The Kerala High Court In the case of M/s Baby Marine Exports versus Assistant Commissioner of Income Tax wherein held that deduction u/s 80HHC accidently allowed to the manufacturer in the absence of certificate from export house, can be rectified by resorting to re-assessment under section 147 of the Income Tax Act.
In instant case Assessee approached earlier before this court regarding the claim of deduction under section 80HHC that the same can be availed only if there is a certificate produced from the export house and the sustainability of the re-opening carried out under Section 147.
After completion of Assessment order AO pressed the CIT (A) order in previous assessment year stating that dis-allowance of deduction under Section 80 HHC, in the absence of production of certificate from export house was contrary to the CBDT circular. This was the ground taken under Section 147 to proceed with the re-opening.
The said appellate order in the earlier assessment years, was taken as an information as contemplated under Section 147 to proceed with the reopening.
The counsel for Assessee cited various case laws before this High Court and the question of law to be answered by this court was whether the appellate order could be taken as an information as contemplated under Section 147.
The court including Justice K. Vinod Chandran and Justice Ashok Menon pressed the case of Kerala State Industrial Development Corporation Limited wherein on the basis of the appellate order of the subsequent year, the assessment by which deduction was allowed, was reopened, which was upheld by the Division Bench of this Court.
Finally while sum-up all the proceedings court ordered that “The appellate authority had for the other years affirmed the findings of the Assessing Officer that a deduction under Section 80 HHC could be claimed successfully only if there were produced certificate of the export house. Admittedly, no certificates were produced by the assessee and inadvertently the Assessing Officer had allowed the deduction for the two years which are before us. On receipt of information by way of the appellate order, the Assessing Officer realized the escapement of assessment in the assessment years 1987-88 and 1988-89. The appellate order has already been held to be coming within the ambit of information as contemplated under Section 147. Hence there could be no vitiating factor found in the re-assessment having been carried out”.
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