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Income Tax Appellate Tribunal, ‘A’ (SMC
Before: SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
In this appeal filed by the Department, which is directed against an order dated 20.10.2017 of the ld. Commissioner of Income Tax (Appeals)-11, Chennai, it is aggrieved that ld. Commissioner of Income Tax (Appeals) deleted a disallowance of deduction of �2,10,754/- claimed by the assessee u/s.80HHC of the Income Tax Act, 1961 (in short ‘’the Act’’).
Ld. Departmental Representative submitted that assessee engaged in the business of manufacturing and exporting of garments had filed its return for the impugned assessment year disclosing income of �5,64,470/-. As per the ld. Departmental Representative, assessee had preferred a wrong claim of �2,10,754/- u/s.80HHC of the Act and this was allowed by mistake. As per the ld. Departmental Representative, the claim being not allowable, the assessment was rectified through an order passed under Section 154 of the Act on 24.04.2007. However, as per the ld. Departmental Representative, assessee carried the matter before the ld. Commissioner of Income Tax (Appeals) and later this Tribunal and the appellate authorities held the rectification u/s.154 of the Act to be void citing a reason that claim u/s.80HHC of the Act involved legal issues. As per the ld. Departmental Representative, thereafter ld. Assessing Officer had invoked Section 148 of the Act and issued notice on 02.09.2009.
Further, as per the ld. Departmental Representative, assessment was later completed u/s.147 r.w.s. 143(3) of the Act on 16.12.2010, disallowing the claim of �2,10,754/- made by the assessee u/s.80HHC of the Act. Submission of the ld. Departmental Representative was that, ld. Commissioner of Income Tax (Appeals) on assessee’s appeal deleted such disallowance holding that there could be no parallel proceedings u/s.147 and 154 on the same issue. As per the ld. Departmental Representative, by virtue of judgment of Hon’ble Kerala High Court in the case of CIT vs. India Sea Foods, (2011) 322 ITR 424, proceedings initiated u/s.154 of the Act once dropped, could not be a reason for holding that a re-assessment proceedings initiated for the same issue was invalid.
Despite notice, none appeared on behalf of the assessee.
I have perused the orders and heard the contention of the 4. ld. Departmental Representative. It is not disputed that disallowance of �2,10,754/- claimed by the assessee u/s.80HHC of the Act, was first attempted by the Revenue through a rectification order dated 24.04.2007. It is also not disputed that the rectification done by the Revenue was set aside by the appellate authorities, citing the reason that it involved legal issues. Thus, admittedly, there were parallel proceedings both u/s.154 as well as 147 of the Act. It might be true that order passed u/s.154 of the Act was overturned by the appellate authorities. However, there were two different proceedings u/s.147 and 154 of the Act on the same issue and this has not been disputed by the ld. Departmental Representative. Ld. Commissioner of Income Tax (Appeals) while holding in favour of the assessee had relied on the judgment of Hon’ble Jurisdictional High Court in the case of CIT vs. E.I.D Parry Limited, (1995) 216 ITR 489. What was held by their lordships in this judgment is reproduced hereunder:-
‘’The crucial expressions for the exercise of two jurisdictions, one for the reopening of the assessment under section 147(b) and the other for rectifying any mistake apparent from the records under section 154 of the Act, are, for the former, the ITO has in consequence of information in his possession reason to believe that the income chargeable to tax has escaped assessment, and, for the latter, any mistake apparent from the record. Thus, the existence of the information for the belief that income chargeable to tax has escaped assessment is the sine qua non for reopening the assessment under section 147(b) and discovery of an error apparent on the record is the sine qua non for rectification under section 154 of the Act. The provisions for rectification of error apparent on the record and for taking proceedings regarding escapement are common features in the tax laws and they are to be invoked in different circumstances. The ITO can have recourse to one or the other, but he must have recourse to the appropriate provision having regard to the facts and circumstances in each case. In cases where the two appear to overlap, the ITO must choose one in preference to the other and proceed. He should not take one as the appropriate proceeding and give it up at a later stage to have recourse to the other, since such proceedings are quasi-judicial and adjudication after notice is intended for the same purpose. In such a case of overlapping, constructive res judicata and not the statutory inhibition, should make the ITO desist from using one proceeding after the other instead of using one of the two with due care and caution’’.
It might be true that Hon’ble Kerala High Court in the case of India Sea Foods (supra) had held otherwise. However, Hon’ble Madras High Court being the Jurisdictional High Court for this Tribunal, I am bound by its judgments. In the circumstances, I am of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in deleting the disallowance made relying on the judgment of Hon’ble Jurisdictional High Court in the case of E.I.D. Parry Limited (supra). I do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals).
In the result, appeal of the Revenue stands dismissed.
Order pronounced on Tuesday, the 3rd day of July, 2018, at Chennai.