2013 (4) TMI 258 - AT - Income Tax

Re-opening of assessment u/s 147 - Held that - The original return of income filed by the assessee was processed u/s 143(1)(a). In view of the amendment brought in by the Taxation laws (Amendment) Act, 2005, the assessing officer had reason to believe that the income has escaped the assessment. In this factual situation, no infirmity in the decision of CIT(A) in upholding the validity of reopening. The view taken by the CIT(A) gets support from the decision of Asst. CIT Vs. Rajesh Jhaveri Stock Brokers P Ltd (2007 (5) TMI 197 - SUPREME COURT) wherein held that failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) Denial of deduction u/s 80HHC on import entitlements of DEPB receipts - retrospective amendments questioned - Held that - The issue relating to the taxability of DEPB benefits and the applicability of the 3rd and 4th proviso to sec. 80HHC(3) during the years under consideration need to be examined afresh. Accordingly restore the same to the file of the Assessing Officer with the direction to examine the issue afresh in the light of the decisions rendered in the case of AVANI EXPORTS & OTHERS 2012 (7) TMI 190 - GUJARAT HIGH COURT wherein held that impugned amendment exists only to be given effect from the date of amendment and not in respect of earlier assessment years of the assesses whose export turnover is above Rs. 10 Crore. In other words, the retrospective amendment should not be detrimental to any of the assessees Also see Vikas Kalra Vs. CIT 2012 (2) TMI 99 - SUPREME COURT OF INDIA and Topman Exports 2012 (2) TMI 100 - SUPREME COURT OF INDIA and decide the same in accordance with law after affording necessary opportunity of being heard to the assessee .

Summary

Issues:
1. Validity of re-opening of assessment u/s 147 of the Act.
2. Denial of deduction u/s 80HHC of the Act on import entitlements.

Analysis:

Issue 1: Validity of re-opening of assessment u/s 147 of the Act
The assessee contested the decision of the Ld CIT(A) on the re-opening of assessment under section 147. The assessing officer re-opened the assessment due to the amendment brought in by the Taxation Laws (Amendment) Act, 2005, which inserted provisos to section 80HHC of the Act with retrospective effect. The AO found that the conditions specified in the provisos were not met by the assessee, leading to the disallowance of the deduction claimed u/s 80HHC. The Ld CIT(A) upheld the validity of the re-opening. The ITAT, in line with the decision of the Hon'ble Supreme Court in a similar case, found no infirmity in the decision of the Ld CIT(A) and upheld the validity of the re-opening of assessment.

Issue 2: Denial of deduction u/s 80HHC of the Act on import entitlements
The assessee's claim for deduction u/s 80HHC on import entitlement (DEPB) receipts was denied by the assessing officer in the re-opened assessment. The Ld CIT(A) affirmed this decision. However, various assessees had filed writ petitions challenging the retrospective amendments related to the deduction. The Hon'ble Supreme Court consolidated these petitions and directed the Hon'ble Gujarat High Court to decide on the matter. The Gujarat High Court ruled that the retrospective amendment should not be detrimental to any assessee. Considering this, the ITAT set aside the orders of the Ld CIT(A) and directed the Assessing Officer to re-examine the issue in light of the decisions of the Hon'ble Gujarat High Court and the Hon'ble Supreme Court. The ITAT allowed the appeal of the assessee for statistical purposes, emphasizing the need for a fresh examination of the taxability of DEPB benefits and the applicability of the provisos to section 80HHC.