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TMI Blog2002 (12) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... d above. The Appellate Tribunal rejected the second question on the ground that it was only argumentative in nature and not fit for reference and that the assessee did not produce the Board's instructions before the Tribunal. The assessee, aggrieved by the order of refusal to refer the second question, approached this court by a writ petition in W. P. No. 12910 of 1997 and E. Padmanabhan J., who heard the writ petition, taking note of the submission of learned counsel for the assessee and the Revenue, held that it is open to the assessee to challenge the order passed by the Appellate Tribunal and also to rely upon the Board's circular at the time of final hearing of the reference. Learned counsel for the assessee submitted that though this court has permitted counsel for the assessee to urge his submissions on the second question, he is not urging any point on the second question. Hence, it is not necessary to consider the same. The relevant facts as seen from the statement of case are that the assessee-firm was engaged in the business of purchase and sale of tanned and finished hides and the assessee earned some portion of turnover from and out of the export activities carried on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and decide them in accordance with law. Aggrieved by the order passed by the Commissioner, the assessee preferred an appeal before the Appellate Tribunal. The Appellate Tribunal held that it is the duty of the Assessing Officer to verify whether the- conditions for allowing deduction under sections 80HH and 80HHC of the Act have been satisfied, and if it is allowable, how much is allowable. The Appellate Tribunal relied upon the decision of this court in Indian Textiles v. CIT [1986] 157 ITR 112 and held that the relief was given by the Assessing Officer without proper verification and the order of the Assessing Officer was an order prejudicial to the interests of the Revenue which could properly form the subject-matter of revision. The Appellate Tribunal therefore held that the Commissioner was justified in setting aside the assessment order and restored the same to the Assessing Officer enabling him to look into the claims of the assessee and decide them in accordance with law. As earlier observed, the assessee sought for reference and the first question sought for by the assessee has been referred to for consideration. Mr. V. S. Jayakumar, learned counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. We have carefully considered the submissions of learned counsel for the assessee and the learned senior standing counsel for the Revenue. The Commissioner, as seen from the facts detailed earlier, has set aside the order of assessment passed by the Assessing Officer under section 143(1) of the Act. The Commissioner has considered two aspects of the matter which were the subject-matter of summary assessment under section 143(1) of the Act. In so far as the subsidy and the import entitlements are concerned, he has stated that there are a number of decisions of this court holding that the premium on sale of import entitlements received by the exporter is an income from business. Clauses (iiia), (iiib) and (iiic) of section 28 of the Act postulate that the profits on the sale of an import licence, cash assistance and duty of customs or excise repaid or repayable as drawback are all treated as business income and by the Finance Act, 1990, section 28 has been amended with full retrospective effect from April 1, 1962, treating all kinds of income covered under three clauses as business income of the assessee. The effect of substitution of the amended section with retrospectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section which was inserted, reads as under: "143. Assessment.-(1) (a) Where a return has been made under section 139, the Assessing Officer may, without requiring the presence of the assessee or the production by him of any evidence in support of the return, make an assessment of the total income or loss of the assessee after making such adjustments to the income or loss declared in the return as are required to be made under clause (b), with reference to the return and the accounts and documents, if any, accompanying it, and for the purposes of the adjustments referred to in sub-clause (iv) of clause (b), also with reference to the record of the assessments, if any, of past years, and determine the sum payable by the assessee or refundable to him on the basis of such assessment. (b) In making an assessment of the total income or loss of the assessee under clause (a), the Assessing Officer shall make the following adjustments to the income or loss declared in the return, that is to say, he shall,- (i) rectify any arithmetical errors in the return, accounts and documents referred to in clause (a) ; (ii) allow any deduction, allowance or relief which, on the basis of the informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from earlier years, namely, unabsorbed depreciation (section 32(2)) ; unabsorbed investment allowance (section 32A(3)(ii)) ; unabsorbed development rebate (section 33(2)(ii)) ; unabsorted development allowance (section 33A(2)(ii)) ; unabsorbed amount of capital expenditure incurred on scientific research (section 35(2)(i)) ; capital expenditure on acquisition of patent rights and copyrights (section 35A(1)) ; unabsorbed amount of certain preliminary expenses which are amortisable against profits (section 350(1)) ; expenditure on prospecting for or development of specified minerals amortisable against profits (section 35E(1)) ; capital expenditure on family planning incurred by an Indian company (section 36(1)(ix), first proviso) ; unabsorbed losses brought forward from the earlier years which are admissible as a set off (sections 72(1), 73(2), 74(1) and 74(3)) ; and the deficiency in tax holiday profits which is eligible for set off (section 80J(3)). The adjustments to be made in the summary assessment in regard to the items specified in (iv) above are to be based on the computation made in the regular assessment, if any, for the earlier assessment year or years." It is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Supreme Court in Malabar Industrial Co.' s case [2000] 243 ITR 83 considered the jurisdiction of the Commissioner under section 263 of the Act. The Supreme Court, while considering the question whether the order of the Assessing Officer is erroneous and prejudicial to the interests of the Revenue, considered the phrase, "prejudicial to the interests of the Revenue" and held that the phrase, "prejudicial to the interests of the Revenue" should be read in conjunction with an erroneous order passed by the Assessing Officer. The Supreme Court noticed the earlier decisions in Rampyari Devi Saraogi v. CIT [1968] 67 ITR 84 and Smt. Tara Devi Aggarwal v. CIT [1973] 88 ITR 323 wherein the Supreme Court held that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the Revenue. The Supreme Court in Malabar Industrial Co. Ltd.'s case [2000] 243 ITR 83 laid down the law as under : ". . . the Commissioner noted that the Income-tax Officer passed the order of nil assessment without application of mind. Indeed, the High Court recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 657 wherein this court held as under: ". . . the Income-tax Officer is expected to make an enquiry before taxing the particular item of income or before granting deduction of a particular item of expenditure and if he does not make such an enquiry as expected, that would be a ground for the Commissioner of Income-tax to interfere under section 263 of the Act." This court in CIT v. Seshasayee Paper and Boards Ltd. [2000] 242 ITR 490 (in which one of us was a party), held that the powers of the Commissioner are very wide in exercising the revisional jurisdiction under section 263 of the Act. This court has held as under : "The Commissioner is empowered to pass an order as the circumstances of the case may warrant He may pass an order enhancing the assessment or he may modify the assessment. He is also empowered to cancel the assessment and direct a fresh assessment. The Commissioner is fully empowered to adopt anyone of the three courses indicated by the provisions of section 263 of the Act and the Commissioner's power cannot be faulted because he cancelled the assessment and directed a fresh assessment. There is nothing in section 263 of the Act to show that the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the assessee placed strong reliance on the decision of the Madhya Pradesh High Court in Nazir Singh v. CIT [2001] 252 ITR 820, particularly the following observations : "Section 147 indicates that the case pertaining to the period ranging between seven and ten years can be reopened. But there is a limit to it. It is not to be applied in the cases which appear to be 'flies' before huge evasion of tax and concealment of taxable income by using clever/deceptive tricks. In this context, the observations of the Supreme Court in the matter of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1, have to be kept in view. In that judgment after discussing the other points which were involved, the Supreme Court pointed out its view in the following paragraph : 'It has been said that the taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well-versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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