Rs. 6,10,10,272 was given to the assessee. (iv) I am satisfied that due to furnishing the false particulars of the income by way of the incorrect certificate which means failure on the part of the assessee to disclose fully and truly all mater....
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....He further submitted that the notice was issued only on the basis of change of opinion purportedly based upon the subsequent decisions of the Bombay High Court in (i) CIT v. K.K. Doshi and Co. reported in [2000] 245 ITR 849, and (ii) CIT v. Kantilal Chhotalal reported in [2000] 246 ITR 439. He further submitted that any interpretation of law made by a court can certainly be taken into consideration by the Assessing Officer while initially making an assessment under section 143(3) of the Act. However, interpretation of a law by a court in a subsequent decision between different parties cannot be a ground for reopening of an assessment under section 147 of the Act after the expiry of a period of four years. He submitted that proceedings under section 147 of the Act can be initiated after a period of four years only if the Assessing Officer had a reason to believe that income chargeable to tax had escaped assessment on account of a failure of the assessee to disclose fully and truly all the material facts necessary for the assessment. Further, a sanction of the Commissioner must also be obtained before reopening of the assessment. A mere change of opinion, though such change of opinio....
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....on allowance or any other allowance, as the case may be, for the assessment year concerned: Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Explanation 1.- Production before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.- For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no....
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....f this sub-section, the provisions of Explanation 2 to section 147 shall apply as they apply for the purposes of that section. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non-resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant assessment year." 7. A judicial order once made unless set aside in appeal, is binding on the parties. Ordinarily, all statutes confer a power on a tribunal or judicial authority deciding a matter, to correct typographical or arithmetical errors in its orders. However, power to review one's own orders is different from the power to correct arithmetic or typographic errors and is not an inherent power in any tribunal or judicial authority. Power to review is required to be conferred by a statute. This principle is also applicable even to the or....
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.... starting the proceedings under section 147 in respect of income escaping assessment is open to challenge in a court of law. (observations of the Supreme Court in ITO v. Lakhmani Mewal Das reported in [1976] 103 ITR 437 at page 445 and 446); and (ii) The Assessing Officer must have a reason to believe that such income had escaped assessment by reason of failure on the part of the assessee (a) to make a return under section 139; or (b) to respond to the notice issued under section 142(1) or 148 of the Act, or (c) to disclose fully and truly all the material facts necessary for his assessment of income for that year. 8. Both the aforementioned conditions imposed must co-exist to confer jurisdiction on the Assessing Officer to reopen the assessment under section 147. Sub-section (2) of section 148 of the Act makes it imperative for the Assessing Officer to record his reasons before initiating proceedings. Where a notice under section 147 of the Act is to be issued after the expiry of four years from the end of the relevant assessment year, the Commissioner or the Joint Commissioner, as the case may be, should be satisfied on the reasons recorded by the Assessing Officer th....
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....ction (2) of section 148 and has further obtained the necessary sanction for issuance of the notice as required under section 151 of the Act. Such notice is also required to be issued within the time limit prescribed under section 149 of the Act. Section 149 of the Act, in our opinion, does not relax the restriction of four years prescribed in the proviso to section 147 of the Act for issuance of a notice under the proviso to section 147. The restriction of four years would be applicable unless the income chargeable to tax has escaped assessment by reason of failure of the assessee to make a return under section 139 or in response to a notice under section 142 or 148 of the Act or the failure of the assessee to disclose fully and truly all material facts. If the reassessment is required to be made on account of the failure of the assessee to disclose fully and truly all material facts necessary for his assessment, obviously, the restriction of four years put under the proviso to section 147 would not be applicable and notice can be issued after the expiry of a period of four years, but within the time limit of 7 or 10 years, as the case may be, prescribed under section 149 of the A....
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....During the relevant assessment year, the assessee had received certain income by way of sale of vessels, other services and shipping agency fees. In the case of CIT v. K. K. Doshi and Co. [2000] 245 ITR 849, the Division Bench of this court held that profit earned by the assessee from an activity which has no linkage with the export activity cannot be included in the business profit from an export activity for the purpose of computation of deduction under section 80HHC of the Act. In view of this decision, according to the Assessing Officer, the deduction under section 80HHC was not properly computed in accordance with the principles laid down by the Division Bench of this court in the case of CIT v. K. K. Doshi and Co. [2000] 245 ITR 849. This was expressly stated in paragraph No. 2 of the reasons recorded. In paragraph No. 3 of the reasons, it is stated excess deduction under section 80HHC of the Act has been allowed on the basis of wrong inclusion of profit from sale of vessels, service receipts and shipping agency fees in computing business profit (of exports) escaped assessment on account of the interpretation of law as laid down by this court in CIT v. K. K. Doshi and Co. [20....
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....at were necessary for computation of income; but this is a case wherein the assessment is sought to be reopened on account of change of opinion of the Assessing Officer about the manner of computation of the deduction under section 80HHC in the light of a subsequent decision of the Division Bench of this court in CIT v. K. K. Doshi and Co. [2000] 245 ITR 849. 12. In ITO v. Lakhmani Mewal Das [1976] 103 ITR 437, relied upon by Shri Dastur, the apex court, while considering section 34 of the Indian Income-tax Act, 1922, has held that while it is the duty of the assessee to fully and truly disclose all primary facts necessary for the purpose of assessment, it is no part of his duty to point out what legal inference should be drawn from the facts disclosed. It. is for the Income-tax Officer to draw an appropriate inference. Shri Dastur also relied upon the judgment of the decisions of the Gujarat High Court in Meghdoot Laminart P. Ltd. v. Rajiv Sinha reported in [1999] 238 ITR 918 at 922, the Calcutta High Court in Mercury Travels Ltd. v. Deputy CIT [2002] 258 ITR 533 at pages 537 to 540 and the Madras High Court in Fenner India Ltd. v. Deputy CIT [2000] 241 ITR 672. In all these de....
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....ssued, the proper course of action for the noticee is to file a return and, if he so desire, to seek reasons for issuing of the notices. On receipt of the reasons, the noticee is entitled to file objections to issuance of the notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. Mr. Revonkar, therefore, submitted that the petitioner should have sought for the reasons recorded by the Assessing Officer for issuance of the notice under section 148 and thereafter should have raised before the Assessing Officer its objections thereto. Thereupon, the Assessing Officer would have decided the objections raised by the petitioner by passing a speaking order. The petitioner should not have rushed to the court and this court, in exercise of its jurisdiction under article 226, should not quash the impugned notice. 15. The ratio of the decision of the Supreme Court in GKN Driveshafts India Ltd.'s case [2003] 259 ITR 19 has been considered and explained by two Division Bench of this court in Caprihans India Ltd. v. Tarun Seem, Deputy CIT reported in [2004] 266 ITR 566, and Ajanta Pharma Ltd. v. Asst. CIT reported in [2004] 267 ITR 200. In the former ....