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TMI Blog2013 (2) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... . On verification of the said return, it is noticed that while computing the deduction u/s 80HHC, the assessee has considered DEPB License income of Rs. 29,85,543/- and excise duty refund of Rs. 22,35,799/-. If these two export incentives are excluded from the income of the assessee, there will be a loss from the export business and consequently the assessee will not be entitled to get deduction u/s. 80HHC of the I.T. Act, 1961. 2. It is imperative that deduction u/s. 80HHC of the Act has to be computed within the parameters of the provisions of section 80AB of the I.T. Act, 1961. In other words, if there is insufficient profit from the export business after setting off the export incentives, the assessee will not be eligible for deduction u/s. 80HHC of the I.T. Act, 1961. This finds support from the decision of the Hon'ble Supreme Court of India in the case of IPCA Laboratory Ltd., 266 ITR 530. The CBDT, New Delhi also vide its letter No. D.O. No. 275/50/2004-IT (B) dated 6-7-2004 issued directions to reopen cases, wherein deduction u/s.80HHC has been claimed even if there is a loss from the export business. 3. In view of the above, I have reason to believe that income chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay High Court after considering the decision of Hon'ble Punjab & Haryana High Court in the case of CIT v. Atlas Cycle Industries [1989] 180 ITR 319 and the decision of Hon'ble Rajasthan High Court in the case of CIT v. Shri Ram Singh [2008] 306 ITR 343 (Raj) held as under:- "If upon the issuance of a notice under section 148(2), the Assessing Officer accepts the objections of the assessee and does not assess or reassess the income which was the basis of the notice, it would not be open to him to assess income under some other issue independently." 4. We thus find that in the instance case no assessment was made in respect of income for which the Learned Assessing officer recorded reasons to belief to issue notice under section 148(2) of the Act. Moreover, we find that no discussion also was made in the impugned order about that income. Thus we find that the income in respect of which reassessment notice was issued by the Learned Assessing officer was not found by him as income escaped from assessment. Therefore, in view of the above settled position of law the order under appeal is without jurisdiction and bad in law. We therefore, cancel the re-assessment order under appeal and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reading of Explanation 3 to section 147 clearly depicts that the Assessing Officer has power to make additions even on the ground on which reassessment notice might not have been issued in case during the reassessment proceedings, he arrives at a conclusion that some other income has escaped assessment which comes to his notice during the course of proceedings for reassessment under section 148 of the Act. The provision no where postulates or contemplates that it is only when there is some addition on the ground on which reassessment had been initiated, that the Assessing Officer can make additions on any other ground on the basis of which income may have escaped assessment. The reassessment proceedings, thus, in the present case cannot be held to be vitiated." 12. On the other hand, learned counsel, Mr. Soparkar drew our attention to the statutory provisions contained in Section 147 of the Act, as amended w.e.f. 01.04.1989, and the explanatory memorandum clarifying the background in which Explanation 3 to Section 147 of the Act was enacted. He submitted that Section 147 of the Act, prior to introduction of Explanation 3, permitted the Assessing Officer to assess or reassess any i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the basis of a notice under Section 148, it is not open to the Assessing Officer to assess independently any other income which does not form the subject matter of the notice. In the process, the High Court observed as under: "23. We have approached the issue of interpretation that has arisen for decision in these appeals, both as a matter of first principle, based on the language used in section 147 and on the basis of the precedent on the subject. We agree with the submission which has been urged on behalf of the assessee that section 147 as it stands prostulates that upon the formation of a reason to believe that income chargeable to tax has escaped assessment for any assessment year, the Assessing Officer may assess or reassess such income "and also" any other income chargeable to tax which comes to his notice subsequently during the proceedings as having escaped assessment. The words 'and also' are used in a cumulative and conjunctive sense. To read these words as being in the alternative would be to rewrite the language used by Parliament. Our view has been supported by the background which led to the insertion to Explanation 3 to section 147. Parliament must be regarded a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into account, he would be required to issue a fresh notice under section 148." 17. In case of Assistant Commissioner of Income Tax v. Major Deepak Mehta reported in [2012] 344 ITR 641 wherein Division Bench of Chhattisgarh High Court also adopted the view taken by the Bombay High Court in case of CIT v. Jet Airways (I) Ltd. (supra). It was observed as under: "35. In the case on hand, the main object and purpose of section 147 read with section 148 is that if there is any escaped assessment and the Assessing Officer has reason to form the opinion a notice must be given to the assessee to file returns or to show that there was no escaped income an under section 152(2) the proceedings may be dropped. In that context, the Explanation provides that along with the proceedings for the escaped income which had formed reason to believe and the assessee has been properly intimated to show his case, proceedings of the other incomes may also be examined along with the said income. 36. We are in respectful agreement with the view taken by the Bombay High Court in CIT v. Jet Airways (I) Ltd. (2011), 331 ITR 236 (Bom) ITR 136 (Delhi)" 18. All the decisions noted by us so far were rendered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that the Assessing Officer may assess or reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice by the Assessing Officer before making the assessment, reassessment or recomputation of income under Section 147 of the Act. Sub-section (2) of Section 148 provides that the Assessing Officer shall before issuing any notice under the said section record his reasons for doing so. 22. Section 147 of the Act thus, gives power to the Assessing Officer for reopening an assessment. Such powers, however, are hedged with several conditions. First the Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment. Further if the reopening is resorted beyond the period of four years from the end of the relevant assessment year, additional requirement that income chargeable to tax has escaped assessment by the reason of failure on the part of the assessee to make a return under Section 139 or in response to a notice under Section 142(1) or 148 of the Act or to disclose fully and truly all material facts necessary for the assessment must also be satisfied. If the requirements of giving jurisdiction to the Assessing Officer to reopen assessment are satisfied, he may assess or reassess such income and also any other income chargeable to tax which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be rendered redundant. Would such a situation not run counter to a well known legal principle that the Legislature cannot be seen to have enacted a redundant legislation and that every effort should be made to give such interpretation which ensures that a provision in a statute is not rendering otiose. Such question may have led to some interesting discussion. However, the entire issue has been put beyond any pale of controversy by virtue of the explanatory memorandum for introducing such explanation. Such explanatory memorandum reads as under: "Clarificatory amendment in respect of reassessment Proceeding under section 147 The existing provisions of section 147 provides, inter alia, that if the Assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or reassess such income after recording reasons for reopening the assessment. Further, he may also assess or reassess such other income which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section. Some courts have held that the Assessing Officer has to restrict the reassessment proceedings onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... body of the statutory provision. In case of S.Sundaram Pillai v. V.R. Pattabiraman reported in AIR 1985 Supreme Court 582 the Supreme Court observed that, an explanation added to a statutory provision is not a substantive provision but as the plain meaning of the word itself shows it is merely meant to explain or clarify certain ambiguities which may have crept in the statutory provision. It was observed as under: "52. Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is- (a) to explain the meaning and intendment of the Act itself, (b) where there is any obscruity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve. (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful. (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuation an important requirement of failure on part of the assessee to disclose truly and fully all material facts would be totally circumvented. 31. As already noted, except for the Punjab and Haryana High Court in case of Majinder Singh Kang v. Commissioner of Income-Tax and anr (supra) all courts have uniformly taken a view that Explanation 3 to Section 147 of the Act does not change the situation insofar as the present controversy is concerned. Leading decision of Bombay High Court in case of CIT. v. Jet Airways (I) Ltd. has been followed by different High Courts. In case of CIT. v. Jet Airways (I) Ltd., the High Court, in its elaborate decision considering the statutory provisions, different judicial pronouncements and the explanatory memorandum for introduction of Explanation 3 to Section 147 of the Act ruled in favour of the assessee. 32. Punjab and Haryana High Court in case of Majinder Singh Kang v. Commissioner of Income-Tax and anr (supra) ofcourse has sounded a different note. We may, however, notice that the explanatory memorandum to Explanation 3 to Section 147 of the Act was not brought to the notice of the High Court in the said decision. The High Court gave consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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