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Undoubtedly, the RBI Guidelines are Guidelines for the banks, issued for FEMA purposes. Clause 2.3 (supra) of these Guidelines refers to Regulation 10B (2) of the Foreign Exchange Management (Approval or Issue of Security By a Person Resident Outside India) Regulations, 2000. The very opening paragraph of these Guidelines (APB-III) shows that they are addressed to ‘Authorised Dealer (AD) Banks’.
Since the present case did not suffer from non-disclosure or omission to disclose ‘fully and truly’ the facts by the assessee, the Assessing Officer could not have been held, and was rightly not held by the learned Tribunal, to have had the jurisdiction to re-open the assessment and make assessment as in the present case.In the present case all the material facts, which were necessary for making a correct assessment, had been furnished, in the case at hand, to the Assessing Officer and when the Assessing Officer had failed to make correct assessment, the Revenue cannot blame the assessee and take recourse to the proviso to Section 147 for the purpose of re-opening the assessment.
Assessing Officer while making certain additions by restricting 90% of the receipts by applying clause (baa) of Explanation to sec. 80HHC has travelled beyond his jurisdiction and scope of enquiry as directed by the Commissioner of Income Tax (Appeals) because it was not the subject matter of remand proceedings. Since the Assessing Officer was lacking the jurisdiction in the remand proceedings to go into the issue other than directed to be re-examined, the Commissioner of Income Tax (Appeals), in the appeal proceedings against the order giving effect also has no jurisdiction to go into the said issue because under the provisions of sec. 251, the Commissioner of Income Tax (Appeals) can exercise his jurisdiction on the issue on which the Assessing Officer could have exercised but did not do so.
We have heard the rival contentions. and perused the material on record as no controverting material has been brought on record by the revenue as to why the deduction u/s.80-IC be denied to the assessee merely because the auditor in a report u/s.44AB in Col. deduction under Chapter VIIA has observed NIL. This being a technical non-disclosure appropriately was supported by the auditor by claiming deduction u/s.80-IC which he had certified therefore cannot be subjected to denial to the assessee being purely of technical nature. We may as a passing reference also mention that the case law cited regarding refund of excise duty was held in favour of the assessee by the jurisdictional High Court for deduction u/s.80-IC.
It is an admitted position that no notice under Section 143(2) had been issued while making assessment under Section 143(3) read with Section 147. The Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 has held that the Tribunal has discretion to allow or not to allow a new ground to be raised. But in a case where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee.
In case of Ashok Taksali (supra), the Rajasthan High Court came across a similar question. The Bench was of the opinion that once a salary income of the block year has been taxed and such tax has been deducted at source, there is no question of holding that the income of the assessee was undisclosed income of the block period. It was observed as under:-
In this case, assessee was carrying on business of conversion of Jumbo Rolls of photographic films into small flats and rolls in desired sizes. It claimed deduction under secs. 80-HH and 80-I as well as investment allowance under sec. 32AB. The controversy arose whether conversion of jumbo rolls into small sizes amounts to manufacture or production, eligible for deduction under sec. 32AB or deduction under sections 80-HH and 80-I of the Income-tax Act, 1961/ Hon’ble Supreme Court has held that this activity amounts to manufacture or production.
The assessee has explained before us the hierarchy of Sacred Heart Congregation viz., Generalate, Province, Region and Convents. There is no dispute that the applicant herein is a Convent. It was further submitted that the constitution (meaning ‘bye laws’) is the same for all the four hierarchies stated above. It was further submitted that Chapter X of the constitution, referred above, is the authority of services given to the convents. We have gone through the Chapter X of the constitution referred above. We notice that the Chapter X discusses about the formation of new houses, local communities, colonial house, local supervisor, local assembly, local council, service centres etc., and the mode of regulation of the same. In clause 278, which is prescribed under the head “Colonial House”, it is stated as under:-
The question as to whether the business is derived from or attributable to SLR or non-SLR funds would not make any difference for the purposes of qualifying the interest earned by the cooperative bank under Section 80P (2) (a) (i) as the deposits of surplus idle money available from working capital, including reserves, excess collection of interest tax and other incomes are all attributable to the business of banking. The interest from such deposits cannot be said to be beyond the legitimate business activities of the bank.
Legal Foundation of Provisions The fundamental legal and common-sense principle which help understanding and appreciating the requirements of valid actions and procedures for re-opening the assessments is, that in general, the law disfavours the unsettling of settled and concluded status/ proceedings. It is easy to understand why it should be so.
