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TMI Blog2006 (2) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... duce the net profit declared by the assessee by the net amount of excise duty paid (total amount paid less the amount of refund received) and to consider the profits so arrived to adopt as the profit of the business for computing deduction under section 80HHC. ( iii )On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in directing the Assessing Officer for calculation of 80HHC deduction whereas he is silent about the quantification of the deduction. ( iv )On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in not appreciating that the amount of Central Excise, Modvat Credit, Sales Tax payment, Sales, closing stock and depreciation are all verifiable items. Grounds of appeal in ITA No. 2259/Mum./2003 ( i )On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in directing the Assessing Officer to exclude amount of sales tax and L/C opening charges from the total turnover for computing the deduction under section 80HHC. ( ii )On the facts and in the circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciation allowance of Rs. 17,900 without giving the base of these findings for assessment year 1998-99." 3. Following grounds have been raised by the assessee in ITA Nos. 2436, 2437 and 2438/Mum./2003 for the assessment years 1995-96, 1996-97 and 1998-99, which are reproduced as under : " Grounds of appeal in ITA No. 2436/Mum./2003 ( i )The Commissioner of Income-tax (Appeals) failed to appreciate that the Assessing Officer has erred in issuing the notice under section 148 dated 27-10-1999 for the assessment year 1995-96. ( ii )The Commissioner of Income-tax (Appeals) failed to appreciate that the Assessing Officer has erred in issuing notice under section 143(2) dated 12-9-2001 after the lapse of more than 12 months in response to the appellant s letter dated 4-12-1999 filed in pursuance of notice under section 148 dated 27-10-1999. ( iii )The Commissioner of Income-tax (Appeals) failed to appreciate that the Assessing Officer has erred in continuing the reassessment proceedings under section 147 when all the reasons for initiating the reassessment proceedings were found to be incorrect and non-existent. ( iv )The Commissioner of Income-tax (Appeals) failed to app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f indirect costs attributable to exports while re-computing the deduction under section 80HHC. ( viii )The Commissioner of Income-tax (Appeals) erred in considering the interest received on Bank Fixed Deposits of Rs. 22,06,414 as assessable under the head Income from other sources when the Assessing Officer has correctly assessed it under the head Business Income ." Grounds of appeal in ITA No. 2438/Mum./2003 "( i )The Commissioner of Income-tax (Appeals) failed to appreciate that the Assessing Officer has erred in issuing the notice under section 148 dated 27-10-1999 for the assessment year 1998-99. ( ii )The Commissioner of Income-tax (Appeals) failed to appreciate that the Assessing Officer has erred in issuing notice under section 143(2) dated 12-9-2001 after the lapse of more than 12 months in response to the appellant s letter dated 4-12-1999 filed in pursuance of notice under section 148 dated 27-10-1999. ( iii )The Commissioner of Income-tax (Appeals) failed to appreciate that the Assessing Officer has erred in continuing the reassessment proceedings under section 147 when all the reasons for initiating the reassessment proceedings were found to be incorre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e containing an assessment year 1998-99 also and the assessee has not charged any interest on these loans. This contrast with the fact that the assessee has paid interest of Rs. 10,981. Therefore, the interest paid by the assessee deserves to be disallowed equivalent to the amount of interest receivable at the rate of 14 per cent of the loan amount given. The interest receivable comes to Rs. 2.32 lakhs since the assessee has paid interest amounting to Rs. 10,981. Therefore, the entire amount of Rs. 10,981 has to be disallowed. This view has been supported by numerous court decisions. In support of this contention the reliance is placed as mentioned below: ( a ) Triveni Engineering Works v. CIT 167 ITR 754 (All.) ( b ) H.R. Sugar Factory v. CIT 171 ITR 363 (All.) ( c ) Phalton Sugar Works Ltd. v. CIT 208 ITR 989 (Bom.) and 216 ITR 479 (Bom.). Therefore, in view of the above mentioned facts the income amounting to Rs. 10,981 has escaped assessment and the case was reopened under section 147 of Income-tax Act, 1961." 6. The Assessing Officer recorded similar reasons for other years except the change of figures relating to disallowance of interest. However, whil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to section 147 with effect from 1-4-1989 the Assessing Officer is not empowered to carry out general review of his own order under section 143(3) making inquiry into various other issues in reassessment proceedings. In the instant case, however, the Assessing Officer has not undertaken a general review of various issues in the reassessment. The issue of excessive deduction under section 80HHC was deleted from the return accompanying the documents and the Assessing Officer was not out of jurisdiction to correct the anomaly and ensure correct amount of deduction was allowed to the appellant. The appellant has also relied on the decision of Delhi High Court in the case of Kelvinator of India Ltd. which states that even after 1-4-1989, reassessment cannot be based on mere change of opinion. In this decision, the Delhi High Court held that the Assessing Officer does not have power to review his own order in the garb of re-assessment. Mere change of opinion cannot be the basis of reassessment. In this case, before me, the facts are different in that the particular issue of Excise Duty had not been examined in the earlier assessment. Thus, it cannot be said that reassessment was don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative submitted that for the validity of reassessment, what has to be seen is, whether the Assessing Officer has information in his possession on the basis of which he could have re-opened the assessment. If that information has a nexus with the reopening of the assessment, then reopening would be justified. It is immaterial as to what happens during the course of assessment proceedings. It is possible that quantum of escapement of income may increase. It may go down or it may not survive at all. The Assessing Officer will see the facts as they were available before him at the time of re-opening of assessment. He would not be concerned with the facts discovered subsequently. At the time when he reopened the assessment, he had with him, the assessment order for the assessment year 1997-98, according to which, a part of interest paid on borrowed funds were treated as disallowable as funds were used for non-business purposes. Regarding assessment having become time-barred, the Learned D.R. submitted that these provisions would not be applicable to proceedings under section 148. The Learned D.R. relied on the decision of the Delhi Bench in Poonam Rani Singh v. Dy. CIT [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial available at that point of time. We beneficially rely on the decision in the case of Poonam Rani Singh ( supra ) referred to by the Learned D.R. In point No. 2 at Page-409 in Para-32 the Tribunal observed as under : "2. The reopening cannot be held to be invalid merely because in the ultimate analysis no escapement of income is found in relation to any ground on the basis of which proceedings for reopening were initiated. In other words, if there was requisite material for assumption of jurisdiction at that stage but the same could not substantiate during reassessment proceedings, then proceedings under section 147 cannot be held to be invalid. 3. The reassessment proceedings may be initiated on one ground but the reassessment may be done on any other ground, if such ground comes to the notice of Assessing Officer during the course of assessment proceedings. It is, therefore, open to the Assessing Officer to consider other items even though they were not included under section 148." 12. Thus merely because the Assessing Officer did not make any addition on account of disallowability of interest, it could not be said that re-opening of the assessment were invalid becau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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