9911796707
TMI Blog2009 (11) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer found that in terms of sub-section (a) of section 80HHC of the Act, the assessee had not received sale proceeds in convertible foreign exchange within the time prescribed under section 80HHC(2)(a) of Act, on the sale of such goods exported out of India and found that the claim for deduction under section 80HHC which had been wrongly calculated and claimed which amounted to Rs.11,69,152 on which a tax liability off Rs. 7,42,075 had accrued and as such sought for rectification proceedings by issue of notice under section 154 of the Act and an order also came to be passed on August 31, 1998, under section 148 of the Act rectifying the original assessment order dated October 23, 1997. The assessee's claim before the Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and rejected the appeal by order dated December 3, 2001. 2. The assessee being aggrieved by the said orders of the Commissioner of Income-tax (Appeals) dated December 3, 2001, preferred an appeal before the Income-tax Appellate Tribunal, Bangalore. The Tribunal by its order dated October 21, 2003, held that once the income is exempt, the same cannot be brought to tax by the Assessing Officer and consequently it was held that reopening of the assessments was erroneous. 3. The Revenue being aggrieved by the same is in appeal before this court under section 260A of the Act raising the following substantial questions of law which had been framed at the time of admission of the appeal : "1. Whether the Tribunal wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reopen the proceedings under section 147/148 of the Act, the assessee was fully justified in contending that the entire income of the assessee having been earned out of the 100 per cent. export oriented unit was exempt under section 10B of the Act and it does not prevent the asses-see from claiming the benefit accrued thereunder and he also relied upon the very same decision, viz., CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 and draws our attention to paragraph 27 of the judgment to contend that the assessee is entitled to put forward claims for deductions of any expenditure in respect of the income or the non-taxability of items and accordingly seeks rejection of the appeal filed by the Revenue and requests this court to answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought for in the original assessment proceedings. Thus, we have to hold that the entire income cannot be claimed as exempted under section 10B of the Act in the reassessment proceedings. In the instant case, we notice that in the original return of income filed on November 20, 1996, the assessee had claimed deduction under section 80HHC to an extent of Rs. 1,21,55,957 and out of the said amount sale pro-ceeds convertible in foreign exchange to an (extent of Rs. 11,69,152 had not been received and as such deduction under section 80HHC(2)(a) of the Act was not allowed. It is precisely this amount which was the subject-matter of reopening the assessment and which was sought to be brought within the total turnover. In the reassessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income to that originally assessed. The income for purposes of `reassessment' cannot be reduced beyond the income originally assessed." 8. In unequivocal terms their Lordships have held that in the reassessment proceedings the assessee cannot be permitted to convert the same as his appeal or revision in disguise and seek relief in respect of items earlier rejected or.accepted. In the instant case, we find that reassessment pro-ceedings were initiated in respect of escaped assessment, i.e., the claim made towards sale proceeds convertible foreign exchange which had not been received. Now, the contention of the assessee that the entire deduc-tion claimed under section 80HHC was exempted under section 10B. Even if it were be so, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income to the extent of reopening of assessment. Clarifying this aspect, we answer question No. 1 in the negative formulated hereinabove, i.e., in favour, of the Revenue, and against the assessee to the extent hereinabove. 11. In so far as question No. 2 is concerned, having perused the judgment of the hon'ble Supreme Court in Sun Engineering Works P. Ltd. case [1992] 198 ITR 297 we have no hesitation to hold that in a reassessment pro-ceedings which relate to the income which has escaped assessment where the assessee would be entitled to put forward the claims for deduction of any expenditure in respect of that income (that income which is referable to escaped income) and also about the taxability of items which were sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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