2004 (6) TMI 586 - AT - Income Tax

Summary

Issues:
- Revision of assessment order under section 263 regarding deduction under section 80HHC.
- Merger of Assessing Officer's order with appellate orders.
- Proper examination of deduction claim under section 80HHC by Assessing Officer.
- Jurisdiction of CIT to revise Assessing Officer's order under section 263.

Analysis:

1. Revision of assessment order under section 263 regarding deduction under section 80HHC:
The appeal was against the order of the CIT setting aside the assessment completed by the Assessing Officer under section 143(3) and directing a fresh decision on the deduction under section 80HHC. The appellant challenged the CIT's order, arguing that the issue had been decided by the CIT(A) in previous appellate orders. The CIT(A) had allowed the deduction initially, but later withdrew it, leading to a series of appeals and reversals. The issue in question was whether the assessee was eligible for the deduction under section 80HHC in the absence of export profit.

2. Merger of Assessing Officer's order with appellate orders:
The contention was raised regarding the merger of the Assessing Officer's order with the appellate orders. The CIT argued that the issue was not properly examined by the Assessing Officer and there was no application of mind. The Tribunal found that the issue was not decided on merits by the CIT in previous orders, thus the Assessing Officer's order did not merge with the appellate orders, allowing the CIT to revise it under section 263.

3. Proper examination of deduction claim under section 80HHC by Assessing Officer:
The Tribunal examined whether the Assessing Officer properly examined the deduction claim under section 80HHC. Correspondence between the assessee and the Assessing Officer showed a specific query raised by the Assessing Officer and a satisfactory explanation provided by the assessee based on the relevant provisions. The Tribunal found that the Assessing Officer had considered the issue and the explanation offered by the assessee, leading to the allowance of the deduction. The Tribunal also noted that the view taken by the assessee was supported by previous Tribunal decisions, indicating a possible view on the issue.

4. Jurisdiction of CIT to revise Assessing Officer's order under section 263:
The Tribunal analyzed the jurisdiction of the CIT to revise the Assessing Officer's order under section 263. It was established that there was no error in the Assessing Officer's order, and the CIT's assumption of jurisdiction under section 263 was not justified. As there was no error in the Assessing Officer's order, the Tribunal set aside the CIT's order under section 263, restoring the Assessing Officer's order passed under section 143(3).

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the proper examination of the deduction claim under section 80HHC by the Assessing Officer and the lack of jurisdiction for revision by the CIT under section 263 due to the absence of error in the Assessing Officer's order.