2018 (11) TMI 512

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....32,14,348/- after claiming deduction u/s.10B of the Act of Rs. 1,35,34,288/-. The assessment was completed u/s.143(3) on 30.11.2010, determining the total income at Rs. 1,54,66,490/-, after making various disallowance/additions to the income admitted, which includes the deduction/restriction of u/s.10B of the I.T. Act. The reasons for this deduction/restriction were discussed by the AO as under: 2.1 The assessee was in the business of processing of granite. The assessee company has set up a hundred per cent export oriented undertaking located at Sy. No. 345,358/1, Marudhandapally(V), Near Soolagiri, Hossur Taluka, Krishnagiri district, Tamil Nadu and registered as EOU in Madras Export Processing Zone and claimed deduction u/s.10B of Inco....

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....reign currency corresponding to third party exports. In view of the above observations, the AO held that the exemption claimed u/s.10B of the Income Tax Act, 1961, was not allowed in respect of third party exports of Rs. 23,97,49,461/- and the same were reduced from the total turnover and exemption u/s.10B was recomputed accordingly. 2.4 When the assessee preferred an appeal before the CIT(A) as well before the ITAT, he upheld the action of AO. 3. Later, the AO initiated penalty proceedings u/s 271(1)(c) of the Act on the ground that the assessee company has deliberately claimed deduction u/s 10B on the third party exports though it has not received any inward remittances in foreign currency with a sole intention to reduce the taxable....

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....led a petition for admission of the following ground of appeal, on the ground that the assessee inadvertently omitted to raise a formal ground to this effect while filing of appeal before the ITAT and the issue involved is a legal issue, the ground may be admitted for adjudication: "The initiation of proceedings u/s 271(1)(c) of the Act is not valid as the AO did not strike off the inappropriate portion of the notice. The AO ought to have struck off the inappropriate portion and indicated to the assessee the applicable portion in the notice" 6. As the said additional grounds are legal grounds, wherein, the facts are on record and facts do not require fresh investigation, following the decision of Hon'ble Supreme Court in the cas....