TMI Blog2014 (10) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... pen the proceeding without any thing further, the same would amount to giving a premium to an authority exercising quasi judicial function to take benefit of its own wrong – thus, the reopening u/s. 147 r.w.s. 148 of the Act is bad in law – Decided in favour of assessee. - I.T.A No. 1275/Kol/2012 - - - Dated:- 22-10-2014 - Shri Mahavir Singh, JM And Shri Shamim Yahya, AM,JJ. For the Appellant : Shri S. M. Surana, Advocate For the Respondent : Shri Niloy Baran Som, JCIT, Sr. DR ORDER Per Shri Mahavir Singh, JM : This appeal by assessee is arising out of order of CIT(A)-XXIV, Kolkata in Appeal No. 682/CIT(A)-XXIV/C-37/09-10 dated 29.06.2012. Assessment was framed by DCIT, Circle-37, Kolkata u/s. 147/143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Years 2004-05 vide his order dated 30.12.2009. 2. The first issue in this appeal of assessee is against the order of CIT(A) upholding the action of AO in initiating reassessment proceedings u/s. 147 read with section 148 of the Act. For this, assessee has raised following ground no.2: 2. For that Ld. CIT(A) erred in upholding the proceedings initiated u/s. 147 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e availed of exemption u/s. 80HHC on ₹ 3238978 being sale proceeds received from Sahar Trading Co. Ltd. for exporting cast iron goods to them this amount could not be treated as bad debt since it was recovered from the said company in convertible foreign exchange. This mistake led to the underassessment of ₹ 2487513/- (Rs.3238978/- less ₹ 751470). As income to the tune of ₹ 2487513/- has escaped assessment hence, the case is reopened u/s. 147 of the I. T. Act, 1961. Issue notice u/s.148. The AO framed assessment u/s. 143(3) of the Act read with section 147 of the Act and disallowed the claim of bad debt of ₹ 32,38,978/- for the reason that In the P L account for the period ending on 31.03.04 the assessee had written off an amount of ₹ 32,48,978/- as bad debt. This bad debt was income derived from M/s. Sahar Trading Co. Ltd., Ajman, UEA for exporting cast iron goods during the FY 2000-01 relating to the AY 2001-02. It transpired from the assessment records of 2001-02 that the assessee brought to India ₹ 85,80,393/- being sale proceeds of iron goods exported out of India and availed a relief of ₹ 85,80,293/- u/s. 80HHC. As the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the export proceeds of ₹ 32,38,976/- is upheld. These grounds of appeal are dismissed. Now, aggrieved against the order of CIT(A) upholding the jurisdiction as well as dismissing the issue on merits, assessee came in appeal before Tribunal. 5. We have heard rival submissions and gone through facts and circumstances of the case. Before us Ld. counsel for the assessee Shri S. M. Surana, first of all took us to the reasons recorded, which are noted in para 3 above. He read out the reasons that the entire basis of reopening is arising from the assessment records from AY 2001-02 that the assessee brought into India sale proceeds of iron cast exported at ₹ 85,80,393/- and also claimed deduction of bad debts at ₹ 32,38,978/- being sale proceeds of Sahar Trading Co. Ltd. treated as bad debt. Ld. counsel for the assessee, first of all, stated that the entire fact was available before the AO and this fact he narrated from the details noted by AO in the order sheet entry dated 11.07.2006 which is enclosed at assessee s paper book page 4 and the relevant entry (2) reads as under: 2. Detailed documents showing that amount of bad debt was earlier shown as income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries raised during the course of assessment proceedings as is evident from queries raised during the course of assessment proceedings and questions raised. The questions raised were duly answered by assessee, which was cross verified by the AO from the parties. In term of the above, Ld. counsel for the assessee stated that the assessee has a case on merits as well as on jurisdiction. On the other hand, Ld. Sr. DR relied on the orders of the lower authorities. When the facts were pointed out to him, he could not answer or could not support the reopening. Particularly when it was pointed out that there is no deduction claimed by assessee u/s. 80HHC of the Act from export proceeds for the reasons that the same were not received by the assessee and no claim u/s. 80HHC of the Act was ever made and moreover, the RBI has permitted the write off of the above bad debt at ₹ 32,38,978/-. We find from the above facts that the entire facts were considered by the AO as he has made sufficient enquiries as is evident from the order sheet entries which are placed before us in the paper book. Even otherwise on merits also there is no scope of addition because the amount in question was rightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel for the parties, we are of the view that these petitions deserve to be allowed. It may be mentioned that a new section substituted section 147 of the Income-tax Act by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989. The relevant part of the new section 147 is as follows: 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 section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company. Hence, it cannot be said that the proposed reassessment in consequence of the impugned notice would be in consequence of or to give effect to any findings of the Tribunal in Boudier Christian s case. A direction or finding as contemplated by section 153(3)(ii) must be a finding necessary for the disposal of a particular case, that is to say, in respect of the particular assessee and in relevance to a particular assessment year. To be a necessary finding it must be directly involved in the disposal of the case. To be a direction as contemplated by section 153(3)(ii) it must be an express direction necessary for the disposal of the case before the authority or court vide Rajinder Nath v. CIT [1979] 120 ITR 14 (SC) ; Gupta Traders v. CIT [1982] 135 ITR 504 (All) ; CIT v. Tarajan Tea Co. (P.) Ltd. [1999] 236 ITR 477 (SC) and CIT v. Goel Bros. [1982] 135 ITR 511 (All), etc. The case of an expatriate employee was to be decided on the basis of the provisions of article XIV of the treaty, whereas corporate income was to be decided on the basis of either article III or article XVI of the treaty or section 44BB of the Act. Hence, the observations of the Tribunal in Boudier C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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