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TMI Blog2003 (5) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses amounting to Rs. 58,767? (vii) It is contended that the provisions of s. 145 of the IT Act are not applicable at all. (viii) Whether, on facts and circumstances of the case, the CIT(A) is justified in upholding the rejection of revised return filed on16th Oct., 1995, declaring business loss of Rs. 6,70,36,898 based on the fact that "no sale of goods" has taken place during the previous year? (ix) The CIT(A) is not justified in upholding the rejection of deduction claimed under s. 80HHC. (x) It is contended that the sale of goods out ofIndiastated at Rs. 9,04,68,208 has not occurred at all in the previous year. (xi) It is contended that a mere book entry of recording an "export sale" is not relevant for the conclusion of lower authorities that such entries reflect sales of goods out of India. (xii) It is contended that under s. 4 of the Sale of Goods Act, 1930, unless all the limbs for a concluded sale are settled, no sale is effected. (xiii) It is contended that the provisions of ss. 234A, 234B and 234C are not applicable at all. (xiv) It is contended that the tax calculations are wrong. (xv) The above grounds of appeal are without prejudice to one and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year. Invalid revised return cannot change the method of accounting. Revised return has been filed on16th Oct., 1995, after detection of concealment of income by the Department as the notice under s. 148 dt.4th Sept., 1995, was served on11th Sept., 1995. (e) No audit report either under s. 44AB or 80HHC has been filed along with this revised return. 6. The AO has also examined the books of accounts of the assessee and after noting various defects including the fact that the assessee has reversed sales of Rs. 9,04,68,208.02 from P L a/c thereby reducing of figure of net profit also by the like amount of sales, rejected the books of accounts of the assessee. The AO thereafter recomputed deduction under s. 80HHC rejecting the claim of loss of assessee. 7. The assessee preferred an appeal before the CIT(A) with the submission that in this assessment year, assessee has switched over to the cash system of accounting from mercantile system after having realized that unrealized export sales proceeds were required to be excluded for the purpose of computation of export income. In support of her contention assessee has relied upon accounting standard of Institution Of Chart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to these details, prices were not determined for the invoices worth Rs. 9,04,68,208.02. In support of his contention, the assessee has filed certain samples of purchase orders and invoices wherefrom it is evident that the consignment was sent after the date of cancellation. He has also carried us through purchase orders in which prices were not quoted. With regard to these invoices and correspondence of those purchase orders, where prices were quoted it was submitted that these prices were quoted for the purpose of shipment of the consignment and in fact these prices were not settled between the parties. The learned counsel has further invited our attention to the order of Special Director of Enforcement Directorate, Government, ofIndiadt. 29th July, 2002, in which proceedings were initiated against the assessee under s. 18(2) of FERA, 1973, read with Central Government s notification for violation of provisions of FERA with the submission that the stand of the assessee that she could not realize the sale proceeds of sale made to various parties worth US$ 31,76,657.47 (equivalent to Rs. 9,84,77,000 appx.) within the stipulated period. When the assessee failed to realize t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e strongly placed reliance upon the order of CIT(A). 14. Having considered the rival submissions and from a careful perusal of the record in the light of the legal provisions, we find that the assessee has filed her return of income claiming deduction under s. 80HHC of the Act therein and this return of income was processed under s. 143(1)(a) of the IT Act. Original balance sheet was prepared after taking into account the entire export turnover and it was filed along with the return of income on29th Oct., 1993. Later on, the assessment was reopened through notice under s. 148 of the Act dt. 4th Sept., 1995, and the return in response to notice under s. 148 was filed on 16th Oct., 1995, declaring business loss of Rs. 6,70,36,898 before depreciation with revised balance sheet and P L a/c. Along with the revised statement of income/loss, a footnote has been given which says that the statement is being revised to reorganize export sale price on realization basis in the revised account. It was also stated in the footnote that though the assessee is entitled to deduction under s. 80HHC, in respect of export sale realized but in the absence of business profit, the same has not been clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le reframing the assessment under s. 147 r/w s. 143 of the Act if it is a mere reassertion of the original return earlier filed. On a careful perusal of this section, we are of the view that once the return is filed in response to notice under s. 148 of the Act, it should be considered as a return as if it was required to be furnished under s. 139 of the Act and on the basis of this return, reassessment is required to be framed by the AO. Hence, while reframing the assessment, AO has to examine the claim raised by the assessee in his revised return and he cannot discard it only for the reason that it is a revised return and the assessee has raised some new claim. But, in the instant case, the AO has rejected the revised return along with the balance sheet and P L a/c after holding it to be an invalid return and estimated the income of the assessee and recomputed deduction under s. 80HHC. The AO has not examined the claim of the assessee that the assessee could not realize the sale proceeds worth Rs. 9,04,68,208, despite of her best efforts. The CIT(A) also did not examine this issue in true spirit and he summarily rejected the claim of the assessee. 18. On a careful perusal of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,77,000 appx.), within the stipulated period, the assessee could not be held responsible for delay because she had been continuously making her sincere efforts. He accordingly exonerated the assessee and dropped the proceedings initiated against her. 20. Though, the assessee has been repeatedly raising the issue before the lower authorities that she could not realize the export sale proceeds due to various reasons despite the best efforts, to an extent of Rs. 9,04,68,208.02 as such she has not earned any export profit thereon but the lower authorities did not look into it and they have estimated the export turnover and export profit, and worked out deduction under s. 80HHC. We, therefore, are of the considered opinion that none of the lower authorities has properly examined the claim of the assessee whether the export sale was properly effected in the light of Sale of Goods Act in order to determine the export turnover and whether the assessee has earned any export profit thereon in order to determine eligible deduction under s. 80HHC of the Act. Since the impugned issue was not properly examined by the lower authorities, we are of the considered view that the issue should be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the issue was not properly examined by the lower authorities as it was not examined by them whether the agreement for commission did exist after the expiry of the term or whether a commission agent had rendered some services for the assessee for which he is entitled, if so, at what percentage of commission. We also found force in the contention of the Revenue that unless export sale is ascertained, payment of commission on sale cannot be quantified. In the foregoing paragraphs, we have set aside the issue of export profit and export turnover to the file of AO for re-examination. In this backdrop, we do not find any justification to adjudicate the issue of payment of commission independently. We, therefore, set aside the order of CIT(A) in this regard and restore the matter to the file of AO with the direction to reexamine it in the light of the assessee s contention that agreement for payment of commission did exist even after the expiry of commission agreement and how much commission was finally accrued on export sale. 24. Ground No. 5 relates to the inclusion of a sum of Rs. 25,574 in respect of short and excess recovery. We have carefully perused the orders of lower autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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