TMI Blog1996 (12) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee. In appeal, the learned CIT (Appeals) confirmed the action of the Assessing Officer. The assessee is aggrieved against the order on the ground that deduction under section 80HHC differently computed could not be made the subject matter of section 154 and that the provisions of section 143(1)(a) of the Act are not applicable at all. It is also contended that the provisions of sections 234A and 234B are also not applicable to the case of the assessee. 3.1 In the meanwhile notice under section 143(2) was issued to the assessee and the assessment was framed under section 143(3) of the Act on12-2-1992. In an appeal filed before the CIT (Appeals) the assessee challenged the quantum of deduction allowed under section 80HHC of the Act. As per the contentions raised, the deduction has to be computed in accordance with section 80HHC read with section 80AB and other sections of the Act. The provisions of sections 234A and 234B as well additional tax levied under section 143(1)(A) are contended to be not applicable in the case of the assessee. However, ground No. 3 relating to income of Rs. 35,90,025 was not pressed during the course of the hearing. The assessee nonetheless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances the order framed under section 143(1)(a) of the Act in the case of the assessee is to be treated as passed under section 143(3) of the Act. Any order without jurisdiction. can either be upheld under different sections or is otherwise a nullity. Apart, two assessments cannot exist simultaneously. This is as held by their Lordships of the Supreme Court in the case of CITv. S. Raman Chettiar [1965] 55 ITR 630. In any case, argued the learned authorised representative, the Assessing Officer was not empowered to restrict the claim of the assessee in respect of deduction under section 80HHC by exercising jurisdiction under section 154 of the Act. The assessee carries on exclusive export business as well exclusive domestic business. Separate books of account were maintained and separate profit and loss accounts were prepared. The Assessing Officer while passing the order under section 154 of the Act, applied section 80HHC(3) and considered such computation as the only correct computation. As there were two views possible, section 154 could not be invoked. The proposition was supported by the decision in the case of T. S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC). 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 4.1 Meeting the contentions of the learned authorised representative that the deduction under section 80HHC was wrongly computed under section 143(3) of the Act, it was submitted that the same is the view as taken by the Special Bench of the Tribunal in the case of International Research Park Laboratories Ltd v. Asstt. CIT[1994] 50 ITD 37 (Delhi). 5. We have carefully considered the rival submissions. There is no dispute with the proposition that it is only prima facie adjustments which are covered under section 143(1)(a) of the Act. While processing the return under the aforesaid section no notice under section 143(2) is contemplated. It is also undisputed that the adjustments can only be made with reference to items which do not admit of two views or for which further investigation is called for. These could be only covered under assessments framed under section 143(3) of the Act. Both the provisions which exist in statute operate in their own respective fields. A glance at the present evolution of the provisions of section 143 would clearly bring out the scheme of the Act and the intent of legislature in framing the provisions relating to section 143(1)(a) along with sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed in terms of the said sub-section and nothing more. By the fiction so created, all incidents of the notice of demand shall become applicable even to that intimation even though no regular recovery notice of demand in the prescribed form under section 156 is served on an assessee, which otherwise is mandatory to enforce any recovery of tax or interest on an assessee. Therefore, intimation to the assessee under section 143(1)(a)(i) of the amounts payable by him as tax or interest even after issue of notice under section 143(2), does not oust the jurisdiction of the Assessing Officer to issue a fresh notice under section 143(2) of the Act, where he considers it to be necessary or expedient to ensure that the assessee has declared his income correctly.' 6.1 As to the adjustments made on account of Rs. 19,150, we find that as per information (contained in the paper book) from the over all cost of Rs. 5,29,426, Rs. 19,150 has been deducted. As a number of items are below Rs. 5,000, the specific items which total upto Rs. 19,150 have not been specifically identified. Even accepting the assessee's stand that the adjustment was not called for, at best it can be termed as an error on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d case the Commissioner of Income-tax while transferring the case referred to thePatialaIncome-tax Act as against the Indian Income Tax Act. On the facts their Lordships of the Hon'ble Supreme Court observed that- "exercise or the power will be referable to a jurisdiction which confers validity upon it and not to a jurisdiction under which it will be nugatory'. This, in fact, illustrates the issue that doctrine of sustaining jurisdiction has a limited scope and is applicable only where power can be validly exercised under one section but in exercise thereof wrong section which is pari materia has been referred. 6.7 In the case of S. Raman Chettiar it was held that if a valid return is filed, the same cannot be ignored. This is not so in the case of the assessee. 6.8 In the case of CITv. National Small Industries Corpn.Ltd [1973]91 ITR 579 (Delhi), reference was made to section 154 as against section 35 of 1922 Act. After finding that the provisions are pari materia it was held by their Lordships that this would not take away the ITO's jurisdiction to rectify the assessment. In the case of the assessee, the Assessing Officer was empowered to make arithmetical adjustments whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the business (as computed under the head 'Profits and gains of business or profession') the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee.' 6.10. Thus as per auditors themselves the deduction is to be computed under sub-section (3) of section 80HHC of the Act as per which it is the proportion of export turnover to total turnover that the profits have to be taken. Nowhere in the return the assessee's claim is in regard to exclusive export business and exclusive local business. In the circumstances, the error being patent one on record justified rectification. Accordingly, we uphold the order of learned CIT(Appeals) in this regard. 7. Coming to the additional grounds of appeals which questioned the very jurisdiction of the Assessing Officer, reliance was placed on the case of Taylor Instrument Co. (India) Ltd. v. CIT[1992] 198 ITR 1 (Delhi) where the assessee claimed deduction of sur-tax in the computation of business income before the I.T.A.T. After holding that it was altogether a new point, the Tribunal did not permit the admission of the ground. The Delhi High Court after considering rule 11 of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961 is restricted to the subject matter of appeal. Rule I 1 of the Income Tax Appellate Tribunal rules is an enabling provision for raising an additional ground and it cannot widen the subject-matter. The subject-matter of the present appeal, as evident from the grounds of appeal, relates to deduction under section 80HHC of the Act. On the other hand, the assessee challenges the jurisdiction of the Assessing Officer in framing the assessment which is beyond the subject matter of appeal. Reliance was placed on the decision of Andhra Pradesh High Court in the case of Begum Noor Banu Alladin . In the aforesaid case after going through the facts on the issue Their Lordships held that the additional ground is to be confined within the campass of subject matter of appeal. In the case of Taylor Instrument Co. (India) Ltd. , the Hon'ble Delhi High Court was not concerned with the subject matter of appeal. This was, however, specifically raised and dealt with in Anand Prasad's case . Reliance was also placed on the decision of Rajasthan High Court in the case of Sandal Kalyani Co. v. CIT[1995] 213 ITR 273. The decision of the Calcutta High Court in the case of Indian Steeel Wire Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT (Appeals) which is co-terminus with that of the Assessing Officer as held by the Hon'ble Supreme Court as well as by various High Courts. This has been discussed at length in the case of Begum Noor Banu Alladin . As per discussion contained therein, relevant sections in this regard are 251 and 253 of the Income-tax Act, 1961 and the rules framed in this regard. As per provisions of section 251, the DC (Appeals) CIT (Appeals) may confirm, reduce, enhance or annul the assessment. He may also send back to the Assessing Officer for fresh assessment in accordance with law. Explanation to section 251 provides that in disposing of an appeal the DCIT (Appeals)/CIT(Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the DC(Appeals)/or as the case may be the CIT(Appeals), by the appellant. Section 253 of the Act on the other hand provides for appeals to be filed before the Appellate Tribunal. Rule 11 of the ITAT rules, 1963 provides for an admission of additional ground of appeal. Sub-section (5) of section 253 empowers the Appellate Tribunal to admit an appeal or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeals are expressed in section 33(4) of the Act in the widest possible terms. The word 'thereon' of course, restricts the jurisdiction of the Tribunal to the subject matter of the appeal. The words 'pass such orders as the Tribunal thinks fit' include all the powers (except possibly the power of enhancement) which are conferred upon the AAC by section 31 of the Act. Consequently the Tribunal has authority under this section to direct the AAC or the ITO to hold a further enquiry and dispose of the case on the basis of such enquiry'. They also referred to Rule 12 (corresponding to present Rule 11) of the ITAT 'Rules and Rule 28 relating to power to remand. The additional ground of appeal was permitted as the subject matter of appeal before the first appellate authority as well as the Appellate Tribunal was the same. Thus, it is the scope of the relief which determines the subject matter of appeal. The issue has been discussed at great length by the decision of Full Bench of the Andhra Pradesh High Court in Begum Noor Banu Alladin case . After discussing the catena of judgments on the issue, which we need not discuss. Their Lordships have held that Rule 11 of the ITAT Rules whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held by Their Lordships of Rajasthan High Court that as it was not within the subject-matter of appeal before the Tribunal, the Tribunal was right in not permitting the additional ground to be raised. In the case of Indian Steel Wire Products Ltd. it was held by Their Lordships of Calcutta High Court that even an additional plea which altogether changes the complexion of the case as originally brought before the first appellate authority, the same cannot be raised at the stage of hearing before the Tribunal. In the case of an assessee the subject matter of appeal relates to deduction under section 80-HHC of the Act. The issue that the assessment framed under section-1 43(3) is a nullity and non estgoes much beyond the subject-matter of appeal. As regards the decision in the case of Bharat General Reinsurance Co. Ltd. , we find that an admission of an income was first made in the return which was subsequently revised and prayer made for its exclusion was held to be-valid. The facts are distinguishable. 11. On merits, it is admitted by the learned authorised representative that issue is covered by the decision of Special Bench of the Tribunal in the case of International Res ..... 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