Dismissed

Jeshan Textile Mills Pvt. Ltd. v. the Deputy Commissioner of Income Tax 4(2), Mumbai and Anr.

Bombay HC13 Mar 2006WP/600/2006

Case brief

AI extract

What is this about?

The Bombay High Court dismissed a writ petition challenging a notice under Section 148 of the Income Tax Act, 1961. The court held that the notice did not suffer from any error of jurisdiction as the Assessing Officer relied on factual discrepancies regarding deduction computations under Sections 80IA and 80HHC.

What did the court decide?

Writ petition dismissed in limine.

Jeshan Textile Mills Pvt. Ltd. Vs the Deputy… — Writ and Judicial Review | Bombay HC (2006)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORIGINAL SIDE

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WRIT PETITION NO.600 OF 2006

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Jashan Textile Mills Private Limited Petitioner vs. The Deputy Commissioner of Income Tax 4(2), Mumbai & anr. Respondents

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Mr.S.N.Inamdar with Mr.Pramod Y. Vaidya i/b.Mr.A.K.Jasani for the petitioner.

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Mr.D.S.Chopra for the respondents.

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CORAM : R. M. LODHA & J.P. DEVADHAR,JJ .

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DATED : 13th March, 2006

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P.C.

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Heard Mr.S.N.Inamdar, the learned counsel for the

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petitioner.

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2.	The	petitioner	was	served	with the notice	under
Section	148	of the	Income	Tax	Act, 1961 dated	18th
March,	2005	recording	therein	th	at the assessing	officer
has	reason	to believe	that	its	income chargeable for	tax
for	the	assessment y	ear 20	01-2002	has escaped ass	essment
within	the	meaning of	Section	147	of the Income Tax	Act.

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The assessing officer also supplied the reasons for

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issuance of the said notice. The reasons read thus:

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"In this	case, Return	Income	was	filed	on
30.11.2000	declaring	total	inc	ome	of
Rs.1,44,01,902/-.	The	assessee	had		claimed
deduction u/s.80IA	of Rs.1,49,54,675/- and
u/s.80HHC of Rs.1,4	4,70,060/-.

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On perusal	of the co	mputation of	deduction
u/s.80HHC,	it is obser	ved that the	assessee
has not	reduced deducti	on claimed	u/s.80IA
from the	profits of	the business,	while
computing the contravention of the 80IA(9) of the I T Act.	deduction u/s.80 provisions of Sec.	HHC. This	is in
In A.Y.199	9-00, CIT*(A)	had held	that
provisions	of Sec.80IA(9)	were applicable	in
the case	of the	assessee and as	such,
deduction	claimed u/s.80IA	had to be	reduced
from the	profits while	working out	deduction
u/s.80HHC.	Failure to do	so has resulted	in
claim of	excess deduction	u/s.80HHC. In	view
of the	same, I have	reasons to believe	that
income	of Rs.71,45,323/-,	chargeable to	tax,
has escaped case is fit for issue of n I.T.Act, 1961.	assessment for otice u/s.148 of the	A.Y.2000-01 and	the

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Notice u/s.148 of the I.T.Act is being issued to the assessee for A.Y.2000-01."

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3.	The	petitioner	filed		objectio	ns	t	o	the	notice,	inter
alia	thus:	(one)	that	the	asses	see	m	ade	full	and	true
disclosure	o	f the	manne	r i	n	which		it	com	puted	deduction
under	Section	80 HHC	and	80	IA;	(	tw	o)	that	the	deduction
under	Section	80HHC	and	80IA	have	to		be	allow	ed on	the
gross	basis	without	mak	ing	any	ded	uc	tion	und	er	Section
80IB	and	(three)	that	by	the	notic	e	da	ted	18th	March,
2005	issued	under	S	ection		148		to	gether	with	the

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consequential notice dated 22nd August, 2005, the roving

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and fishing enquiry cannot be made.

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overruled by the speaking order dated 16th February,

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The learned counsel for the petitioner re-iterated the objections that were raised by the petitioner in response to the notice under Section 148 of the Income Tax Act. The learned counsel for the petitioner also relied upon the judgment of the Punjab and Haryana High Court in the case of Vipan Khanna v. Commissioner of Income-tax & ors., 255 ITR 220 and the judgment of the

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Madras High Court in the case of Commissioner of Income

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Tax v. M.Chellapan, 198 CTR 490.

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6.		We consider	ed	the	submis	sions	of the learned	counsel
for	the	petitioner	and	in	our	con	sidered view, it	cannot
be	said	that the	issu	ance	of	notice	under Section	148 of

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the Income Tax Act suffers from any patent error of jurisdiction.

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7.	In	its	order d	ated 16t	h	February,	2006, dis	posing of
the	obj	ections	raised	by	the	petitioner,	the	Deputy
Commissio	ner	of	Income	Tax,	Circl	e 4(2),	Mumbai	recorded
that		Section	80IA(9)	specifica	lly	bars	any such	benefit
to	the	assessee	wh	ereby he	can	claim	any	deduction
already		availed	of	under Se	ction	80IA	under any	other
provisions		of	Chapte	r VI-A		under	the	heading,
"C-Deduct	ions	in	respect	of		certain	incomes".	The
assessing		officer	also	noticed		that re	liance on	Section
80AB	does	not	support	the clai	m	of the	assessee	and that
there	i	s no	question	of rovi	ng	enquiry	but the	queries

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raised were material to the determination of escaped

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income.

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8.	For	the	af	oresaid	reaso	ns re	corded	by	the	assessing
officer in		its		order	dated	16th	February,		2006,	the
reopening	of		the	peti	tioner’s	case	for	the		assessment
year 2000-2001	cannot	be said	to	be with	out
jurisdiction.

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9.	In th	e case	of Vipan Khanna, the	Division Bench	of
Punjab	and	Haryana	High Court considered	the effect	of
amendment	in	Section	143 with effect fr	om 01.04.1989	and
held	that	after	the amendment th	e position	has
materially	chang	ed.	Now the Assessin	g Officer	initially
processes	the	return	under Section	143(1)(a)	and
determines	the	am	ount payable on refun	dable on	that
basis.	It	is no	t necessary for him	to frame	an
assessment	in	each	and every case.	However, if	he
chooses	to	verify	the return and frame	an assessment	he
has	to	issue a	notice under subsection	(2) of	Section
143	and	require	the assessee to produce	his books	of
account	and	oth	er materials in support	of the	return.
Thereafter	h	e can	make the assessment	under su	bsection
(3)	of se	ction 14	3. The notice under	subsection (2)	of
section	143	has to	be served within 12	months from	the
end	of the	month	in which the return i	s furnished.	It
was held	that	in a	case where the return	is filed an	d is
furnished	un	der sec	tion 143(1)(a) of the	Income Tax	Act
and	no	notice	under sub-section (2) of	section 143	of

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the	Act	thereafter	is	served		on	the	assesse	e withi	n the
stipulated	of	12	months,	the		assess	ment	to	serve	under
section	143	would	come	to	an	end	and	the	matter	becomes
final.	In	our	cons	idered		view,	the	judgment	of	the

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Punjab & Haryana High Court in the case of Vipan Khanna

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cannot be applied to the facts of the present case.

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10.	In	so	far	as	the judge	ment	of	Madras	High	Court in
the	case	of	M.	Chellap	an, we	find	that	the	Madras	High
Court	relied	u	pon	the	judgement	of	the	Punja	b &	Haryana
High	Court	in		Vipan	Khanna	and	held	that	the	issue
raised	in	the	case	bef	ore them	did	not	give	rise	to any