STEELFAB ENGG., MUMBAI V. ACIT 12(3), MUMBAI

CO 15/MUM/2009

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7225 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 30 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-04-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 14-03-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 14-01-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND SONDE
• Keywords: Reasonable cause; Condonation of delay; Revised return
• Section: 143(3); 133A; 80IB; 139(5); 147; 148

Judgement Text

ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI BEFORE SHRI P. M. JAGTAP, AM AND SHRI AMIT SHUKLA, JM ITA NO. : 494/MUM/2006 ASSESSMENT YEAR : 2000-01 & CROSS OBJECTION NO.15/M/2009 M/S. STEELFAB ENGINEERING CORPORATION (INDIA) 5, RUSTOM BUILDING, 2 ND FLOOR, 29, VEER NARIMAN RD, MUMBAI-400 023 PAN NO: AAEFS 3082 N ACIT WARD 12(3), AAYKAR BHAWAN, MUMBAI (APPELLANT IN ITA NO. : 494/MUM/2006 AND RESPONDENT IN CROSS OBJECTION NO.15/M/2009 ) VS. (RESPONDENT IN ITA NO. : 494/ MUM/2006 & CROSS OBJECTOR IN C.O. NO.15/M/2009) APPELLANT BY : SHRI ARVIND SONDE RESPONDENT BY : SHRI DINESH KUMAR DATE OF HEARING : 15.03.2012 DATE OF PRONOUNCEMENT : 13.04.2012 O R D E R PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 19.08.2005 PASSED BY CIT-XII, MUMBAI FOR THE QUANTUM OF ASSESSMENT FOR THE ASSESSMENT YEAR 2000-01. 2. THE APPEAL IS BARRED BY LIMITATION BY 91 DAYS. AL ONG WITH THE APPEAL, THE APPELLANT HAS FILED A PETITION FOR CONDONATION OF DELAY ACCOMPANIED BY AN AFFIDAVIT OF PARTNER SHRI C HIRAG PRAMOD ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 2 SHAH. THE REASONS FOR CONDONATION OF DELAY HAS GIV EN BY THE APPELLANT ON THE FOLLOWING GROUNDS :- 1. THE ORDER OF THE CIT(A) DATED 19 TH AUGUST, 2005 WAS SERVED AT OUR OFFICE & WAS RECEIVED BY SHRI GIRISH B. DOSHI. HE DID NOT NOTE DOWN THE DATE OF COMMUNICATI ON OF THE ORDER. 2. AS SHRI GIRISH B DOSHI, PROCEEDED ON UNSCHEDULED LEAVE FOR CERTAIN PERSONAL REASON, HE DID NOT COMMUNICATE THE RECEIPT OF THE ORDER TO ANY OF THE PARTNERS/RESPONS IBLE PERSONS OF OUR FIRM. 3. ONLY ON 17 TH JANUARY, 2006, WHEN HE RETURNED FROM LEAVE, DID HE INFORM RECEIPT OF THE ORDER. 4. IMMEDIATELY THEREAFTER THE ORDER OF THE CIT(A) W AS FORWARDED ALONG WITH THE RELEVANT PAPERS TO OUR CHARTERED ACCOUNTANT SHRI VIJAY KOTHARI FOR DRAFTIN G OF GROUNDS OF APPEAL. 5. ON THE BASIS OF THE RECORDS AVAILABLE, SHRI VIJA Y KOTHARI DRAFTED THE GROUNDS OF APPEAL TO BE FILED BEFORE H ONBLE ITAT & RETURNED THE PAPERS ON 19 TH JANUARY, 2006. 6. UNDER THESE FACTS, WHICH ARE STATED HEREINABOVE, WE ARE NOW FILING THIS APPEAL. WE HAVE TO SUBMIT & REQUEST THAT THE DELAY IN FILIN G OF THE APPEAL BE CONDONED. THE LAPSE ON THE PART OF THE AP PELLANT IN NOT FILING THE APPEAL WITHIN THE PRESCRIBED TIME WAS UNINTENTIONAL & ENTIRELY DUE TO INADVERTENCE. WE HE NCE PRAY THAT THE DELAY BE CONDONED & THE APPEAL BE ADMITTED . FOR SUCH ACT OF KINDNESS WE SHALL EVER BE OBLIGED TO YO UR HONOURS. AN AFFIDAVIT OF SHRI GIRISH B. DOSHI HAS ALSO BEEN FILED STATING THAT HE HAD A SERIOUS CHEST PAIN FOLLOWED W ITH SWEATING IN AND AROUND THAT TIME AND WAS, THEREFORE, TAKEN FOR URGENT MEDICAL TREATMENT. AS PER THE MEDICAL ADVICE, FOR COMPLETE BED REST, HE HAD MOVED TO PUNE AT HIS BROTHERS PLACE. DURING THE COURSE OF HEARING, THE LEARNED AR APPEARING ON BEHA LF OF THE ASSESSEE ALSO PRODUCED MEDICAL FILES OF SHRI GIRISH DOSHI. IN VIEW OF THE AVERMENTS MADE IN THE AFFIDAVITS AND UN DER THE FACTS ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 3 AND CIRCUMSTANCES, WE CONDONE THE DELAY AND ADMIT T HE APPEAL FOR ADJUDICATION ON MERITS. 3. THE APPEAL HAS BEEN PREFERRED ON THE FOLLOWING GRO UNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN NOT GRANTING DEDUCTION U/S 80-IB OF THE INCOME TAX ACT, 1961 OF RS.69,32,870/-. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE APPELLANT WAS NOT ELIGIBL E FOR DEDUCTION U/S. 80-IB ONLY FOR THE REASON THAT THE APPELLANT HAD FILED A REVISED RETURN OF INCOME WITHDRAWING THE CLAIM OF DEDUCTION U/S.80-IB. 4 . THE FACTS IN BRIEF ARE THAT, THE ASSESSEE HAD FIL ED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2000-01 ON 31.10. 2000 DECLARING TAXABLE INCOME OF `. 4,507/-, AFTER CLAIMING DEDUCTION U/S.80IB OF THE INCOME TAX ACT. SUCH A RETURN OF I NCOME WAS ACCEPTED U/S.143(1). LATER ON, A SURVEY U/S.133A W AS CONDUCTED AT THE OFFICE AND FACTORY PREMISES OF THE ASSESSEE ON 12.12.2003. IN PURSUANCE THEREOF, THE ASSESSMENT WAS REOPENED B Y ISSUANCE OF NOTICE U/S.148 DATED 16.01.2004 AFTER RECORDING THE REASONS (THE COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOO K FROM PAGES 43 TO 44A). AFTER THE NOTICE WAS SERVED UPON THE A SSESSEE, IT VIDE LETTER DATED 15.10.2004 INTIMATED TO THE ASSESSING OFFICER THAT THE RETURN FILED ORIGINALLY SHOULD BE TREATED AS R ETURN IN RESPONSE TO NOTICE U/S.148. THUS IN TERMS OF LETTE R DATED 15.10.2004, THE ASSESSEE FILED ITS RETURN IN RESP ONSE TO THE NOTICE U/S.148 BASED ON ORIGINAL RETURN, WHEREIN TH E CLAIM FOR ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 4 DEDUCTION U/S.80IB WAS MADE. SUBSEQUENTLY ON 09.03 .2005, SUCH A RETURN WAS REVISED, WHEREBY THE ENTIRE CLAIM MADE U/S.80IB WAS WITHDRAWN BY THE ASSESSEE. THE SO CAL LED REVISED RETURN WAS ACCOMPANIED BY A LETTER DATED 07.03.200 5 GIVING THE REASONS FOR WITHDRAWING THE CLAIM (THE COPY OF WHIC H HAS BEEN PLACED IN THE PAPER BOOK AT PAGES 75 TO 76). 5. THE ASSESSEE IS A PARTNERSHIP FIRM WHICH WAS FORME D AS PER THE PARTNERSHIP DEED DATED 15.12.1998. IT IS ENGAG ED IN THE BUSINESS OF MANUFACTURING OF PRE-FABRICATED STEEL B UILDINGS FROM THE FACTORY SITUATED AT SILVASA. THE ASSESSING OFF ICER NOTED THAT IN THE BALANCE SHEET AS ON 31.03.1999, RELEVANT TO THE ASSESSMENT YEAR 1999-2000, THE ASSESSEE HAS DISCLOS ED A MACHINERY FOR A VALUE OF SUM OF `. 5,25,155/-, INSTALLED IN FACTORY PREMISES AT SILVASA. AS PER THE ASSESSEE, THE BUSIN ESS HAD STARTED IN THE ASSESSMENT YEAR 1999-2000 ITSELF, FR OM THE PREMISES TAKEN ON RENT. HOWEVER, IN THE RETURN FIL ED FOR THE ASSESSMENT YEAR 2000-01, THE ASSESSEE HAD MADE A CL AIM FOR DEDUCTION U/.80IB FOR THE FIRST TIME. IN THE SCHED ULE OF FIXED ASSETS ACCOMPANYING THE BALANCE SHEET AS ON 31.03.2 000, THERE WAS AN ADDITION OF `. 29,61,117/- WHICH INCLUDED AN ADDITION TOWARDS FACTORY, BUILDING, LAND, PLANT AND MACHINER Y. FROM THE DETAILS OF ADDITIONS MADE IN THE FIXED ASSETS SPECI FICALLY ON PLANT AND MACHINERY, THE ASSESSING OFFICER TOOK NOTE OF T HE FACT THAT ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 5 THE SAME HAVE BEEN PURCHASED FROM AUGUST, 1999 TILL MARCH, 2000. THE DETAILS OF MACHINERY PURCHASED HAVE BEEN ELABORATELY GIVEN IN A TABULAR FORM BY THE ASSESSING OFFICER IN PARA 8 OF THE ASSESSMENT ORDER. 6. IN ORDER TO VERIFY THE GENUINENESS OF THE PURCHASE OF THE MACHINERY OF `. 5,25,155/- PURCHASED IN THE ASSESSMENT YEAR 1999-2000, THE ASSESSING OFFICER CONDUCTED AN ENQUI RY FROM WHERE IT WAS GATHERED THAT THE ENTIRE MACHINERY WAS PURCHASED FROM ONE M/S. JYOTI TRADERS, AHMEDABAD. FROM THE B ILLS OF PURCHASE AND THE DETAILS OF PAYMENT OF CHEQUE, HE C ARRIED OUT FURTHER ENQUIRY FROM THE BANK FROM WHERE IT WAS RE VEALED THAT THE ABOVE CHEQUES WERE ISSUED TO M/S. JIGSON ENGINE ERS (ONE OF THE SISTER CONCERN OF M/S. JYOTI TRADERS). ON BEIN G CONFRONTED, IT WAS SUBMITTED BY THE ASSESSEE THAT THE PURCHASE OF THE MACHINERY FROM M/S. JYOTI TRADERS WAS MADE THROUGH ITS SISTER CONCERN M/S. JIGSON ENGINEERS AND THE SAID PARTY HA VE IN TURN MADE THE PAYMENT TO M/S. JYOTI TRADERS. FURTHER DI SCREPANCY WAS NOTED THAT, M/S. JIGSON ENGINEERS HAVE NOT MADE ANY PAYMENT TO M/S. JYOTI TRADERS EITHER BY CHEQUE OR B Y CASH AND IN FACT THE SAID PARTY HAD FILED THE REVISED RETURN FO R THE ASSESSMENT YEAR 1999-2000 ON 10.06.2004 DISCLOSING INCOME OF `. 5,20,000/- ONLY TO COVER THE CASH PAYMENT TO M/S. JYOTI TRADER S. THE ASSESSING OFFICER ALSO FOUND THAT M/S. JYOTI TRADER S HAVE NOT ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 6 MAINTAINED ANY BOOKS OF ACCOUNTS TO INDICATE THAT T HE PAYMENT HAS BEEN RECEIVED BY THEM IN CASH TO THE SAID SUPPL Y OF PLANT AND MACHINERY. EVEN NO RETURN OF INCOME FOR THE ASSESS MENT YEAR 1999-2000 HAVE BEEN FILED BEFORE THE DEPARTMENT. 7. AFTER POINTING OUT DISCREPANCY IN PURCHASE OF MACH INERY IN THE A.Y. 1999-2000, HE FURTHER PROCEEDED TO EXAMINE , WHETHER THE BUSINESS HAD STARTED FROM THE NEW INDUSTRIAL UN DERTAKING. IT HAS BEEN OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD STARTED ITS BUSINESS FROM A LEASE PREMISES 102/11, MADHUBON DAM ROAD, RAKHOLI, SILVASA TAKEN FROM M/S. STEEL FA B ENGINEERING CORPORATION (SILVASA) (A DIFFERENT UNIT ), WHICH WAS CARRYING ON A SIMILAR BUSINESS AND IT HAD CLOSED IT S BUSINESS AS ON 31.03.1999. THE MACHINERY WHICH WAS USED BY M/ S. STEEL FAB ENGINEERING CORPORATION (SILVASA) WAS SOLD TO T HE SISTER CONCERN M/S. STEEL FAB ENGINEERING CORPORATION (KAS HMIRA, MUMBAI) (AGAIN A DIFFERENT UNIT) FOR A SUM OF `. 4,63,890/-. THE ASSESSING OFFICER AFTER ENQUIRY HAS EVEN DOUBTED TH E SAID PURCHASE AND SHIFTING OF MACHINERY FROM SILVASA TO KASHMIRA. FROM THE ENTIRE INFORMATION GATHERED AS ABOVE, HE CAME TO THE CONCLUSION THAT THE ASSESSEE HAD NOT STARTED THE MA NUFACTURING ACTIVITIES FROM THE BEGINNING OF THE YEAR BUT ONLY WHEN THE NEW MACHINERY ALLEGED TO HAVE BEEN PURCHASED BY THEM UP TO MARCH 2000. THE CRUX OF THE FINDING OF THE ASSESSING OF FICER AS ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 7 SUMMARIZED BY HIM IN PARA 9 AND 10 OF THE ASSESSMEN T ORDER IS THAT THE ASSESSEE MAY HAVE USED THE OLD MACHINERY F OUND DURING THE SURVEY OPERATION, IN THE PERIOD UNDER CONSIDERA TION I.E. FINANCIAL YEAR 1999-2000, HOWEVER, THE NEW FACTORY BUILDING AND NEW MACHINERY PURCHASED WERE NOT READY FOR USE BEF ORE 01.04.2000. 8. BASED ON THE ABOVE BACKGROUND, THE ASSESSING OFFIC ER OBSERVED THAT IT WAS ONLY AFTER BEING APPRISED BY T HE VARIOUS ENQUIRIES CONDUCTED IN THIS REGARD, THE ASSESSEE CA ME FORWARD AND FILED A REVISED RETURN OF INCOME ON 09.03.2005, WITHDRAWING THE CLAIM OF SECTION 80IB AS WAS MADE IN THE ORIGIN AL RETURN OF INCOME. FINALLY, ON THE STRENGTH OF SUCH REVISED R ETURN AND THE LETTER ACCOMPANYING THE SAID RETURN (THE CONTENTS O F WHICH HAVE BEEN REPRODUCED AT PAGE 6 AND 7 OF THE ASSESSMENT O RDER), THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THE A SSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80IB OF THE ACT WHICH IT SELF HAS BEEN WITHDRAWN BY THE ASSESSEE IN THE REVISED RETURN. T HUS THE CLAIM FOR DEDUCTION FOR A SUM OF `. 69,42,870/- WAS WITHDRAWN AND ADDED TO THE TAXABLE INCOME OF THE ASSESSEE. 9. BEFORE THE CIT(A), THE ASSESSEE CONTENDED THAT THE CONDITION PRECEDENT FOR CLAIMING DEDUCTION UNDER SECTION 80IB STANDS SATISFIED IN ITS CASE. THE SUBMISSIONS OF THE ASSES SEE TO THIS EFFECT ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 8 HAVE BEEN INCORPORATED FROM PAGES 3 TO 10 OF THE AP PELLATE ORDER. THE SUM AND SUBSTANCE OF CONTENTION OF THE ASSESSEE ARE THAT:- (I) ON THE FIRST CONDITION THAT THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE HAS NOT BEEN FORMED BY RECONSTRUCTION OR S PLITTING OF BUSINESS ALREADY IN EXISTENCE , THE ASSESSEE SUBMITTED THAT; (A) IT HAS COME INTO EXISTENCE VIDE PARTNERSHIP DE ED DATED 15- 12-1998 FOR CARRYING OUT THE ACTIVITY OF MANUFACTUR ING PRE- FABRICATED STEEL BUILDING FOR WHICH IT WAS GRANTED CERTIFICATE FROM SMALL SCALE INDUSTRIES AND ALSO GOT SEPARATE REGISTRATION OF SALES TAX, EXCISE, POLLUTION CONTRO L, PROVIDENT FUND ETC.; (B) THERE WAS ANOTHER CONCERN NAMELY, STEELFAB ENGI NEERING CORPORATIONS, SILVASA (SECS), WHICH WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF STEEL TUBULAR STRUCTUR ES AND STEEL SCAFFOLDING, WHICH WERE DISTINCT AND SEPARATE PRODUCT FROM WHAT IS MANUFACTURED BY THE ASSESSEE; (C) THE SAID FIRM ON ITS OWN HAD SET UP STATUTORY R EGISTRATION UNDER VARIOUS AUTHORITIES AND DIFFERENT ACT AND EVE N THE CONSTITUTION OF PARTNERS WERE DIFFERENT; AND (D) BOTH SECS AND SEC FIRMS ARE HAVING INDEPENDENT MACHINERIES AND EQUIPMENTS FOR CARRYING OUT OF MANUFACTURING ACTIVITIES AND THERE WAS NO COMMON CUSTOMER ALSO. ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 9 THUS, ON THESE FACTS, IT WAS CONTENDED THAT IT IS N EITHER A CASE OF SPLITTING NOR RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE. (II) AS REGARD TO THE SECOND CONDITION THAT THE NEW IN DUSTRIAL UNDERTAKING IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. THE ASSESSEE CONTENDED THAT; (A) IT HAD FILED BILLS, TRANSPORT RECEIPTS AND OTHE R EVIDENCES TO SHOW THAT THE NEW PLANT MACHINERIES HAVE BEEN PURCH ASED; (B) PRIOR TO ASSESSMENT YEAR 2000-20001, I.E. FOR T HE ASSESSMENT YEAR 1999-2000 IT WAS CARRYING OUT MANUFACTURING ACTIVITIES FROM THE MACHINES PURCHASE D FROM M/S JYOTI TRADERS AND IN SUPPORT OF WHICH ALL THE R ELEVANT DOCUMENTS AND CONFIRMATION WAS FILED WHICH INCLUDE, INVOICE COPIES RECEIVED FROM SALES TAX DEPARTMENT, GUARANTEE CERTIFICATE ISSUED BY M/S JYOTI TRADERS, DELIVERY CHALLAN FOR MACHINERY PURCHASE AND ACCOUNT CONFIRMA TION FROM M/S JYOTI TRADERS. (THE OTHER SET OF EVIDENCES HAVE BEEN DISCUSSED IN PARA 3 OF PAGE 6 OF THE APPELLATE ORDER.) (C) FURTHER IT WAS NEVER THE CASE OF THE AO THAT T HE PLANT AND MACHINERIES WHICH WERE OWNED BY THE ASSESSEE WERE E ITHER NOT NEW OR THEY WERE PREVIOUSLY USED FOR ANY OTHER PURPOSES; (III) LASTLY, WITH REGARD TO THE LAST CONDITION, IT WAS SUBMITTED THAT THE MANUFACTURED PRODUCT IS PRE-FABRICATED BUI LDING WHICH DOES NOT FALL IN THE LIST OF 11 SCHEDULE AND IT HAD EMPLOYED MORE THAN 10 WORKERS. ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 10 BASED ON ABOVE SUBMISSIONS, IT WAS VEHEMENTLY CONT ENDED THAT THE ASSESSEE FIRM IS ELIGIBLE FOR DEDUCTION UN DER SECTION 80IB. 10 . SO FAR AS THE COMMENTS GIVEN BY THE AO IN THE ASS ESSMENT ORDER, THE ASSESSEE SUBMITTED THAT IT HAS GIVEN ELA BORATE REBUTTAL OF EACH AND EVERY FINDING AND ENQUIRY OF THE AO, WH ICH HAS BEEN DISCUSSED AT PAGES 7 & 8 OF THE APPELLATE ORDER WHI CH NEED NOT TO BE REITERATED. 11. FINALLY, ON THE ISSUE OF DENIAL FOR DEDUCTION UNDE R SECTION 80IB ON THE GROUND THAT IT HAS WITHDRAWN THE CLAIM THROUGH ITS REVISED RETURN, IT WAS SUBMITTED THAT THE REVISED R ETURN ITSELF WAS INVALID AS THE RETURN FILED IN RESPONSE TO THE NOTI CE UNDER SECTION 148 CANNOT BE REVISED AS PER LAW AND HENCE, COGNIZA NCE OF REVISED RETURN CANNOT BE TAKEN FOR DENYING THE BENE FIT OF CLAIM. IN SUPPORT OF THIS PROPOSITION, RELIANCE WAS PLACED ON THE DECISION OF CIT VS. BANSIDHAR JALAN & SONS, REPORTED IN 207 ITR 488 (CAL.) . FURTHER THE ASSESSEE HAS ALSO REBUTTED THE CONTEN TS OF THE LETTER DATED 7-3-2005, WHEREBY THE CLAIM FOR DEDUCT ION UNDER SECTION 80IB WAS WITHDRAWN. THE REASONING FOR SUCH REBUTTAL HAVE BEEN GIVEN AT PAGE 9 & 10 OF THE APPELLATE ORD ER. 12. THE LEARNED CIT (A) THOUGH AGREED THAT THE ASSESSE E SEEMS TO FULFILL ALL THE CONDITIONS STIPULATED UNDER SECT ION 80IB OF THE ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 11 ACT, HOWEVER, DECIDED THE MATTER AGAINST THE ASSESS EE ON THE GROUND THAT THE ASSESSEE ITSELF HAS WITHDRAWN THE C LAIM UNDER SECTION 80IB SUO MOTU BY FILING REVISED RETURN ON 9-3-2005, AND THEREFORE, THE ACTION OF THE AO IS JUSTIFIED. THUS, THE ASSESSEES CLAIM UNDER SECTION 80IB WAS REJECTED. THE RELEVANT FINDINGS OF THE LEARNED CIT(A) ARE REPRODUCED HEREINBELOW :- 3.3 I HAVE CONSIDERED THE DETAILED SUBMISSIONS OF THE APPELLANT. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER. THERE IS A SURVEY ACTION ON THE ASSESSEES OFFICE A S WELL AS THE FACTORY PREMISES U/S 133A OF THE IT ACT, 1961. THE APPELLANT WAS ISSUED A NOTICE U/S 148 OF THE IT ACT . HOWEVER, THE APPELLANT HAS NOT FILED ANY RETURN IN RESPONSE TO THIS NOTICE BUT WROTE A LETTER DATED 15.10.2004 FILED ON 28.10.2004 STATING THAT ORIGINAL RETURN FILED ON 31 .10.2000 SHOULD BE TREATED AS RETURN IN RESPONSE TO NOTICE U /S 148. AFTER THE DETAILED INQUIRIES AND INVESTIGATION MADE BY THE ASSESSING OFFICER, HE CAME TO THE CONCLUSION THAT A PPELLANTS CLAIM U/S 80-IB IS NOT ALLOWABLE. THE APPELLANT SUO -MOTU FILED A RETURN ON 09.03.2005 WITHDRAWING ITS CLAIM U/S 80-IB OF THE IT ACT. IN APPELLATE PROCEEDINGS BEFORE ME, IT IS ARGUED THAT THE RETURN FILED BY THE APPELLANT IS NOT A VAL ID RETURN AND THE ASSESSING OFFICER SHOULD NOT HAVE TAKEN COG NIZANCE OF THE REVISED RETURN FILED ON 09.03.2005. THIS ARG UMENT OF THE APPELLANT CANNOT BE ACCEPTED NOW. THE APPELLANT IS AIDED AND ADVISED BY COMPETENT CAS AND TAX CONSULTA NTS. THE REVISED RETURN FILED ON 09.03.2005 MUST HAVE BE EN FILED AFTER CONSULTING THE APPELLANTS CA. HOWEVER, AFTER PERUSING THE APPELLANTS SUBMISSIONS, I NOTICE THAT THE APPELLANT SEEMS TO FULFILL ALL THE CONDITIONS STIPU LATED IN SECTION 80IB OF THE I.T.ACT, 1961 BUT SINCE THE APPELLANT ITSELF SUO MOTO HAS WITHDRAWN HIS CLAIM U /S ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 12 80 IB BY FILING REVISED RETURN ON 9.3.2005, I DECLI NE TO INTERFERE IN THE MATTER. ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER IS UPHELD AND THE APPELLANTS CLA IM U/S. 80IB IS REJECTED. 13. LEARNED SENIOR COUNSEL APPEARING ON BEHALF OF THE ASSESSEE AFTER TAKING US THROUGH THE SUBMISSIONS MADE BEFORE THE CIT(A) AND THE RELEVANT FACTS OF THE CASE, CONTENDED THAT THE REVISED RETURN FILED ON 9-3-2005 WAS AN INVALID RETURN AS O NCE THE RETURN HAS BEEN FILED IN RESPONSE TO NOTICE UNDER SECTION 148, THE SAME CANNOT BE REVISED SPECIFICALLY FOR WITHDRAWING THE CLAIM MADE IN THE ORIGINAL RETURN. AFTER REFERRING TO PROVISIONS CONTAINED UNDER SECTION 139(5) & 139 (9), SUBMITTED THAT ONLY A MIS TAKE OR DEFECT IN THE RETURN CAN BE RECTIFIED AND THE WITHDRAWAL O F THE CLAIM IS NEITHER AN OMISSION NOR A WRONG STATEMENT. IN SUPPO RT OF THIS CONTENTION, HE RELIED UPON THE DECISION IN THE CASE OF CIT VS. ANDHRA COTTON MILLS LTD., [219 ITR 404 (AP)] & CIT VS. BANSIDHAR JALAN & OTHERS, [207 ITR 488 (CAL.)] . 14 . MOST IMPORTANT, HE DREW OUR ATTENTION TO A VITAL FACT ON THE RECORD THAT BASED ON SAME SURVEY OPERATION, REOPENI NG UNDER SECTION 147 WAS DONE FOR THE SUBSEQUENT YEARS I.E. IN THE ASSESSMENT YEAR 2001-2002, 2002-2003, 2003-2004 AND 2004- 2005, WHEREIN THE REASONS FOR REOPENING IN THE YEAR S WERE SAME I.E. CLAIM FOR DEDUCTION UNDER SECTION 80IB. IN THE ASSESSMENT ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 13 PASSED U/S.143(3) READ WITH SECTION 148, THE SAID C LAIM OF SECTION 80IB HAS BEEN ACCEPTED BY THE AO IN THE ORD ER PASSED ON THE SAME DATE I.E. 25-3-2005 FOR ALL THE ASSESSMENT YEARS (COPY OF ALL SUCH ASSESSMENT ORDERS HAVE BEEN PLACED IN T HE PAPER BOOK FROM PAGES 144 TO 159). 15 . LASTLY, HE SUBMITTED THAT EVEN IF THE CLAIM FOR D EDUCTION UNDER SECTION 80IB WAS WITHDRAWN IN TERMS OF LETTER DATED 7-3- 2005 FILED ALONG WITH THE REVISED RETURN DATED 9-3- 2005, THE SAME WILL NOT PRECLUDE THE ASSESSEE TO MAKE A CLAIM BEFORE APPELLATE AUTHORITIES UNDER SECTION 80IB, IN VIEW O F THE SETTLED PRINCIPLE OF LAW THAT JURISDICTION CANNOT BE CONFERRED BY CONSENT . IN SUPPORT OF THIS PRINCIPLE, HE CITED FOLLOWING CA SE LAWS :- I) 126 ITR 344 (BOM.) (COMMISSIONER OF WEALTH TAX VS. N.A. NARIELWALLA) ; II) 27 ITR 54 (BOM.) (CIT VS. RAMSUKH MOTILAL); AND III) 113 ITR 2 (GUJARAT) (P.V. DOSHI VS. CIT) FURTHER ON THE PROPOSITION THAT MERELY BECAUSE THE INCOME IS RETURNED ON AN ERRONEOUS IMPRESSION OR MISCONCEP TION OF LAW, THE AO CANNOT MAKE ASSESSMENT ON SUCH RETURN, RELIA NCE WAS PLACED ON THE FOLLOWING DECISIONS :- I) 81 ITR 303 (DELHI.) (CIT VS. BHARAT GENERAL REINSURANCE CO. LTD.); II) 66 ITR 647 (ALLAHABAD) (P.T.SHEO NATH PRASAD SHARMA VS. CIT); III) 117 ITD 241 (MUM.) (SHANKAR R. MHATRE); AND IV) 269 ITR (1) (BOM.) (NIRMALA L. MEHTA VS. CIT) . ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 14 16 . ON THE STRENGTH OF THESE DECISIONS, HE ARGUED THA T SURRENDERING OF CLAIM THROUGH A LETTER OR WITHDRAWI NG THE CLAIM BY WAY OF AN INVALID REVISED RETURN, THERE CANNOT B E ESTOPPEL FOR ASSESSEE FOR MAKING THE CLAIM BEFORE THE APPELLATE AUTHORITIES, WHICH IF OTHERWISE IS ALLOWABLE ON FACTS AND CIRCUM STANCES OF THE CASE. 17 . PER CONTRA , LEARNED SENIOR D.R. SUBMITTED THAT FIRSTLY, ALL THE CASE LAWS AS HAVE BEEN REFERRED TO BY THE LD. C OUNSEL ARE NOT APPLICABLE AND SECONDLY, WHEN THE ASSESSEE ITSELF H AS SUO MOTU REVISED THE RETURN FOR WITHDRAWING THE CLAIM, IT CA NNOT BE NOW, AT THIS STAGE, BE ALLOWED TO TAKE THE PLEA FOR THE CLA IM UNDER SECTION 80IB. THE SURRENDER OR WITHDRAWAL OF CLAIM BY THE A SSESSEE WAS NOT A VOLUNTARY ACTION BUT WAS DONE ONLY WHEN THE A O HAS CARRIED OUT ENQUIRY AND BROUGHT SUFFICIENT MATERIAL ON RECORD TO HOLD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTI ON UNDER SECTION 80IB DURING THE YEAR. HE DREW OUR ATTENTION TO VARIOUS CATEGORICAL FINDING GIVEN BY THE ASSESSING OFFICER AND SUBMITTED THAT THE CONCLUSION DRAWN BY THE CIT (A) IS ABSOLUT ELY CORRECT, EVEN THOUGH HE HAS NOT GIVEN ANY COMMENT ON ANY OF THE REASONING GIVEN BY THE AO. HE, THUS, HEAVILY RELIED UPON THE FINDINGS GIVEN BY THE AO. ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 15 18 . AT THE STAGE OF HEARING AND AFTER A LAPSE OF MOR E THAN 3 YEARS FROM THE DATE OF THE FILING OF THE APPEAL BY THE ASSESSEE, THE DEPARTMENT CAME WITH A CROSS OBJECTION CHALLENGING THE OBSERVATION OF THE CIT(A) THAT AFTER PERUSING THE APPELLANTS SUBMISSIONS, I NOTICE THAT THE APPELLANT SEEMS TO F ULFILL ALL THE CONDITIONS STIPULATED IN SECTION 80IB OF THE I.T.AC T, 1961 . THIS CROSS OBJECTION HAS BEEN FILED TO NEGATE SAID THE O BSERVATIONS OF THE CIT(A), WHICH OTHERWISE GOES AGAINST THE FINDIN G OF THE A.O. 19 . THE GROUNDS FOR CONDONATION OF DELAY IN FILING OF CROSS OBJECTION AS HAVE BEEN GIVEN IN THE AFFIDAVIT FILED BY MR. P.RADHAKRISHNAN DCIT 12 (3), MUMBAI, ARE REPRODUCED HEREIN BELOW :- AGGRIEVED BY THE CIT(A) ORDER THE ASSESSEE FILED APPEAL BEFORE ITAT ON 20.01.2006. THE SR. ASSISTANT REGISTRAR VIDE LETTER NO.SR.AR/ITAT-VII/B BENCH/08- 09 DATED 26.11.2008 STATED TO FILE THE CROSS OBJECTION TO THE CIT (A)S OBSERVATION AND THE SAME HAS BEEN FROM ON 14.01.2009 BEFORE THE HONBLE ITAT. AS PER THE LETTER DATED 12.10.2009, THE SENIOR AR OF THE DEPTT. HAS DIRECTED THE APPELLANT UNDER THE AFF IDAVIT FOR THE CONDONATION OF DELAY IN FILING THE CROSS OBJECT ION AS THE SAME IS FILED ON THE FOLLOWING REASONS :- A) THE APPEAL BEFORE HONBLE ITAT WAS FILED BY HE ASSESSEE ON 20.01.2006 AND THE COMMUNICATION REGARDING OF THE FILING AN APPEAL BY THE ASSESSEE BEFORE THE HONBLE ITAT WAS RECEIVED IN THIS OFFICE ON 15.01.2007 AND THEREFORE THE DELAY IS 728 DAYS. ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 16 B) THE SR.A.R., ITAT-VII B BENCH VIDE LETTER NO.SR.AR/ITAT/-VII/B BENCH/08-09, DATED 26.11.2008 DIRECTED THE DEPARTMENT TO FILE CROSS OBJECTION FOR THE OBSERVATION MADE BY THE LD.CIT(A) ON PAGE 10 OF ORDER AS QUOTED HEREIN BELOW : THE APPELLANT SEEMS TO FULFILL ALL THE CONDITIONS STIPULATED IN SECTION 80IB OF THE I.T.ACT, 1961 BUT SINCE THE APPELLANT ITSELF SUO MOTO HAS WITHDRAWN HIS CLAIM U/S 80 IB BY FILING REVISED RETURN ON 9.3.2005, I DECLINE TO INTERFERE IN THE MATTER. C) IN PURSUANCE OF SR.A.R. LETTER DATED 26.11.2008, THE DEPARTMENT VIDE LETTER DATED ACIT 12(3)/ITAT/2008- 09 DATED 13.01.2009 FILED THE CROSS OBJECTION BEFOR E CIT (DR), ITAT O N 14.01.2009. D) AS SOON AS THE AO RECEIVED THE DIRECTION OF THE SR. A.R. TO THE CROSS OBJECTION THE SAME HAS BEEN FILED WITH THE REASONABLE TIME AFTER OBTAINING THE APPROV AL FROM THE CIT-12, MUMBAI ON 14.01.2009, BEFORE THE HONBLE ITAT. PRAYER : IT IS SUBMITTED THAT THE CROSS OBJECTION HAS BEEN F ILED BEFORE THE HONBLE ITAT AGAINST THE FOLLOWING OBSERVATION OF THE CIT(A) IN THE ORDER DATED 19.08.2005. THE APPELLANT SEEMS TO FULFILL ALL THE CONDITIONS STIPULATED IN SECTION 80IB OF THE I.T.ACT, 1961 BUT SINCE THE APPELLANT ITSELF SUO MOTO HAS WITHDRAWN HIS CLAIM U /S 80 IB BY FILING REVISED RETURN ON 9.3.2005, I DECLINE TO INTERFERE IN THE MATTER. WHILE MAKING THE ABOVE OBSERVATION, NO SPECIFIC REASONS WERE GIVEN BY THE LD. CIT(A). HOWEVER, IN T HIS CASE, THERE WAS SURVEY U/S.133A AND A.O. HAS CONDUCTED THOROUGH ENQUIRIES AND CAME OUT TO THE CONCLUSION T HAT THE ASSESSEES CLAIM U/S.80IB WAS NOT ALLOWABLE. THE AS SESSEE ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 17 HAS ALSO FILED THE REVISED RETURN ON 09.03.2005 WIT HDRAWING THE CLAIM U/S.80IB. IN VIEW OF THE ABOVE FACT I RESPECTFULLY SAY, SUBM IT AND MAINTAIN THAT THE DEPARTMENT HAVE A GOOD CASE O N MERITS TO SUCCEED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, I SAY THAT THE APPELLANT ARE PUBLIC AUTHORITIES ACT ING IN PUBLIC REVENUE INTEREST AND EXERCISING THE POWERS U NDER THE INCOME-TAX ACT, AND THE RULES FRAMED THEREUNDER, I SAY AND RESPECTFULLY SUBMIT THAT THE BALANCE OF INCONVENIEN CE IS IN FAVOUR OF THE APPELLANT AND NO PREJUDICE WOULD BE C AUSED TO THE RESPONDENTS IF THE SUBJECT APPEAL IS RESTORED T O THE FILE AND DECIDED ON ITS MERITS BY THIS HONBLE TRIBUNAL. IN THE AFORESAID CIRCUMSTANCES, I RESPECTFULLY SUB MIT THAT NO PREJUDICE IS CAUSED TO THE ASSESSEE BY COND ONING THE DELAY AS THE ISSUE INVOLVES IS ON FACTS AND THEREFO RE THE PRESENT AFFIDAVIT TAKEN OUT BY THE APPELLANT FOR TH E CONDONATION OF DELAY OF THE SUBJECT APPEAL MAY BE M ADE ABSOLUTE. 20. FROM THE CONTENTS OF THE AFFIDAVIT GIVEN ABOVE, IT IS NOT UNDERSTOOD WHAT ARE THE REASONS FOR CONDONATION OF DELAY. WHAT HAS BEEN GIVEN IS NOT AN AVERMENT FOR REASONS FOR D ELAY BUT THE GROUNDS FOR CHALLENGING THE OBSERVATION OF THE CIT (A). WE ARE, THEREFORE, NOT INCLINED TO ACCEPT THE DELAY IN FILI NG OF THE CROSS- OBJECTION AS NO COGENT REASON OR REASONABLE CAUSE H AS BEEN EXPLAINED IN THE AFFIDAVIT FOR CONDONING THE DELAY. IN THE RESULT, CROSS-OBJECTION FILED BY THE DEPARTMENT IS DISMISSE D . 21. THE LEARNED SENIOR DR ALTERNATIVELY SUBMITTED THAT EVEN IF THE CROSS-OBJECTION ARE NOT ADMITTED, STILL THE DEP ARTMENT IS FREE ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 18 TO CHALLENGE THE OBSERVATIONS OF THE CIT (A) PREJUD ICIAL TO THE DEPARTMENT, UNDER RULE 27 OF THE INCOME TAX TRIBUNA L RULES, 1963. ON THE OTHER HAND, LEARNED SENIOR COUNSEL ON BEHALF OF THE ASSESEE SUBMITTED THAT THIS RULE IS MEANT FOR THE A SSESSEE AND NOT FOR THE DEPARTMENT AND ONLY OPTION FOR THE DEPA RTMENT WAS TO FILE CROSS-OBJECTION IN TERMS OF SUB SECTION 4 OF S ECTION 253 AND SINCE THE CROSS-OBJECTION HAS BEEN FILED BELATEDLY WITHOUT GIVING ANY COGENT REASON FOR CONDONATION OF DELAY, THE DEP ARTMENT IS DEBARRED FROM CHALLENGING THE FINDING OF THE CIT (A ) AT THIS STAGE. 22. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AT LENGTH AND CAREFULLY GONE THROUGH THE FINDINGS GIVEN BY TH E AO AS WELL AS BY THE CIT(A) AND ALSO PERUSED THE FACTS AND MAT ERIAL PLACED ON RECORD. 23. FIRST OF ALL, WE WILL ADVERT TO THE ISSUE AS TO WH ETHER UNDER RULE 27, THE DEPARTMENT CAN CHALLENGE THE FINDING O F THE CIT(A), STATING THAT THE ASSESSEE SEEMS TO FULFILL ALL THE CONDITIONS STIPULATED IN SECTION 80IB , EVEN THOUGH IN FINAL CONCLUSION, HE HAD DECIDED THE ISSUE AGAINST THE ASSESSEE. RULE 27 PROVIDES THAT THE RESPONDENT, THOUGH HE MAY NOT HAVE APPEALED, M AY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DE CIDED AGAINST HIM. THIS RULE ENABLES THE RESPONDENT TO CHALLENGE ANY OF THE FINDING DECIDED AGAINST HIM, EVEN THOUGH HE HAS NEI THER COME IN ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 19 ANY APPEAL NOR HAS FILED ANY CROSS OBJECTION, AS IN THE FINAL CONCLUSION, THE ISSUE HAS BEEN DECIDED IN HIS FAVOU R. WE ARE UNABLE TO AGREE WITH THE CONTENTION OF THE LEARNED SENIOR COUNSEL THAT THIS RULE IS ONLY MEANT FOR THE ASSESSEE AND N OT FOR THE DEPARTMENT. THE RULE PER SE DOES NOT DISTINGUISH BETWEEN THE DEPARTMENT AND THE ASSESSEE AS IT GIVES THE RIGHT T O THE RESPONDENT, WHICH CAN BE DEPARTMENT ALSO AND IT IS PERMISSIBLE FOR THE DEPARTMENT AS A RESPONDENT TO DEFEND THE OR DER OF CIT(A) ON ANY OTHER GROUND WHICH HAS BEEN DECIDED AGAINST IT. RULE 11 & 27 ARE PROCEDURAL MECHANISM, WHICH GIVES DISCRETI ON TO THE TRIBUNAL TO ALLOW ANY PARTY TO AN APPEAL, WHETHER T HE APPELLANT OR RESPONDENT, TO RAISE A NEW POINT OR NEW CONTENTI ON, PROVIDED NO NEW FACTS ARE REQUIRED TO BE BROUGHT ON RECORD F OR DISPOSING OF SUCH NEW POINT AND ALSO AN OPPORTUNITY IS GIVEN TO THE OTHER SIDE TO MEET THE POINT. THE SAID RULE DOES NOT IN ANY WA Y CIRCUMSCRIBE THE POWERS OF THE TRIBUNAL TO ENTERTAI N SUCH PLEA OR GROUND RAISED BY THE RESPONDENT. SINCE NO NEW FACTS ARE REQUIRED TO BE EXAMINED IN THIS CASE AND ARE INFACT ARISING FROM THE FINDINGS OF THE ASSESSING OFFICER, WE, THEREFORE, P ERMIT THE SENIOR D.R TO CANVASS THE CASE OF THE DEPARTMENT BASED ON THE OBSERVATIONS GIVEN BY THE LEARNED CIT(A). BOTH THE PARTIES WERE, THUS, HEARD ON MERITS AND THE PLEADINGS ON THIS SCO RE RAISED BY THE LEARNED DR FOR DEPARTMENT. ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 20 24 . NOW, THE FOLLOWING ISSUES ARE REQUIRED TO BE DECI DED BY US :- (I) FIRSTLY , WHETHER, IF AN ASSESSEE HAS GIVEN UP OR SURRENDERED THE CLAIM FOR DEDUCTION UNDER SECTION 80IB BY WAY OF A LETTER BEFORE THE ASSESSING OFFICER, CAN BE PERMITTED TO RAISE AND RAKE UP THE ISSUE BEFORE THE APPELLATE AUTHORITIES ?, AND (II) SECONDLY , WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB ? 25 . FROM THE FACTS AS HAVE BEEN DISCUSSED IN THE FORE GOING PARAGRAPHS, IT IS EVIDENT THAT THE ASSESSEE HAS FIL ED LETTER DATED 7-3-2005, WHEREIN THE ASSESSEE HAS WITHDRAWN ITS CLAIM OF DEDUCTION OF RS.69,28,363/- UNDER SECTION 80 IB, WHICH WAS ACOMPANIED BY REVISED RETURN FILED ON 9-3 -2005. THE REASONS FOR SURRENDERING THE CLAIM AND OFFERIN G IT FOR TAXATION WAS THAT THE ASSESSEE WILL NOT BE ABLE TO SATISFY WITH THE EVIDENCE THE ACQUISITION OF NEW MACHINERIES PUR CHASED BY IT FOR THE NEW BUSINESS AND WILL NOT BE ABLE TO SUB STANTIATE OR ESTABLISH THE CLAIM ON THE STANDARD OF PROOF WHICH IS REQUIRED AND ACCEPTABLE TO THE DEPARTMENT. THE SAID CLAIM WA S WITHDRAWN ALSO WITH A VIEW TO AVOID PROTRACTED LIT IGATION AND THAT NO PENALTY AND PROSECUTION PROCEEDINGS UNDER S ECTION 271 (C) WILL BE INITIATED. ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 21 26 . FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS S EEN THAT THE AO HAS DEALT WITH THE CLAIM OF 80IB ON MER ITS AND HAS ALSO BASED HIS FINDINGS ON THE BASIS OF OFFER L ETTER AS ABOVE MADE BY THE ASSESSEE FILED ALONG WITH THE REV ISED RETURN. BEFORE THE CIT (A), THE ASSESSEE CHALLENGED THE FINDING OF THE ASSESSING OFFICER THAT THE CONDITIONS REQUIR ED FOR CLAIMING DEDUCTION UNDER SECTION 80IB STANDS FULLY SATISFIED AND ALL SUCH EVIDENCES AND ENQUIRY AS DONE BY THE A O WILL NOT RENDER THE CLAIM OF THE ASSESSEE INFRUCTUOUS. A DETAIL REBUTTAL WAS GIVEN BY THE ASSESSEE BEFORE THE CIT ( A) AND THE CLAIM FOR 80IB WAS STRONGLY PLEADED FOR. 27. IT IS QUITE A SETTLED PROPOSITION THAT ANY CLAIM F OR DEDUCTION UNDER INCOME TAX ACT ARE DEPENDENT UPON T HE CONDITIONS LAID DOWN UNDER THE PROVISIONS OF THE AC T AND THERE ARE REQUISITE FORMALITIES WHICH ARE REQUIRED TO BE DONE AS PER THE LAW. ONCE THESE CONDITIONS ARE FULFILLED , THE ASSESSEE IS ENTITLED FOR STATUTORY DEDUCTION OR CLA IM TO WHICH HE IS ENTITLED TO. MERE CONSENT OR ACQUIESCENCE BY THE ASSESSEE CANNOT TAKE AWAY THE OTHERWISE A LEGITIMAT E CLAIM TO WHICH HE IS ENTITLED TO. IT IS AN ADMITTED POSITION OF LAW THAT AN ADMISSION OR ACQUIESCENCE CANNOT BE A FOUNDATION FOR ASSESSMENT WHERE THE INCOME IS RETURNED UNDER ERRON EOUS ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 22 IMPRESSION OR MISCONCEPTION OF LAW. IT IS OTHERWISE OPEN TO THE ASSESSEE TO DEMONSTRATE AND SATISFY THE AUTHORI TIES CONCERNED THAT HIS PARTICULAR INCOME WAS NOT TAXABL E OR CLAIM FOR DEDUCTION IS OTHERWISE LAWFULLY ALLOWABLE TO HI M. THE DECISION OF MUMBAI BENCH IN THE CASE OF SHANKAR R. MHATRE, REPORTED IN 117 ITD 241 (MUM.) , WHEREIN THE RATIO AND PRINCIPLE LAID DOWN BY THE HONBLE BOMBAY HIGH COUR T IN THE CASE OF NIRMALA L. MEHTA VS. CIT, REPORTED IN 269 ITR (I) (BOM.) , WAS REFERRED AND RELIED UPON CLEARLY CLINCHES THE ISSUE THAT ACQUIESCENCE CANNOT TAKE AWAY FROM AN AS SESSEE, THE RELIEF WHICH HE IS ENTITLED TO WHEN THE TAX IS LEVIED OR CALCULATED WITHOUT AUTHORITY OF LAW. IF IN LAW, AN ITEM IS NOT TAXABLE, NO AMOUNT OF ADMISSION CAN BE MADE TAXABLE . IN VIEW OF THE SAID PRINCIPLE, WE HOLD THAT EVEN THOUG H THE ASSESSEE HAS SURRENDERED ITS CLAIM BEFORE THE ASSES SING OFFICER, THE SAME CAN BE CHALLENGED ON MERITS IF IT HAS A STRONG CASE FOR SUCH A CLAIM BASED ON FACTS AND MAT ERIAL ON RECORD AND CONDITIONS RELEVANT FOR CLAIMING SUCH DE DUCTION STANDS FULFILLED. THE OTHER CASE LAWS AS RELIED UPO N BY THE LD. SENIOR COUNSEL ON THE PROPOSITION THAT JURISDICTIO N CANNOT BE CONFERRED BY CONSENT WILL NOT BE APPLICABLE AS WE ARE NOT DEALING WITH THE ISSUE OF JURISDICTION. HENCE, THEY ARE NOT DISCUSSED AND DEALT WITH. ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 23 28 . NOW, WE PROCEED TO DEAL WITH THE MERITS OF THE CL AIM OF ASSESSEE UNDER SECTION 80IB. IN THIS CASE, THE ASSE SSEE HAS COME INTO EXISTENCE VIDE PARTNERSHIP DEED DATED 15- 12-1998, TO CARRY ON THE BUSINESS OF MANUFACTURING OF PRE-FA BRICATED BUILDING MATERIAL. FOR THE PURPOSE OF ITS BUSINESS ACTIVITIES, IT HAS OPENED UP A FACTORY, SITUATED AT SILVASA. IT HA D PURCHASED MACHINERY FOR VALUE OF SUM OF RS.5,25,155/- AND CAR RIED OUT ITS MANUFACTURING ACTIVITIES IN THE ASSESSMENT YEAR 1999- 2000. THE ASSESSING OFFICER, THOUGH THROUGH HIS ENQ UIRY HAS DISPUTED THE VERY PURCHASE OF THE SAID MACHINERY, H OWEVER, HIS FINDINGS IN ENQUIRY ARE NOT CONCLUSIVE IN PROVI NG THAT SUCH A MACHINERY DID NOT EXIST IN THE ASSESSMENT YE AR 1999- 2000 FOR THE REASON THAT FIRSTLY , ALL THE BILLS AND INVOICES RELATING TO PURCHASE OF MACHINERY HAVE NOT BEEN DIS PUTED EXCEPT FOR THE FACT THAT PAYMENT MADE TO M/S JYOTI TRADERS FROM WHERE THE PURCHASES HAVE BEEN MADE ARE NOT OPE NED FOR VERIFICATION. ONCE, THE SALES TAX DEPARTMENT AFTER VERIFICATION OF INVOICES, HAS GRANTED REGISTRATION AND MACHINERI ES ARE APPEARING IN THE BALANCE SHEET OF THE ASSESSEE AS O N 31-3- 1999, FILED ALONG WITH THE RETURN FOR THE ASSESSMEN T YEAR 1999-2000, IT CANNOT BE HELD THAT THE PURCHASE OF M ACHINERY ITSELF WERE BOGUS. SECONDLY , THE ASSESSING OFFICER HIMSELF HAS ADMITTED THAT OLD MACHINERY WAS FOUND IN THE SURVEY ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 24 OPERATION AT THE FACTORY PREMISES DURING THE FINANC IAL YEAR 1999-2000 I.E.AY 2000-2001 AND HAS ALSO OBSERVED TH AT IT MAY HAVE USED IT FOR THE PRODUCTION PURPOSE. FROM T HIS, IT CAN BE SAFELY INFERRED THAT THE ASSESSEE WAS ENGAGE D IN MANUFACTURING OF BUILDING MATERIAL SITUATED AT SILV ASA EVEN IN THE ASSESSMENT YEAR 1999-2000. 29 . IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSING OF FICER HAS DENIED THE CLAIM ON THE GROUND THAT MOST OF THE NEW PLANTS AND MACHINERIES WERE PURCHASED DURING THE RE LEVANT YEAR ONLY AND THAT TO BE FROM 4 TH FEBRUARY, 2000 TO 27 TH MARCH, 2000 AND, HENCE, THESE MACHINERIES WERE NOT READY FOR USE AS ON 1-4-2000. THEREFORE, THE CLAIM UNDER SECTION 80IB FOR MANUFACTURING THE PRODUCTS FROM AN INDUSTR IAL UNDERTAKING DURING THIS YEAR, IS NOT FULFILLED. ONC E IT HAS BEEN ACCEPTED THAT THE ASSESSEE WAS ENGAGED IN THE MANUF ACTURING OF BUILDING MATERIAL IN THE ASSESSMENT YEAR 1999-20 00 AND THERE IS NO CONTRARY EVIDENCE TO SHOW THAT IT HAS C EASED TO CARRY ON SUCH ACTIVITIES IN THE RELEVANT YEAR, WE A RE UNABLE TO CONCUR WITH THE FINDING OF THE AO SIMPLY ON THE GRO UND THAT THE NEW MACHINES WERE PURCHASED IN THE LAST QUARTER OF THE FINANCIAL YEAR AND THE ASSESSEE DID NOT CARRY OUT A NY MANUFACTURING ACTIVITIES IN THIS YEAR. THE NEW PLAN TS AND MACHINERIES EVEN IF IT IS ACCEPTED THAT IT WAS INST ALLED IN THE ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 25 LAST QUARTERS OF THE FINANCIAL YEAR HAS GONE TO ENH ANCE THE CAPACITY OF THE ASSESSEE WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSEES INCOME FROM SUCH MANUFACTURING ACTIV ITIES HAS INCREASED IN THIS YEAR. VERY IMPORTANT FACT WHICH D ESERVES OUR ATTENTION IS THAT THE ASSESSING OFFICER HAS NOT DEN IED THE FACT THAT INCOME SHOWN BY THE APPELLANT IS FROM MANUFACT URING OF BUILDING MATERIAL ONLY AND NOT FROM ANY OTHER SOURC ES. THERE IS NO SUCH FINDING WHILE DENYING THE CLAIM UNDER SE CTION 80IB BY THE AO THAT THE INCOME WHICH HAS BEEN SHOWN BY T HE APPELLANT ARE FROM OTHER BUSINESS ACTIVITIES AND NO T FROM MANUFACTURING BUSINESS CARRIED OUT FROM SILVASA. WH AT HEAVILY WEIGHED IN THE MIND OF THE AO WAS THAT THE ASSESSEES FIRM HAS BEEN FORMED BY RECONSTRUCTION ON SPLITTING OF BUSINESS ALREADY IN EXISTENCE I.E. STEELFAB ENGINEE RING CORPORATION (SECS), SILVASA, WHICH IS A DIFFERENT U NIT ALTOGETHER. THIS PREMISE OF THE ASSESSING OFFICER G ETS NEGATED FROM THE FACT THAT STEELFAB ENGINEERING CORPORATION (SECS), SILVASA WAS ENGAGED IN A DIFFERENT PRODUCT ALTOGETH ER WITH DIFFERENT SET UP OF PARTNERS HAVING DIFFERENT STATU TORY REGISTRATION UNDER VARIOUS AUTHORITIES AND DIFFEREN T ACT. 30 . ANOTHER VERY VITAL FACT IS THAT THE ASSESSEE HAS BEEN HELD TO BE CARRYING ON MANUFACTURING ACTIVITIES OF PRE- FABRICATED STEEL BUILDINGS IN THE SUBSEQUENT YEARS FOR WHICH ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 26 THE CLAIM UNDER SECTION 80IB HAS BEEN ALLOWED BY TH E ASSESSING OFFICER HIMSELF IN THE ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 148 FOR THE ASSESSMENT YEA RS 2001- 2002, 2002-2003, 2003-2004 AND 2004-2005. THE RECONSTRUCTION AND SPLITTING OF BUSINESS IS ONE TIM E AFFAIR AND IT CANNOT BE HELD THAT IN THE SUBSEQUENT YEARS THER E WAS NO RECONSTRUCTION OR SPLITTING OF BUSINESS ALREADY IN EXISTENCE AND IN THE IMPUGNED YEAR THERE WAS RECONSTRUCTION O F SPLITTING OF BUSINESS. THE CONDITIONS WHICH ARE APP LICABLE FOR ALLOWING EXEMPTION/CLAIM UNDER SECTION 80IB IN THE SUBSEQUENT YEAR CANNOT BE SAID TO BE NON-EXISTENCE IN THE IMPUGNED ASSESSMENT YEAR. THUS, THE FIRST CONDITION THAT THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE HAS NOT BEEN FORMED BY RECONSTRUCTION OR SPLITTING OF BUSINESS ALREADY IN EXISTENCE , STANDS FULFILLED. 31 . NOW, COMING TO THE SECOND CONDITION THAT THE NEW INDUSTRIAL UNDERTAKING IS NOT FORMED BY THE TRANSFE R TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE , ALSO STANDS SATISFIED, WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSING OFFICER HIMSELF HAS ADMITTED THA T THE NEW PLANT AND MACHINERY HAS BEEN PURCHASED AND IT IS NO T HIS CASE THAT THE ASSESSEE WAS PREVIOUSLY USING ITS NEW PLANT AND MACHINERY. THE LAST CONDITION THAT IT MANUFACTURES ARTICLE NOT ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 27 INCLUDED IN ELEVENTH SCHEDULE AND HAS EMPLOYED MORE THAN 10 WORKERS IS NOT IN DISPUTE. THUS, ALL THE CONDITI ONS LAID DOWN UNDER SECTION 80IB STANDS FULLY SATISFIED IN T HE CASE OF THE ASSESSEE AND CLAIM FOR DEDUCTION UNDER SECTION 80IB CANNOT BE DENIED IN THIS YEAR BASED ON THE FINDINGS GIVEN BY THE ASSESSING OFFICER OR BY THE VIRTUE OF SURRENDER OF CLAIM BEFORE THE ASSESSING OFFICER. IT IS A DUTY CASTS UP ON THE ASSESSING OFFICER OR TO THE APPELLATE COURT TO SEE THAT IF A DEDUCTION OR A CLAIM FOR EXEMPTION IS STATUTORY ALL OWABLE, THEN THE SAME HAS TO BE ALLOWED, IF THE ASSESSEE FU LFILLS THE PRESCRIBED CONDITIONS REQUIRED UNDER THE STATUTE. 32 . IN VIEW OF OUR FINDINGS, WE, ACCORDINGLY REVERSE THE FINDINGS OF THE ASSESSING OFFICER AS WELL AS THE CI T (A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM FOR DEDUCTION UNDER SECTION 80IB IN THE IMPUGNED YEAR ALSO AS HAV E BEEN ALLOWED IN THE SUBSEQUENT YEARS BY THE DEPARTMENT, AS THERE IS NO CHANGE OF FACTS AND CIRCUMSTANCES. 33 . THERE WAS ONE MORE ISSUE, WHICH WAS ARGUED BY THE LD. SENIOR COUNSEL AND ALSO PLEADED BEFORE CIT(A) THAT THE RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 CANNO T BE REVISED. SINCE WE HAVE ALLOWED THE CLAIM OF SECTION 80IB ON MERITS, THEREFORE, WE ARE NOT INCLINED TO ADJUDICAT E THIS ISSUE AS IT HAS BECOME PURELY ACADEMIC. ITA NO: 494/MUM/2006 M/S. STEELFAB ENGINEERING CORP. LTD. & CROSS OBJECTION NO.15/M/2009 28 34. RESULTANTLY, APPEAL FILED BY THE ASSESSEE IS ALLOWE D AND THE CROSS OBJECTION FILED BY THE DEPARTMENT IS HEREBY DISMISSED AS DISCUSSED ABOVE . ORDER PRONOUNCED ON THIS 13 TH DAY OF APRIL, 2012 . - ( P. M. JAGTAP ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT: 13 TH APRIL, 2012 . COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI/PRAKASH