TMI Blog2012 (12) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of assessee - ITA No. 664 & 665/Chd/2010 - - - Dated:- 13-7-2012 - SHRI H.L. KARWA AND SHRI T.R. SOOD, JJ. Appellant by: Shri Sudhir Sehgal Respondent by: Shri N.K. Saini ORDER PER T.R. SOOD, A.M In both these appeals various grounds have been raised but at the time of hearing the ld. counsel of the assessee submitted that only issue involved is that the revisionary order passed u/s 263 is time barred. 2. Brief facts of the case are that the originally assessee filed return declaring income of Rs. 1,04,02,357/-. In the return the assessee had claimed deduction u/s 80HHC amounting to Rs. 1,76,54,394/- and u/s 80IB amounting to Rs. 93,52,251/-. During the assessment proceedings u/s 143(3) while examining the deduction u/s 80HHC, it was noticed that the assessee has not reduced the gross interest from business profits. After detailed examination and following the decision of Hon'ble Punjab Haryana High Court in case of Rani Paliwal V CIT, 268 ITR 220, 90% of gross interest was reduced from business profits and deduction u/s 80HHC was granted at Rs. 1,73,91,386/-. While examining the deduction u/s 80IB it was found that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verify and examine the applicability of Section 80IB(13) r.w.s. 80IA(9) of the Act. In view of this failure to examine the application of this provision the assessment order was considered as erroneous and prejudicial to the interest of the Revenue. In response to the show cause notice it was mainly contended that only reason for reopening the assessment was that profits of business as envisaged in clause (baa) of explanation to sub-sec 4C of Section 80HHC for the purpose of calculation of deduction in respect of sales made export house as supporting manufacture and same was required to be calculated after reducing 90% of DEPB realization and other incomes for computing the deduction u/s 80HHC resulting in excess deduction of Rs. 96,19,262/-. Ultimately in the reassessment proceedings the deduction u/s 80HHC was reduced to Rs. 77,72,122/- against which he assessee filed an appeal before the ld. CIT(A)-II, Ludhiana who allowed the appeal and deduction u/s 80HHC was determined at Rs. 1,43,93,733/-. This appellate order was confirmed by the Tribunal vide order dated 24.8.2009. Thus it is clear that the Assessing Officer failed to verify the application of Section 80IB(13) r.w.s. 80IB( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd are as under:- The issues No. 1 and No. 2 are considered together. The question is whether when there was error in both the orders, original and reassessment the Assessing Officer was eligible and within legal jurisdiction to consider the applicability of 80IB(13) r.w.s 80IA(9) in the reassessment proceedings. Even the Hon'ble Punjab Haryana High Court in Vippan Khanna V. CIT, 255 ITR 220 have held that For the sake of clarification, we may repeat that nothing observed by us in this cae would debar the Assessing Officer to bring to tax any other item of income which may have escaped assessment and which comes to his notice during the course of the proceedings u/s 147 of the Act. Thus the Assessing Officer was not at all prevented from examining this issue in the reassessment proceedings even though it was not one for the reasons for reopening the assessment. The proceedings u/s 263 of the Act has been initiated against the reassessment order and failure of the Assessing Officer to examine the applicability of Section 80IB(13) r.w.s. 80IA(9). There was no case of finality of this issue in any order since this issue was not considered at all. Therefore, the contention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, the ld. DR for the revenue submitted that reassessment order is definitely erroneous as well prejudicial to the interest of the revenue because the issue regarding applicability of Section 80IB(13) r.w.s. 80IA(9) was never examined by the Assessing Officer. She further submitted that once the assessment was reopened the Assessing Officer was duty bound to examine all the issues and in this regard she relied on the decision of Hon'ble Supreme Court in case of CIT V. Sun Engineering Works P. Ltd., 198 ITR 297. 8 We have heard the rival submissions carefully and find force in the submissions of the ld. counsel of the assessee. The facts of this case are almost identical with that of CIT V. Alagendran Finance Ltd (Supra). In that case the returns for Assessment Years 1994-95, 1995-96 and 1996-97 were filed on 23.11.94. 27.11.94, 26.11.97. These assessments were completed and in the said orders the assessees s claim regarding lease equalization fund was accepted. Later on the assessments were reopended by the Assessing Officer on March 04, 2004 for examining (i) the expenses claimed for share issue (ii) bad and doubtful debts (iii) excess depreciation on gas cylinders and goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furthermore held (page 320): As a result of the aforesaid discussion, we find that, in proceeding u/s 147 of the Act, the ITO may bring to charge items of income which had escaped assessment other than or in addition to that item or items which have led to the issuance of the notice u/s 148 and where reassessment is made u/s 147 in respect of income which has escaped tax, the ITO s jurisdiction is confined to only such income which has escaped tax or has been under-assessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee to reagitate questions which had been decided in the original assessment proceedings. It is only the under-assessment which is set aside and not the entire assessment when reassessment proceedings are initiated. The ITO cannot make an order of reassessment inconsistent with the original order of assessment in respect of matters which are not the subject matter of proceedings u/s 147 20 We may at this juncture also take note of the fact that even the Tribunal found that all the subsequent events were in respect of matters other than the allowance of lease equalization fund . The said finding of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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