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TMI Blog2006 (11) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... osition purported to take yet another ground, that is, benefit of section 80HHC could not be allowed unless export sale proceeds were received in convertible foreign exchange. As rightly pointed out on behalf of the petitioner by Mr. Bajoria there could be no question of the deduction of export profits being allowed in the first place, unless the petitioners had been able to demonstrate that the sale proceeds were received in convertible foreign exchange. It was never the case of the Revenue, not even at the time of reopening of the assessment, that the proceeds were not received in convertible foreign exchange. In any case, it is well-established that the Revenue cannot by way of affidavit improve upon reasons initially disclosed for reopening of the assessment. As held by a Division Bench of the Bombay High Court in the case of Hindustan Lever Ltd. [ 2004 (2) TMI 41 - BOMBAY HIGH COURT] reasons recorded by the assessing authority cannot be supplemented or substituted either by affidavit or by oral arguments. The writ application is, therefore, allowed. The impugned notice is set aside and quashed. - Ms. Indira Banerjee J. For the Petitioner : R. N. Bajoria , J. P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80HHC of the said Act. 8. According to the petitioner, on or about March 29, 2001, the petitioner received the notice dated March 20, 2001, under section 148 of the said Act in respect of the assessment year 1994-95, which is under challenge in this writ petition, mainly on the ground that the action against the petitioner is barred by limitation. 9. Reference has, in this context, been made to the proviso to section 147 of the Income-tax Act which is extracted hereinbelow : 147. If the Assessing Officer, has reason to believe that any income chargeable to tax has escaped assessment for 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to tax, that escaped assessment, exceeded Rs. 1 lakh, a notice might be issued after four years but not more than six years from the end of the relevant assessment year. 13. Significantly, Parliament has in its wisdom used the word action in the proviso to section 147 of the said Act but has used the word notice in section 149(1) of the said Act. 14. Under section 147 of the said Act, assessment might be reopend in the circumstances specified in the said section. Once, however, an assessment is made under section 143(3), the assessment may not be reopened after the expiry of four years from the end of the relevant assessment year, except in the circumstances specified in the proviso to section 147 of the said Act. 15. However, once an assessment is reopened it is incumbent upon the Assessing Officer to give notice under section 148 of the said Act to the assessee. Assessment, reassessment and/or re-computation would have to be done upon notice. The issuance of a notice under section 148 is subject to the limitation prescribed in section 149 of the said Act. 16. Mr. Bajoria argued and, in my view, rightly, that an assessment could be reopened under section 147. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid judgment of the Division Bench, I cannot but hold that the impugned action against the petitioner is barred by limitation, such action not having been initiated within four years from the end of the relevant assessment year. Action under section 147 being barred by limitation, the impugned notice is liable to be set aside. The impugned notice does not disclose any reasons for reopening assessment. Reasons have, however, subsequently been disclosed to the petitioner. The reasons disclosed are as follows : . . . Scrutiny of calculation of deduction under section 80HHC reveals that an amount of Rs. 8,93,27,508, Rs. 72,85,890 and Rs. 24,000 were credited in the profit and loss account, under the head licence, sales, interest and hire charges respectively of M/s. Reylon Industries. As per Explanation (baa) of section 80HHC(4A), 90 per cent. of licence, sales, interest and hire charges should be deducted from the 'profit of the business' . Due to wrong calculation of deduction under section 80HHC, excess deduction was allowed to the tune of Rs. 2,37,18,764 in the assessment for the year. Under the above circumstances, I have reason to believe that there was underasses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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