Marble Men Vs. Cit and ors - Court Judgment

Excerpt:
counsels: manish goel, for the assessee a.n. mahajan, for the revenue head note: income tax reassessment--notice under section 148validity--withdrawal of deduction granted under section 80hhc catch note: the petitioner was a dealer, engaged in the business of handicraft items and marble goods in the city of agra. the goods were sold against foreign exchange. while taking the goods out of the country, it required customs clearance at the airport, the petitioner claimed benefit of special deduction under section 80hhc of the act in respect of the turnover and profit of counter sales made against convertible foreign exchange to the foreign tourists. the assessing authority, in the original assessment order accepted the claim and granted deduction. however, he issued notice under section 148 of the act seeking to withdraw the deduction granted to the petitioner under section 80hhc of the act. the allahabad high court in ram babu & sons v. union of india & anr. (1996) 222 itr 606 (all) already allowed deduction under section 80hhc in such cases and this view was also approved by apex court in cit v. silver arts palace (2003) 259 itr 684 (sc). held: when the jurisdictional high court held that deduction under section 80hhc is available in respect of counter sales effected against convertible foreign exchange if the goods were taken out of country and the transaction was subjected to customs clearance and this view also being approved by the supreme court, there was no reason for the assessing officer to form any belief that income had escaped assessment and thus issuance of notice under section 148 only to withdraw the deduction under section 80hhc was to be set aside. ratio: in view of jurisdictional high court's decision that deduction under section 80hhc is available in respect of counter sales effected against convertible foreign exchange having also been supported by the supreme court, no reassessment for withdrawal of the relief could be made. case law analysis: applied : ram babu & sons v. union of india & anr. (1996) 222 itr 606 (all), cit v. silver arts palace (2003) 259 itr 684 (sc), gkn driveshafts (india) ltd. v. ito & ors. (2003) 259 itr 19 (sc). application: also to current assessment year. decision: in assessee's favour. income tax act, 1961 section 148 income tax act, 1961, s. 148 in the allahabad high court r.k. agrawal & k.n. ojha. jj. - indian penal code, 1860 [c.a. no. 45/1860]. section 302; [m.c. jain, r.c. deepak & k.k. misra, jj] murder plea as to accused being minor school register and transfer certificate not proved before court according to law held, it has to be ignored and question of age is to be determined on other evidence and circumstances surfacing on record. age determined on the basis of x-ray plates and report prepared by c.m.o., is the correct age of accused. accused was declared to be child on the date of commission of offence of murder. however, considering fact that now accused was around 41 years, he cannot be sent to approved school. accused was directed to pay fine of rs.25,000/- under section 302 i.p.c., amount of fine was directed to be paid as compensation to wife of deceased. mohammad - the submission is misconceived inasmuch as when the notice under section 148 of the act was issued by the assessing officer, the law laid down in the case of ram babu & sons (supra) was holding the field till such time the said decision is not reversed or disapproved by the honble supreme court, it cannot be said that the assessing officer could have formed any reasonable belief.by the courtin the present writ petition, notice issued under section 148 of the income tax act, 1961 (hereinafter referred to as the act), for the assessment year 1997-98 has been challenged.2. the petitioner is a dealer engaged in the business of handicraft items and marble goods in the city of agra. it caters to the need of foreign tourists, who visit the city. the goods are sold against foreign exchange. while taking the goods out of the country, it requires customs clearance at the airport, the petitioner claimed benefit of special deduction under section 80hhc of the act in respect of the turnover and profit of counter sales made against convertible foreign exchange to the foreign tourists. the assessing authority in the original assessment order accepted the claim and granted deduction. however, he issued notice under section 148 of the act seeking to withdraw the deduction granted to the petitioner under section 80hhc of the act.3. we have heard sri manish goel, learned counsel for the petitioner, and sri a.n. mahajan, learned standing counsel appearing for the respondents,4. it is not in dispute that notice under section 148 of the act has been issued only to withdraw the deduction granted to the petitioner under section 80hhc of the act in respect of the counter sales made against foreign exchange. a division bench of this court in the case of ram babu & sons v. union of india & anr. : [1996]222itr606(all) has held that benefit of special deduction under section 80hhc is available in respect of the counter sales effected against convertible foreign exchange if the goods are taken out of the country and the transaction is subjected to customs clearance. the aforesaid view has been approved by the honble supreme court in the case of cit v. silver arts palace : [2003]259itr684(sc) . since the view taken by this court in the case of ram babu & sons & anr. (supra) has been approved by the hon'ble supreme court in the case of cit v. silver & arts palace (supra) and this court has taken a view that even the counter sales made against foreign exchange and which are subjected to customs clearance, is entitled for deduction under section 80hhc of the act, there cannot be any reasonable belief upon which the assessment year can form the opinion that any income has escaped assessment to tax or any deduction has been wrongly allowed so as to fall under section 147 of the act and thus, only on that ground if the notice has been issued, it cannot be sustained and is liable to be quashed. it may be mentioned here that the view taken by this court, has been approved by hon'ble supreme court in silver & arts palace (supra). this is an additional reason that the notice cannot be sustained.5. sri a.n. mahajan, learned standing counsel appearing for the revenue, relied upon a decision of the hon'ble supreme court in the case of gkn driveshafts (india) ltd. v. ito & ors. (2003) 259 itr 19 and submitted that the petitioner ought to be relegated to file return in pursuance of the notice under section 148 and submit its reply and it will not be proper for the court to quash the proceedings. the submission is misconceived inasmuch as when the notice under section 148 of the act was issued by the assessing officer, the law laid down in the case of ram babu & sons (supra) was holding the field till such time the said decision is not reversed or disapproved by the honble supreme court, it cannot be said that the assessing officer could have formed any reasonable belief. in the present case the action under section 147 of the act has been initiated solely on the ground that the counter sales effected against the convertible foreign exchange even though it has been exported out of india and has been subjected to customs clearance, the deduction is not to be allowed. in this view of the matter there is no necessity for relegating the petitioner to file a fresh return and submit reply before the assessing officer.6. in view of the foreign discussion, the writ petition succeeds and is allowed. the notices issued under section 148 of the act and all consequential proceedings are set aside. however, there shall be no order as to costs.