2003 (6) TMI 437 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the assessment order.
2. Deletion of addition as undisclosed income from export of coal.
3. Deletion of trading addition.
4. Direction to allow deduction under section 80HHC of the Income-tax Act.
5. Other law points/contentions/arguments raised by the assessee.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order:
The revenue challenged the cancellation of the assessment order by the CIT(A). The Departmental Representative argued that the assessment was completed within the extended time provided under section 153(3)(ii) of the Income-tax Act, following the High Court's direction to continue proceedings without passing a final order until the Commissioner disposed of the matter. The CIT, N.E.R., Shillong, rejected the assessee's transfer request on 14th/15th October 1996, and the assessment was completed on 25-2-1997. The assessee contended that the assessment was time-barred, as the final order should have been passed by 30th November 1996, considering the High Court's order and the limitation period. The Tribunal found that the assessment was indeed barred by limitation and upheld the CIT(A)'s cancellation of the assessment order. Additionally, the Tribunal noted that the approval of the Range Dy. CIT without hearing the assessee was beyond the scheme of the Income-tax Act, further invalidating the assessment order.

2. Deletion of Addition as Undisclosed Income from Export of Coal:
The revenue contested the deletion of Rs. 1 lakh added by the Assessing Officer as undisclosed income from the export of coal. The Assessing Officer applied a net profit rate of Rs. 50 per M.T. without providing specific instances or confronting the assessee. The Tribunal upheld the CIT(A)'s deletion of the addition, finding no basis for the lump sum addition made by the Assessing Officer.

3. Deletion of Trading Addition:
The revenue challenged the deletion of a trading addition of Rs. 85,457. The Tribunal noted that the assessment was completed under section 144 due to the assessee's non-production of books of account, citing the pending transfer matter before the High Court. In the interest of justice, the Tribunal restored the matter to the Assessing Officer for a fresh examination, directing the Assessing Officer to decide the issue after reviewing the books of account and providing a reasonable opportunity for the assessee to be heard.

4. Direction to Allow Deduction under Section 80HHC:
The revenue disputed the CIT(A)'s direction to allow deduction under section 80HHC for export profit from coal. Both parties agreed that the issue was covered by a previous Tribunal order, which had set aside the matter to the Assessing Officer. Following this precedent, the Tribunal restored the matter to the Assessing Officer to decide the issue as per the Tribunal's earlier directions, after providing a reasonable opportunity for the assessee to be heard.

5. Other Law Points/Contentions/Arguments Raised by the Assessee:
The assessee contended that the CIT(A) should have allowed relief on other law points. The Tribunal found that the CIT(A) had passed a speaking order regarding these grounds and, in the absence of any contrary material from the assessee, found no error in the CIT(A)'s order. Consequently, the ground was rejected.

Conclusion:
In summary, the Tribunal dismissed the revenue's appeal for the assessment year 1993-94, partly allowed the appeal for the assessment year 1994-95 for statistical purposes, and rejected both cross objections filed by the assessee. The Tribunal upheld the CIT(A)'s cancellation of the assessment order due to limitation and procedural issues, confirmed the deletion of undisclosed income and trading additions, and remanded the deduction under section 80HHC for fresh consideration.