9911796707
TMI Blog2012 (11) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... dia) Pvt. Ltd. As per certificate of Registration No. 11-120639 of 1999 issued by the Registrar of Companies, Mumbai. The registered office of the assessee was shifted from Mumbai to Bangalore on 8.5.2006 which is confirmed by certificate of transfer from one state to another issued on 4.9.2006 by Dy. Registrar of Companies, Bangalore. The name of the assessee was changed from M/s. Focus Infosys (India) Pvt. Ltd. To M/s. Focus M.T. India Pvt. Ltd. on 19.6.2008 and thereafter the name was changed to M/s. Nuance Transcription Services India Pvt. Ltd. on 14.3.2011 as per Certificate of Incorporation consequent upon change of name issued by the Registrar of Companies, Karnataka. 2.2 The assessee-company is primarily engaged in the business of providing medical transcription services. It also provides HR and pay roll services to medical transcriptionists, back office support services, etc. All these services are provided entirely to its associate enterprise viz. M/s. Nuance Transcription Services Inc. (Formerly known as Focus Informatics Inc.). The assessee is a 100% Export Oriented Undertaking (EOU) and has obtained registration from Software Technology Parks of India (STPI). 2.3 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of computer software outside India and therefore the same was to be reduced from the export turnover for the purpose of computing the eligible deduction u/s. 10A. The internet charges reduced from export turnover was not reduced from the total turnover as the Assessing Officer was of the view that in the absence of the definition of 'Total Turnover' in section 10A, the normal meaning of the word 'total turnover' is to be adopted and hence expenditure reduced from 'export turnover' in accordance with the specific definition cannot be reduced from 'total turnover'. In view of the Assessing Officer finding, the deduction u/s. 10A was allowed to the extent of Rs. 23,96,13,592 (Rs. 26,12,91,413 less Rs. 16,77,820) and Rs. 16,77,820 was added to the assessee's income as 'excess claim of 10A deduction' resulting in the income of the assessee being assessed at Rs. 16,88,841. 2.4 The assessee went in appeal before the CIT(A) against the order of Assessing Officer. In this appeal, the assessee raised the ground challenging the Assessing Officer's action in reducing internet charges from export turnover and filed written submission in support thereof. It was submitted that in any case onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with insomuch as I am satisfied to hold the entire income shown to have been earned from the business of medical transcription not forming part of the main objects of the company is considered its unaccounted concealed income." The learned CIT(A) in his order dt. 10.8.2011 held that the assessment framed was bad in law; directed the Assessing Officer to take appropriate steps to bring income chargeable to tax in appropriate hands and dismissed the appeal filed as infructuous. Against this order, the learned Authorised Representative of the assessee submitted that the assessee has filed an appeal before the Tribunal (ITA No. 1040/Bang/2011 Dt. 16.11.2011) which is yet to come up for hearing. 2.5 The Assessing Officer filed a rectification application u/s. 154 dt. 30.11.2011 before the learned CIT(A) on 2.12.2011, which is reproduced hereunder : "The Hon'ble CIT(A) in the order cited under reference has held that assessment passed in the above case is bad in law since the assessment order has been passed on a non-existent company and directed this office to take appropriate steps to bring the income chargeable to tax in appropriate hands and has set aside the assessment. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us MT India Pvt Ltd. Though the name of the company was changed but it was under the same PAN. The assessee is recognized in the department from its PAN. Further, it is submitted that the Software Technology Parks of India has renewed the Green Card in the name of M/s. Focus MT India Pvt Ltd wherein the initial approval was granted in the name of M/s. Focus Infosys (India) Pvt Ltd. This further strengthens the stand that the assessee is one and the same and it is only the change of name under the same PAN. The decision of the CIT(A) that the assessment is bad in law since the assessment is made on non-existent company is not correct and it suffered from a mistake apparent. In view of the above, it is requested that the orders passed by the Hon'ble CIT(A) suffers from mistakes apparent from records, and therefore, the CIT(A) is requested to recall the appellate order for Assessment Year 2007-08 and decide the ground of appeal taken by the assessee on the merits of the case." 2.6 This rectification application u/s. 154 was admitted for hearing by the learned CIT(A) and he accepted the contention of the Assessing Officer that even after change in the name of the company, it remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) dt. 3.1.2012 denying the deduction claimed under section 10A and thereby enhancing the income of the assessee is bad in law since no opportunity of hearing was provided to the assessee before making such enhancement. In the hearing before us, the learned Authorised Representative submitted that : (i) Neither was the rectification application dt. 30.11.2011 filed by the Assessing Officer brought to the notice of the assessee nor was a copy of the same served on the assessee. (ii) No notice was given to or served on the assessee by the learned CIT(A), proposing to deny deduction claimed under section 10A which resulted in enhancing the income of the assessee. (iii) No opportunity of hearing was given to the assessee before concluding that the assessee is not entitled to the deduction claimed under section 10A thereby resulting in enhancement of the assessee's income. (iv) The reasons for denying the deduction under section 10A were neither discussed with the assessee nor brought to its notice. In view of the above cited reasons, the learned Authorised Representative strongly contended that the order passed by the learned CIT(A) on the miscellaneou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the learned CIT(A) dt.10.8.2011. (vi) The learned Authorised Representative contends that while in the order dt. 10.8.2011, the learned CIT(A) held that the assessment made was bad in law only for the reason that the company was not in existance, in the order on Miscellaneous petition dt.3.11.2012 at page 2 thereof the learned CIT(A) states that the assessment made was bad in law for the reasons that (a) the name of the assessee as mentioned in the assessment order is not correct and (ii) the assessee is not eligible to claim deduction under section 10A of the Act. (vii) The learned Authorised Representative also challenged the findings of the learned CIT(A), on merits at para 5.1 of the order that the Memorandum of Association of the assessee-company does not reveal that it is involved in medical transcription activity. He referred to the relevant para of the same Memorandum of Association which reads as under: "Main object of the company to be pursued on its incorporation: To engage in the profession of providing information technology enabled services including but not restricted to data transmission and processing, software development, consultancy & t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity of being heard, we feel, the issue to be addressed is as to whether passing of an order on miscellaneous petition and thereby enhancing the income after passing the original appellate order is proper and in accordance with law. 4.1 Section 246A of the Income Tax Act deals with orders appealable before the CIT(A). Section 249 deals with the form of appeal and limitation. Section 250 deals with the procedure in appeal. Under section 250(1), the CIT(A) has to fix the date of hearing of the appeal and intimate the same to the assessee and the Assessing Officer by a notice. As per section 250(2), the assessee, his learned Authorised Representative and the Assessing Officer have the right to be heard at the hearing. Section 250(3) confers the powers of adjournment to the CIT(A). Section 250(4) provides that the CIT(A) may, before disposing of any appeal, make such further inquiry as he thinks fit or may direct the Assessing Officer to make further inquiry and report the result of the same to the CIT(A). Section 250(5) entitles the CIT(A) to raise any additional grounds of appeal. Section 250(6) provides that the order of the CIT(A) disposing the appeal shall be in writing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire claim of the assessee for deduction under section 10A, in an order on miscellaneous petition and pursuant to a rectification application filed by the Assessing Officer under section 154, is correct? 4.5 Section 154 of the Act permits an income tax authority to correct any mistake apparent from the record. A mistake apparent from the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning or examining on points where there may be conceivably be two opinions. A mistake apparent from the records must be a glaring, obvious and self-evident mistake which does not require elaborate discussion of evidence or argument to establish it. Such errors should be so manifest and clear that no court would permit it to remain on record. If the view accepted by the court in the original judgment is one of the possible views, the case cannot be said to be covered by an error apparent on the face of the record. Rectification is not possible if the question is debatable. The decision in T.S. Balaram, ITO v. Volkart Bros. [1971] 82 ITR 50 (SC); CIT v. Hero Cycles (P.) Ltd. [1997] 228 ITR 463 (SC) and Asstt. CIT v. Saurashtra Kutch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability of the assessee shall not be made unless the income tax authority has given notice to the assessee of its intention to do so and has afforded the assessee reasonable opportunity of being heard. Action u/s. 251(2) provides that the CIT(A) shall not enhance the assessment unless the assessee has been afforded reasonable opportunity of showing cause against such enhancement and the opportunity granted, of being heard, must be real, genuine and substantial. It should not be an empty formality and the process cannot be short circulated by any reason whatsoever. No order can be passed in violation of the principles of natural justice as they are incorporated into every unoccupied interstice of the statute C.B. Gautam v. UOI [1993] 199 ITR 530 (SC). 4.8 The principle of a fair hearing i.e. audi alteram partem is very important for it touches every aspect of fair procedure or due process. The income tax authorities have various powers like calling for evidence, examination of witness, etc. However, these powers are coupled with a duty that the officers concerned conduct the proceedings in a fair manner. The principles of audi alteram partem have two aspects, one is notice and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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