1 itxa2328.10.sxw IN THE HIGH COURT OF JDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 2328 OF 2010 Commissioner of Income Tax, Central-III ...Appellant. Vs. M/s. Bhavani Gems ..Respondent Mr.Suresh Kumar for the Appellant. Mr. Deepak Tralshawala i/by Vishnu S. Hadade for the Respondent. CORAM : J.P. DEVADHAR AND A.A. SAYED, JJ. DATE : 11TH AUGUST, 2011. P.C. 1. Whether the ITAT is justified in holding that the assessee is entitled to deduction under section 80HHC on the undisclosed income declared by the assessee in its block return is the question raised in this appeal. In the block assessment order, the Assessing Officer declined to grant deduction under section 80HHC on the ground that such deduction cannot be granted in respect of the undisclosed income. The ITAT was of the opinion that in view of the amendment to section 158BB of the Act, the assessee would be entitled to deduction under section 80HHC on the undisclosed income. Accordingly, the ITAT, set aside the block assessment and directed the Assessing Officer to pass fresh order. 2. While giving effect to the order of the ITAT, the assessing officer was of the opinion that undisclosed income had no nexus with the export business and disallowed the deduction under section 80HHC. 2 itxa2328.10.sxw 3. On appeal filed by the assessee CIT(A) held that the Tribunal by its earlier order has held that the assessee was entitled to deduction under section 80HHC on undisclosed income offered by the assessee. The ITAT has upheld the order of CIT(A). Hence the revenue has filed the present appeal. 4. In the present case, the question that the assessee is entitled to the deduction under section 80HHC on the undisclosed income is not in dispute. But the question is whether the undisclosed income fulfills the criteria laid down under section 80HHC is the question. According to the assessing officer, undisclosed income offered by the assess does not fulfill the criteria laid down under section 80HHC. Validity of this finding recorded by the assessing officer has not been considered either by CIT(A) or by the ITAT. Counsel for the assessee states that the assessee is a 100% exporter, that the undisclosed income was referable to the export activities and, therefore, the assessing officer was not justified in refusing to grant deduction under section 80HHC. As noted above, the fact that the undisclosed income can be considered for deduction under section 80HHC, it does not mean that the undisclosed income fulfills the criteria laid down under Section 80HHC. Since this aspect of the matter has not been considered by the ITAT on merits, by consent of the parties the impugned order of the ITAT dated 24th July, 2009 passed in I.T.(SS)A. No. 84/Mum/2008 is quashed and set aside. The appeal is restored to the file of ITAT for fresh consideration in accordance with law. 5. All contentions of both the parties are kept open. Appeal is disposed 3 itxa2328.10.sxw of accordingly with no order as to costs. ( A.A. SAYED, J. ) ( J.P. DEVADHAR , J.)