Judgment : Aravind Kumar. J., The assessee is a company engaged in the manufacture and export of granite monuments. During the assessment year 1996-97 Return of Income was filed declaring Nil income after claiming deduction under Sec.80HHC of the Income Tax Act (hereinafter referred to as ‘The Act’ for the sake of brevity). This Return of Income for the Assessment Year 1996-97 came to be processed under Sec.143(1)(a) on 23.10.1997. The Assessing Officer found that in terms of Sub-section (a) of Sec.80HHC of the Act, assessee had not received sale proceeds in convertible foreign exchange Within the time prescribed under Sec.80HHC (2) (a) of Act, on the sale of such goods exported out of India and found that the claim for deduction under Sec.80HHC which had been wrongly calculated and claimed which amounted to Rs.11,69,152/- on which a tax liability of Rs.7,42,075/- had accrued and as such sought for rectification proceedings by issue of notice under Sec.148 of the Act and an order also came to be passed on 31.8.1998 under Sec.154 of the Act rectifying the original assessment order dated 23.10.1997. The assessee’s claim before the Commissioner of Income-Tax seeking for extension of time had been rejected on 30.12.1998. The assessee being aggrieved by the order of rectification filed appeal before the Commissioner of Income-Tax (Appeals) and a revision before Commissioner of Income-Tax, Karnataka-I. The appeal came to be withdrawn. This very order which was questioned by the assessee before the Commissioner of Income Tax in Revision under Sec.264 of the Act, which authority by order dated 30.12.1998 cancelled the order passed under Sec.154 of the Act directing the Assessing Officer to proceed under Sec.147 of the Act. Thereafter, Assessing Officer issued notice to the assessee in response to which the assessee filed Returns of Income on 5.2.1999 declaring Nil income and it is in this revised Return of Income filed on 5.2.1999 assessee claimed exemption of entire income under Sec.10B on the ground that entire profits earned by it from the export business is eligible for exemption. The Assessing Authority on consideration of the said claim by relying upon the judgment of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Vs. Sun Engineering Works (P) Ltd., Reported in (1992) 198 ITR-297 held that the assessee was not entitled to re-agitate what was not urged in the earlier original assessment proceedings by order dated 30.3.2001. Sun Engineering Works (P) Ltd., Reported in (1992) 198 ITR-297 held that the assessee was not entitled to re-agitate what was not urged in the earlier original assessment proceedings by order dated 30.3.2001. This order came to be challenged by the assessee before the Commissioner of Income Tax (Appeals) who confirmed the order of the Assessing Officer and rejected the appeal by order dated 3.12.2001. 2. The assessee being aggrieved by the said orders of CIT (A) dated 3.12.2001, preferred an appeal before the Income Tax Appellate Tribunal, Bangalore. The tribunal by its order dated 21.10.2003 held that once the income is exempt, the same cannot be brought to tax by the Assessing Officer and consequently it was held that re-opening of assessments were erroneous. 3. The revenue being aggrieved by the same is in appeal before this court under Sec.260A of the Act raising the following substantial questions of law which had been framed at the time of admission of the appeals: 1. Whether the Tribunal was correct in holding that in re-opened assessments which had been made to consider the deduction under Sec.80HHC of the Act wrongly claimed the assessee can be permitted to agitate a new claim that the entire income was exempt under Sec.10B of the Act? 2. Whether the Tribunal was correct in holding that the assessee who had not claimed either in the original return or in the assessment order which had reached finality that the entire income was exempt from income tax can for the first time do so in reopened assessments contrary to the principle enunciated in the judgment of the Apex Court in CIT Vs. Sun Engineering reported in 198 ITR 297? 4. We have heard Sri. M.V. Seshachala, learned counsel for the revenue and Sri. Kulkarni, learned counsel for the respondent/assessee. 5. Sri. M.V. Seshachala appearing for the revenue relies upon the judgment of Sun Engineering Works supra drawing our attention to para-25 to contend that in reassessment proceedings the assessee cannot claim re-computation of the income or re-doing of assessment which had earlier taken place and accordingly seeks that questions of law framed in these appeals be answered in favour of the revenue. Per contra, Sri. Kulkarni contends that it is no doubt true that in the original Return of Income filed the assessee had not claimed benefit under Sec.10B of the Act. Per contra, Sri. Kulkarni contends that it is no doubt true that in the original Return of Income filed the assessee had not claimed benefit under Sec.10B of the Act. However, when the Assessing Officer sought to invoke and re-open the proceedings under Sec.147/148 of the Act, the assessee was fully justified in contending that the entire income of the assessee having been earned out of 100% export oriented unit was exempt under Sec.10B of the Act and it does not prevent the assessee from claiming benefit accrued thereunder and he also relied upon the very same decision viz., Sun Engineering Works supra and draws our attention to para-27 of the judgment to contend that the assessee is entitled to put forward claims for deductions of any expenditure in respect of the income or the non-taxability of items and accordingly seeks rejection of the appeal filed by the revenue and requests this court to answer the questions of law in favour of the assessee and against the revenue. 6. Having given our anxious consideration to the submissions made at the Bar, we find from the records that Sec.148 proceedings was triggered on account of non-receipt of convertible foreign exchange by the assessee towards the sale of its export products which entitles the assessee to claim exemption under sub-clause(a) of sub-section (2) of Sec.80HHC. It is on account of this non-receipt of foreign exchange, rectification proceedings were initiated which ultimately culminated in Sec.148 proceedings and an order of assessment came to be passed on 30.3.2001 rejecting the claim of the assessee. It is to be noticed by us that in the first instance the assessee had not claimed benefit under sec.10B of the Act and had restricted his claim under Sec.80HHC only. However in the revised returns which was filed on 5.2.1999 assessee sought for exemption of entire income under Sec.10B of the Act. 7. In so far as the claim of the assessee that entire income was exempt under Sec.10B of the Act is concerned, we have no reason to hold that such claim cannot be accepted particularly the assessee himself having acquiescence in accepting the earlier assessment order and said assessment order having nor been challenged by the assessee and in the re-assessment proceedings and under its guise the assessee cannot now seek which he could have sought for in the original assessment proceedings. Thus, we have to hold that the entire income cannot be claimed as exempted under Sec.10B of the Act in the re-assessment proceedings. In the instant case, we notice that in the original return of income filed on 20.11.1996 assessee had claimed deduction under Sec.80HHC to an extent of Rs.1,21,55,957/- and out of the said amount sale proceeds convertible in foreign exchange to an extent of Rs.11,69,152/- had not been received and as such deduction under Sec.80HHC (2)(a) of the Act was not allowed. It is precise this amount which was the subject matter of reopening the assessment and which was sought to be brought within the total turnover. In the re-assessment proceedings, the assessee for the first time has taken up the contention that entire income viz., sale proceeds received under Sec.80HHC was exempted form tax in view of Sec.10B. In fact, the assessee has made a claim in reply to the re-assessment proceedings however the Assessing Officer rejected the same on the premise that it is impermissible to do so in view of Sun Engineering Works case supra. In the said judgment it is noticed by Their Lordships that at para-27 which reads as follows: “Indeed, in the reassessment proceedings for bring to tax items which had escaped assessment, it would be open to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non-taxability of the items at all. Keeping in view the object and purpose of the proceedings under Sec.147 of the Act which are for the benefit of the Revenue and not an assessee, an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to “escaped income”, and reagitate the concluded matters. Even in cases where the claims of the assessee during the course of reassessment proceedings relating on the escaped assessment are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. Even in cases where the claims of the assessee during the course of reassessment proceedings relating on the escaped assessment are accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. The income for purposes of “reassessment” cannot be reduced beyond the income originally assessed.” (emphasis supplied by us) In unequivocal terms their Lordships have held that in the re-assessment proceedings assessee cannot be permitted to convert the same as his appeal or revision, in disguise and seek relief in respect of items earlier rejected or accepted. In the instant case, we find that re-assessment proceedings was initiated in respect of escaped assessment i.e., claim made towards sale proceeds convertible foreign exchange which had not been received. Now the contention of the assessee that entire deduction claimed under Sec.80HHC was exempted under Sec.10B. Even if it were be so, we are not inclined to accept such submission in view of the judgment of Sun Engineering Works as enumerated in para-27 hereinabove. 8. What is to be looked into by the authorities for the purpose of computation under reassessment proceedings would be escaped assessment and it is not original proceedings which can be gone into in the re-assessment proceedings. It is that income which has escaped assessment from the purview of tax that assessee would be entitled to take all contentions including the contention regarding taxability of the said income. Thus the assessee cannot now contend in the revised return for the first time that entire income is outside the purview of taxability in view of Sec.10B of the Act. At the most, assessee can claim exemption in respect of that part of income derived under Sec.80HHC by pressing into service Sec.10B of the Act which is sought to be revised and not on entire income. 9. In view of the above discussion, we have to hold question No.1 formulated hereinabove partly in favour of the revenue since said question is concluded which encompasses within itself the entire income and hence we will have to clarify here that it is only escaped income which is the cause of action for issuing notice under Sec.148 which can be the subject matter of consideration and the assessee would be fully justified in raising all such claims including the taxability of the income to the extent of re-opening of assessment. Clarifying this aspect, we answer question No.1 in the negative formulated herein-above i.e., in favour of the revenue and against the assessee to the extent hereinabove. 10. In so far as question No.2 is concerned, having perused the judgment of the Hon’ble Supreme Court is Sun Engineering’s case, we have no hesitation to hold that in a reassessment proceedings which relates to the income which has escaped assessment where the assessee would be entitled to put forward the claims for deduction of any expenditure in respect of that income (that income which is referable to escaped income) and also about the taxability of items which was sought to be taxed in the reassessment proceedings only can be agitated and not those income which was not the subject matter of reassessment. If the contention of the learned counsel Sr.Kulkarni were to be accepted which is to the effect that income which has been assessed and accepted by the assessee can also be gone into in the re-assessment proceedings, it would be leading to incongruous situation in as much as the assessee would under the guise of questioning the taxability would in effect convert it as his appeal or revision in disguise which is impermissible in law particularly having accepted the assessment orders. Hence, we are of the considered opinion that in view of the SUN ENGINEERINGS case supra tribunal was error in holding that the question regarding taxability of the entire income can be gone into in the re-assessment proceedings. Accordingly, we answer question No.2 in negative i.e., in favour of the revenue and against assessee. 11. However, on facts we find that the tribunal has recorded finding with regard to the claim of the assessee in so far as the re-assessment proceedings are concerned, that the assessee was justified in claiming exemption under Sec.10B of the Act and this finding of the tribunal to the extent it relatable to taxability of escaped income does not require to be disturbed by us and accordingly we desist from doing so. We clarify that finding of the tribunal in so far as it relates to the claim for exemption from the taxability under Sec.10B is concerned in reassessment proceedings is to be restricted only to the extent of escaped income and not entire income as claimed by assessee. 12. We clarify that finding of the tribunal in so far as it relates to the claim for exemption from the taxability under Sec.10B is concerned in reassessment proceedings is to be restricted only to the extent of escaped income and not entire income as claimed by assessee. 12. Accordingly the appeal is allowed in part by answering questions of law in favour of the revenue and against the assessee and the order of the tribunal on facts is confirmed only to the extent enumerated hereinabove. Parties are directed to bear costs.