ACIT, NEW DELHI vs SH. JAGJEET SINGH, DELHI

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-2’, NEW DELHI

Before: SHRI J. SUDHAKAR REDDY

Appellant by : Shri Raman Kant Garg, Sr.D.R. Respondent by : Sh. Harish Malik, C.A ORDER

This is an appeal filed by the Revenue against the order dt. 31.10.2013 of Ld.CIT(A)-XXVII, New Delhi for Assessment Year 2001-02 challenging the cancellation of the order passed by the A.O. passed u/s 154 of the Income Tax Act, 1961 (the Act).

The A.O. passed an order on 7.7.2008 u/s 143(3) r.w.s. 254, and latter amended the same order under the provisions of s.154 the Act on 11.12.2012. The facts are brought out at paras 3 and 4 of the Ld.CIT(A)’s order which are extracted for ready reference. “3. Return of income for A.Y. 2001-02 was filed on 08.10.2001 and the appellant claimed Rs. 6,28,664/- as deduction u/s 80HHC of the I.T. Act. Assessment u/s 143(3) was completed on 17.03.2004 after adding purchases of Rs. 18,91,200/- as unverifiable. The matter travelled up to the IT AT and the IT AT upheld the addition of Rs. 11,40,030/- but set aside the issue of deduction u/s 80HHC back to the file of the Assessing Officer with the following directions:

ITA 150/Del/2014 AY 2001-02 Sh. Jagjeet Singh "Nevertheless, the transaction of purchase has been held as not genuine" but this would not change the head of income of the assessee from business income to income from other sources. Hence, the A.O. is directed to re-compute the business income of the assessee and consider the claim of deduction U/S 80 HHC in the light of the provisions of section 80 HHC of the IT Act. "

Based on the above directions, the A.O. passed orders u/s 143(3)/154 on 07.07.2008 recalculating 80HHC deduction at Rs. 15,11,280/- against Rs. 6,28,644/- claimed by the appellant in the original return of income. Subsequently, A.O. issued notice u/s 154 on 27.07.2012 for re- computing the deduction u/s 80HHC allowed in the order dated 07.07.2008 and to restrict the 80HHC deduction to Rs. 6,28,644/- claimed in the original return of income. The rectification order u/s 154 was passed on 11.12.2012 restricting the 80HHC deduction to Rs. 6,28,644/- and the relevant portion of rectification order u/s 154 of the I.T. Act is as follows: "After considering the submission of the assessee and the facts & circumstances of the case, deduction U/S 80HHC is allowed only to the extent of Rs. 6,28,644/- as claimed in the return of income. As directed by the Hon'ble ITAT the addition of Rs. 11,04,030/- on account of unconfirmed and unverified purchases is added under the head income from business and profession. However, the deduction u/s 80HHC is with respect to export turnover specifically, and not in respect of any income from business & profession in general. Therefore, only a deduction of Rs. 6,28,644/- is allowed U/S 80HHC. The amount of Rs.11,04,030/- added to the total income of the assessee is a part of the income under the head income from business & profession but is not a part of the export turnover. "

The First Appellate Authority interpreted the order of the ITAT and accepted the contentions of the assessee that the addition on account of unverified purchases goes to increase the business income of the assessee and consequently the assessee is entitled for exemption u/s 80HHC and that the assessee is not carrying on any other business, except export

ITA 150/Del/2014 AY 2001-02 Sh. Jagjeet Singh business and hence all the profits in question pertain to export business only and that there is no mistake apparent on record requiring rectification. Aggrieved the Revenue is in appeal. 4. I have heard Shri Raman Kant Garg, Ld.Sr.D.R. on behalf of the Revenue and Shri Harish Malik, Ld.Counsel for the assessee.

After hearing rival contentions I am of the considered opinion that interpretation of the directions of the ITAT in its order dy. 28.9.2007 by the A.O. in the order passed u/s 143(3) r.w.s. 254 on 7.7.2008, cannot be a subject matter of rectification, as there is no mistake apparent on record. The rectification in question, in my view, does not fall within the ken of S.154 of the Act. The issue of computation of deduction u/s 80 HHC of the Act, vis-à-vis, disallowance for certain purchases and interpretation of the order of the Tribunal, are highly debatable issues. Hence I uphold the order of the First Appellate Authority and dismiss this appeal of the Revenue.

In the result, the appeal by the Revenue stands dismissed. Order pronounced in the Open Court on 14th October,2015.

ACIT, NEW DELHI vs. SH. JAGJEET SINGH, DELHI