JAWAND SONS Vs. COMMISSIONER OF INCOME TAX (APPEALS)

JUDGEMENT

(1.) THE assessee has filed the instant appeal under s. 260A of the IT Act, 1961 (hereinafter referred to as 'the Act') against (hereinafter referred to as 'the Tribunal') in ITA No. 568/Chd/2008, pertaining to the asst. yr. 2001 -02, raising the following substantial question of law :

(2.) THE brief facts of the case are that the assessee -appellant firm is engaged in the business of manufacture and export at Rs. 5,61,096 along with the audit report under s. 44AB of the Act. The audit report for claim of deduction under s. 80HHC of the Act in Form 10CCAC and the audit report for claim of deduction under s. 80 -IB of the Act were attached Subsequently, a notice under s. 148 of the Act was issued for reassessment on the ground that some income has escaped assessment. After considering the objections filed by the assessee to the issuance of notice under s. 148 of the A3), while following the decision of the Supreme Court in CIT vs. Sterling Foods (1999) 153 CTR (SC) 439 : (1999) 237 ITR 579 (SC) and a decision of this Court in Liberty India vs. CIT (2007) 207 CTR (P&H) 243 : (2007) 293 ITR 520 (P&H), disallowed the deduction claimed by the assessee on account of the export incentives and interest received under s. 80 -IB of the Act. Accordingly, an amount of Rs. 24,79,620 received by the assessee as export incentives was reduced from the net profit declared by the assessee in the P&L a/c for the purposes of determination of correct deduction under s. 80 -IB of the Act. Regarding the claim of the assessee for deduction of Rs. 17,67,256 under s. 80HHC of the Act, it was held that the said deduction was rightly claimed and no addition on that account was made. The aforesaid order was

(3.) DURING the course of arguments, learned counsel for the appellant -assessee could not controvert the legal position that in view of the decision of the Supreme Court in Sterling Foods' case (supra) and the decision of this Court in Liberty India's case (supra), no deduction on account of the duty drawback and the Duty Entitlement Pass Book Scheme (hereinafter referred to as 'DEPB') under s. 80 -IB of the Act can be allowed. It is also conceded position that the judgment of this Court in Liberty India's case (supra) has been affirmed by the apex Court in Liberty India vs. CIT (2009) 225 CTR (SC) 233 : (2009) 317 ITR 218 (SC). From this, it is clear that in the initial assessment, the benefit of deduction of the duty drawback and DEPB under s. 80 -IB of the Act was wrongly granted to the appellant -assessee, for which he was not entitled. However, learned counsel for the appellant -assessee argued that initiation of the reassessment proceedings was not in consonance with the requirement of ss. 147 and 148 of the Act. Learned counsel argued that the AO was not justified in reopening the assessment, merely on the basis of change of opinion, and while framing the opinion that some income chargeable to tax has escaped assessment on account of non -disclosure of fully and truly all material facts necessary for assessment for the relevant assessment year. Therefore, he submitted that as far as the assessee is concerned, he has fully disclosed all the material facts necessary for assessment. The audit report as well as the accounts were shown and in no way, it can be said that the assessee had not disclosed the relevant facts. Thus, the initiation of proceedings of reassessment itself was bad and the orders passed in the said proceedings are liable to be set aside. Learned counsel argued that while taking the wrong interpretation of the proviso to s. 147 of the Act, the Tribunal has wrongly come to the conclusion that the reassessment proceedings were rightly initiated, whereas the Revenue has not discharged the onus for bringing on record the material to show that disclosure was not made fully and truly.