CIT Vs. SMT. R. SUNANDA BAI

JUDGEMENT

(1.) The question raised in the two appeals filed by the Revenue is whether the reassessment completed under section 147 is barred by limitation. The original assessments completed for the assessment years 1992-93 and 1993-94 were revised to withdraw the ineligible relief claimed and wrongly allowed in the original assessments. We have heard senior counsel Sri P.K. Ravindranatha Menon appearing for the Revenue and senior counsel Sri V. Ramachandran appearing for the respondent-assessee. The original assessment was completed granting relief, among other things, under section 80HH and section 80-I of the Income-tax Act. However, the assessing officer found that the assessee was not entitled to deduction under section 80HH because of the prohibition contained under sub-section (9A) of section 80HH of the Act which provides that, if the assessee was allowed deduction under section 80HHA for any assessment year, then such assessee shall not be entitled to deduction under section 80HH of the Act. Even though the assessee challenged the reopening on the ground of limitation, the assessing officer overruled the same for the reason that the assessee did not disclose in the return filed the claim allowed under section 80HHA for any of the preceding assessment years and so much so there was suppression of facts relevant for considering the claim under section 80HH of the Act. Even though the two appellate authorities held that the assessee made disclosure in the return filed and, therefore, reopening could not be made beyond four years, we feel otherwise because, there is nothing in the return filed to indicate that the assessee had claimed deduction under section 80HHA for any of the preceding years. The fact is that the assessee claimed and was given relief under section 80HHA for the three preceding years which disentitled her for deduction under section 80HH for the assessment years 1992-93 and 1993-94. The claim made under section 80HH happened to be allowed in the original assessments only because the assessee suppressed the deduction allowed under section 80HHA of the three preceding years. In our view, an assessee making a claim of deduction under section 80HH is bound to disclose that the assessee is not disqualified under sub-section (9A) of the said section which necessarily involves disclosure of facts pertaining to the claim under section 80HHA for the preceding years. So much as, we hold that there was suppression of material facts in the returns filed which entitles the officer for extended period of limitation for reassessment under section 147 beyond four years. So far as the withdrawal of relief granted in the original assessments under section 80-I is concerned, it is disallowed for the reason that it was claimed and granted beyond the period permitted under the Act.

(2.) During hearing, senior counsel for the respondent raised a new contention which was not raised before any of the lower authorities that there was no claim of deduction made by the assessee under section 80HH of the Act during 1992-93 and that the assessee has claimed deduction only under section 80HHA of the Act. This is a strange contention because reassessment were completed withdrawing the deduction allowed under section 80HH only by virtue of the prohibition in sub-section (9A) and neither in the course of reassessment proceedings nor in the two level appeals, the assessee raised a contention that she has never made the claim for deduction under section 80HH and the claim made was only under section 80HHA of the Act. When an entirely new issue is put forward by the assessee in an appeal under section 260A, we will not be able to decide the same because such question raised by the assessee does not arise out of the orders of the Tribunal. However, based on the facts on record, we uphold the position canvassed by the Revenue that reassessments are not time barred by virtue of the nondisclosure of the claim allowed in favour of the assessee under section 80HHA for the three preceding years which disentitled her for the claim of deduction under section 80HH for the year 1992-93 or any other year. However, in view of the new case put forward by the assessee before us which was not raised before any of the lower authorities, we vacate the orders of the Tribunal and the first appellate authority and restore the reassessments with a direction to the assessee to file rectification applications within six weeks from the receipt of this judgment for the assessing officer to consider whether in the original assessments 1992-93 and 1993-94 and no claim was made under section 80HH and the claim made was only under section 80HHA of the Act. If rectification applications are allowed, then the reassessment itself would become unnecessary and the assessing officer will recall the said orders. If rectification applications are rejected as without basis, then revised assessments will stand sustained and the appeals will stand restored to the first appellate authority for deciding the appeals on the merits. Rectification applications filed pursuant to directions given above should be treated as filed in time and the assessing officer should decide it on the merits.