The Commissioner Of Income Tax Chennai v. M/S Chennai Garments Flat

In the High Court of Judicature at Madras Dated : 03.08.2015 Coram :- THE HONOURABLE MR.JUSTICE V.RAMASUBRAMANIAN andTHE HONOURABLE MR.JUSTICE T.MATHIVANAN Tax Case (Appeal) No.547 of 2015 The Commissioner of Income TaxChennai..Appellant/Respondentv. M/s Chennai GarmentsFlat No.5, 3rd Floor,32, 92nd Street,18th Avenue, Ashok NagarChennai 600 082 ..Respondent/Appellant Tax Case Appeal filed under section 260 A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal, Madras"C" Bench, Chennnai dated 27.01.2012 passed in I.T.A.1807/Mds/2010and against the order passed by the Commissioner of Income Tax(Appeals)-VIII, Chennai-34, made in ITA No.134/0910, dated 30.04.2010and against the order made in PAN No. , dated 29.12.2009 forthe assessment -year 2004-05 by the Asst. Commissioner of Income TaxBusiness Circle-III, Chennai. For Appellant : Mr.T.Ravikumar (Judgment of the Court was delivered by V.Ramasubramanian,J.)) The Commissioner of Income Tax has come up with the above appealunder Section 260(A) of the Income Tax Act, 1961. 2. Heard Mr.T.Ravikumar, learned counsel for the appellant. 3. The respondent assessee filed a return of income on27.10.2004 for the assessment year 2004-05, on a gross total incomeof Rs.2,47,37,757/-. He claimed a deduction of Rs.71,64,030/- underSection 80 HHC. https://hcservices.ecourts.gov.in/hcservices/ 4. The respondent was also earlier assessed under Section 143(3)on 31.03.2006 on assessed income of Rs.1,78,80,672/-, after allowinga deduction under Section 80 HHC of Rs.68,58,976/-. Subsequently, thereturn was re-opened and a notice under Section 148 was issued.Thereafter, a revised assessment order was passed on 29.12.2009,reducing the deduction allowable under Section 80 HHC fromRs.68,58,976/- to Rs.60,10,271/-. 5. The assessee filed an appeal before the Commissioner ofIncome Tax (Appeals)-VIII. The appeal was rejected by theCommissioner by an order dated 30.07.2010. 6. The assessee filed an appeal in I.T.A.No.1807/Mds/10 beforethe Income Tax Appellate Tribunal. The Tribunal, by an order dated27.01.2012 allowed the appeal. Therefore, the department is beforeus. 7. A bare perusal of the order of assessment passed on 29.12.2009would show that what the Assessment Officer had chosen to do it onlyto re-open the assessment, on a change of opinion. The relevantportion of the order of the Assessing Officer dated 29.12.2009 wouldmake this position very clear. Hence, it is extracted as follows:- "The assessee firm is in garments businessand its total sale is export sale. Assesseeclaimed a deduction u/s 80 HHC forRs.71,64,030/-.In the year assessee earned income by way ofquota sale Rs.19,35,093/- and included thatamount to the export turnover for the purpose ofcomputation of deduction u/s 80 HHC. In the earlier assessment order, the AOobserved that the quota sale should be consideredas local sale and therefore, he proceeded to re-compute the eligible deduction u/s 80HHC, and hedeterminedtheallowabledeductionforRs.68,58,976/-.It appears that the workings of 80HHC as madein the assessment order were not correct andassessee was allowed excess deduction u/s80HHC....." 8. It is true that an income that escaped assessment can alwaysform the basis for re-opening of assessment. Mr.T.Ravikumar, learnedStanding Counsel for the department, on the question of law, pure andsimple, may be correct in his submissions that under clause (c)(iv) https://hcservices.ecourts.gov.in/hcservices/ under Explanation II to Section 147, computation of any allowance inexcess of the permissible limits, can be ordered as a case whereincome chargeable to tax had escaped assessment. But, can that formthe basis for re-opening of assessment is a most fundamental questionto be answered. 8. It is true that an income that escaped assessment can alwaysform the basis for re-opening of assessment. Mr.T.Ravikumar, learnedStanding Counsel for the department, on the question of law, pure andsimple, may be correct in his submissions that under clause (c)(iv) https://hcservices.ecourts.gov.in/hcservices/ under Explanation II to Section 147, computation of any allowance inexcess of the permissible limits, can be ordered as a case whereincome chargeable to tax had escaped assessment. But, can that formthe basis for re-opening of assessment is a most fundamental questionto be answered. 9. It is well settled that merely because another AssessingOfficer finds some thing wrong with the order of assessment passed bythe previous one, assessment cannot be re-opened. The provisions ofSection 147, which enables the Assessing Officer, who has reason tobelieve that income chargeable to tax has escaped assessment toreopen the assessment and recompute the assessment, cannot beexercised merely because one officer finds fault with the previousone. Hence, we do not find any justification to entertain theappeal. Therefore, it is dismissed. No costs. Sd/- Assistant Registrar //True Copy// Sub Assistant RegistrarrgTo1. The Income Tax Appellate Tribunal, Madras "C" Bench, Chennnai.2. The Commissioner of Income Tax (Appeals)-VIII, No.121, Mahatama Ganthi, Road, Chennai 600 034.3. The Assistant Commissioner & Income Tax, Business Circle-III, Chennai. +1cc to Mr.T. Ravikumar, Advocate, S.R.No.39520SCD(CO)EU(24/08/2015) Tax Case(A)No.547 of 2015