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TMI Blog2015 (12) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... there was any arithmetical error in the return. Moreover, the claim, assuming to be incorrect was not apparent from the information in the return which could have been dealt by the Assessing Officer under Section 143(1)(a). Thus, the issue was a debatable one as correctly held by the Tribunal. If the Assessing Officer was of the view that there was reason to believe that the claim was inadmissible, he should have served notice on the assessee specifying the particulars of such claim or such loss or deduction or relief under Section 143(2) or if he had reason to believe that the income had escaped assessment should have served notice under section 148 of the Act. The Assessing Officer chose neither of the two avenues. Thus the judgment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 80HHC of the Act. Facts, as evident from the record, are as follows: The respondent, that is, the assessee, had filed its return showing an income of ₹ 97,310/- after claiming deduction of ₹ 36,51,903/- under Section 80HHC of the Income Tax Act, 1961. While processing the return under Section 143(1)(a) of the Act, the Assessing Officer computed income at ₹ 10,20,000/-. The assessee had profit of ₹ 42,68,504/- in the pipe division and a loss of ₹ 5,19,294/- in sheet division. The assessee had claimed deduction of ₹ 8,56,043/- under section 80HHC with reference to profit in the pipe division. In the adjustment made under Section 143(1)(a) of the Act, the Assessing Officer deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(a) and thus the application under Section 154 was not maintainable. Mr. Arnab Chakraborty, learned advocate for the respondent relying on the order passed by the CIT(A) and the Tribunal submitted that the Assessing Officer was not justified in rejecting the application under Section 154. In order to appreciate the issue it is appropriate to refer to the relevant portion of the order under Section 154 passed by the Assessing Officer which is as follows :- I am of the opinion that the Assessing Officer is competent to disturb the computation of deduction u/s. 80HHC as claimed by the assessee, and recompute proper quantum of deduction as per provisions of Sec. 80HHC of the I.T. Act in course of processing of the return u/s. 143(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0HHC. Identical issue was raised before the ITAT, Kolkata in the case of the Appellant for A. Yr. 1991-92. The ITAT observed that since this issue is squarely covered by at least 2 reported decisions of coordinate benches of this Tribunal namely decision reported in 68 ITD 358 (DEL) and 63 ITJ 761 (AHMD). In those decisions the coordinate benches of the Tribunal have taken a view that for the purpose of computation of deduction u/s. 80HHC profit to the export unit only is to be taken into a/c. . Following the above mentioned 2 decisions the ITAT, Kolkata Bench upheld the contention of the Appellant and allowed the appeal. It directed the A.O. To recomputed the admissible deduction u/s. 80HHC. Considering the facts that this case is squarel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore, find that the A.O. was not justified in making prima facie adjustment with regard to the deduction claimed under section of the Act. If there was any doubt as to the claim of the assessee under section 80HHC, the Income Tax Officer should have proceeded under section 143(2) or 147 of the Act and then he should have decided the matter on merits in accordance within the provisions of law. But it is settled that it is not a matter to be covered under section 143(1)(a) of the Act, and as such he was required to rectify the same under section 154 of the Act by withdrawing the prima facie adjustment made by him to the returned income. The order of the ld. CIT(A) is modified accordingly. The order of ld. CIT(A) is, therefore, upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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