2011 (2) TMI 1515 - AT - Income Tax

Summary

Issues involved: Validity of reassessment under section 147 and eligibility of deduction under section 80HHC of the Income Tax Act.

Validity of Reassessment under Section 147:
The appeal challenged the validity of reassessment under section 147, questioning whether proceedings can be initiated when the time for issuing notice under section 143(2) has not expired. The notice under section 148 was issued before the time available for issuing notice under section 143(2) had expired. The Tribunal analyzed the procedural aspects and relevant provisions of the Income Tax Act. It was held that reassessment completed pursuant to the notice under section 148 was not valid as the time limit for completing scrutiny assessment had not expired. Citing judgments of the Hon'ble Madras High Court and Tribunal, the Tribunal concluded that the reassessment order passed under section 147 was invalid.

Eligibility of Deduction under Section 80HHC:
The assessee had claimed deductions under sections 80HHC and 10B of the Income Tax Act for different units. The Assessing Officer disallowed the deduction under section 80HHC on the grounds that the income from manufacturing activity was negative and job work income was considered non-manufacturing activity. The assessee contended that profits from job work receipts should be eligible for deduction under section 80HHC. The Tribunal did not adjudicate on the merits of this issue due to the decision on the validity of reassessment in favor of the assessee.

Conclusion:
The Appellate Tribunal, Bangalore, partly allowed the appeal filed by the assessee, holding the reassessment under section 147 as invalid due to procedural irregularities. The issue regarding the eligibility of deduction under section 80HHC was not addressed in detail as the jurisdictional aspect was decided in favor of the assessee.