- (1.) Assessee is a corporate body engaged in computer training and software development. During the relevant previous year the assessee made project exports to certain parties. Profit from such project exports was entitled to exemption under section 10A of the Income Tax Act, 1961. The assessee filed return of its income showing total income of Rs.51,51,190/- after claiming, inter alia, deduction of Rs.3,52,52,076/- under section 10A of the Act. The said claim for deduction was supported by auditor's certificate in Form 54F and was duly accepted as per intimation issued under section 143(1). Based on a statement made by the auditor, that till the date of signing the report certain amounts against project exports remain unrealized, the Assessing Officer (AO) issued notice under section 148 of the Act. During the course of proceeding under section 147, assessee filed supplementary auditor's report claiming profit from software export at the reduced figure of Rs.1,56,34,346/- because net profit as shown in profit and loss account stood reduced due to sales return against project exports, by Rs.1,96,17,730/. The AO without accepting the claim of sales return took the net profit at the original figure for computation but reduced exemption under section 10A to the extent of Rs.1,54,51,000/-, to reassess the total income at Rs.2,49,52,270/-. On appeal by the assessee, CIT(A) found it difficult to sustain the order of AO and therefore directed computation of net profit by the AO to be reconsidered in the light of observations made in the appellate order. Revenue preferred an appeal to the Tribunal which confirmed the order of CIT(A).
(2.) Revenue continuing to be aggrieved seeks to prefer this appeal against order dated 7th May, 2015 passed by the Income Tax Appellate Tribunal "A" Bench, Kolkata in ITA no.1055(KOL)/2010 pertaining to assessment year 2001/02. Of the questions suggested, Mr. Kundalia, learned advocate appearing for Revenue, pressed question (a) for admission of appeal. The said suggested question is as under: "a) Whether on the facts and circumstances of the case the Learned Tribunal is correct in accepting the supplementary auditor's report dated 15th July, 2004 and amended Form 54F, which were filed by the assessee at the reassessment proceeding, contravening the judgment of the Apex Court in the case of CIT-Vs.- Sun Engineering Works Pvt. Ltd, 1992 198 ITR 297 wherein it has been held by the Apex Court that (i) assessment under section 147 is for the benefit of the Revenue and not for the assessee; and (ii) in reassessment proceedings, it is not open to an assessee to seek review of the concluded item, unconnected with escapement of income, for the purpose of computation of the escaped income?"
(3.) Mr. Kundalia, relied on Sun Engineering to submit that the jurisdiction of the AO was confined to income which had escaped assessment as declared by the Supreme Court. The assessee claimed reduced profit in reassessment proceeding under section 147. Claim of reduced profit had no relation to assessment of escaped income. He relied on the following portions in the judgment as are extracted below: " The assessee cannot claim recomputation of the income or redoing of an assessment and be allowed a claim which he either failed to make or which was otherwise rejected at the time of original assessment which has since acquired finality. Of course, in the reassessment proceedings, it is open to an assessee to show that the income alleged to have escaped assessment has in truth and in fact not escaped assessment but that the same had been shown under some inappropriate head in the original return, but to read the judgment in V. Jaganmohan Rao, 1970 75 ITR 373 (SC), as laying down that reassessment wipes out the original assessment and that reassessment is not only confined to "escaped assessment" or " underassessment" but to the entire assessment for the year and starts the assessment proceedings de novo giving the right to an assessee to reagitate matters which he had lost during the original assessment proceedings, which had acquired finality, is not only erroneous but also against the phraseology of section 147 of the Act and the object of reassessment proceedings Although section 147 is part of a taxing statute, it imposes no charge on the subject but deals merely with the machinery of assessment and in interpreting a provision of that kind, the rule is that that construction should be preferred which makes the machinery workable. Since the proceedings under section 147 of the Act are for the benefit of the Revenue and not an assessee and are aimed at garnering the "escaped income" of an assessee, the same cannot be allowed to be converted as "revisional" or "review" proceedings at the instance of the assessee, thereby making the machinery unworkable.";