2021 (12) TMI 1492 - AT - Income Tax

Admission of additional grounds of appeal filed under Rule 11 of Income Tax (Appellate Tribunal) Rules, 1963 - legal issue of jurisdiction u/s 147 challenged - Deduction u/s 80IA - AO noticed that the assessee has claimed excess deduction by including income which would not qualify for deduction u/s 80IA - Revenue has challenged deletion of addition made towards foreign exchange fluctuation claimed by the assessee - HELD THAT - Before us, by filing petition for admission of additional grounds of appeal filed under Rule 11 of Income Tax (Appellate Tribunal) Rules, 1963, assessee has submitted that the assessee is challenging the legal issue of jurisdiction under section 147 of the Act, since, against the original assessment order dated 26.12.2008, the assessee preferred an appeal and vide order dated 24.02.2012, the ld.CIT(A) has allowed deduction under section 80IA of the Act to the extent of ₹.14,11,72,786/- as against the claim of ₹.14,28,54,064/-, which was confirmed by the ITAT in an appeal filed by the Revenue in 2017 (1) TMI 1830 - ITAT CHENNAI as well as the Hon ble Jurisdictional High Court vide 2019 (4) TMI 861 - MADRAS HIGH COURT on further appeal, thereby the issue of eligibility of 80IA relief attained finality. As contended that no reason was stated by the AO while issuing notice under section 148 of the Act and thus, the reassessment proceedings is bad in law and prayed for suitable directions. The petition filed under Rule 11 of Income Tax (Appellate Tribunal) Rules, 1963 has been admitted. Since the assessee has not raised the legal issue before the ld. CIT(A), we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) to decide the legal issue and thereafter the claim of deductions under section 80IA of the Act, if any, afresh in accordance with law after affording a meaningful opportunity of being heard to the assessee. Appeals filed by the assessee as well as Revenue are allowed for statistical purposes.

Summary

Issues involved:
1. Disallowance of deduction claimed under section 80IA of the Income Tax Act, 1961.
2. Deletion of addition made towards foreign exchange fluctuation claimed by the assessee.

Analysis:
1. The appeals were filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2006-07. The assessee challenged the disallowance of deduction claimed under section 80IA of the Act, while the Revenue challenged the deletion of addition made towards foreign exchange fluctuation. The Assessing Officer disallowed the excess claim of deduction under section 80IA and brought it to tax after excluding interest income. The CIT(A) confirmed the disallowances partially, leading to cross appeals by both parties.

2. The assessee raised a legal issue of jurisdiction under section 147 of the Act, arguing that the issue of eligibility for 80IA relief had attained finality in previous appeals. The reassessment proceedings were challenged as being bad in law due to lack of reasons stated by the Assessing Officer while issuing notice under section 148. The assessee filed a petition under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963, which was admitted. The Tribunal remitted the matter back to the CIT(A) to decide the legal issue and the claim of deductions under section 80IA afresh, providing a meaningful opportunity for the assessee to be heard.

3. Ultimately, both appeals by the assessee and the Revenue were allowed for statistical purposes, and the order was pronounced in Chennai on 2nd December 2021. The Tribunal's decision to remit the matter back to the CIT(A) for a fresh decision on the legal issue of jurisdiction under section 147 highlights the importance of procedural compliance and affording the assessee a fair opportunity to present their case.