M/s. J.P. Mills, BALOTRA V. Addl. CIT, JODHPUR

ITA 146/JODH/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74893 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 16-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Keywords: Unexplained expenditure; Depreciation; Income from undisclosed sources; Principle of natural justice; Additional depreciation
• Section: 143(3); 153A; 234B; 80IB; 132

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.146/JODH/2012 (A.Y. 2008-09) M/S. J.P. MILLS, VS. ADDL. CIT, F-240, IIIRD PHASE, INDUSTRIAL AREA, CENTRAL CIR CLE-1, BALOTRA. JODHPUR. PAN NO. AAEPJ 2921 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI DEPARTMENT BY : DR. DEEPAK SEHGAL - D.R. DATE OF HEARING : 08/01/2014. DATE OF PRONOUNCEMENT : 10/01/2014. O R D E R PER N.K.SAINI, A.M THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 23/02/2013 OF LD. CIT (A), JAIPUR. THE FOLLOWING G ROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS PATENTLY INVALID, CONTRARY TO PROVISIONS OF LAW AND CONTRARY TO ALL C ANNONS OF NATURAL JUSTICE. 2 2. THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE GRO UND RELATING TO INVALIDITY OF SEARCH CONDUCTED U/S 132 IS NOT WITHI N THE DOMAIN OF POWERS OF THE CIT(A). SUCH CONCLUSIONS DERIVED BY T HE LD.CIT(A) IS CLEARLY CONTRARY TO THE JUDGMENT OF HON'BLE JURISDI CTIONAL HIGH COURT IN THE CASE OF CIT V/S CHITRA DEVI 313ITR 174 NOTED BY THE CIT(A) IN PARA 2.1 OF THE IMPUGNED ORDER. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE APPEL LANTS CASE THE LD. CIT(A) OUGHT TO HAVE SUMMONED THE ORIGINAL AUTHORIZ ATION OF SEARCH AND OUGHT TO HAVE CONSIDERED THE VALIDITY OR INVALI DITY OF THE PROCEEDINGS OF SEARCH AND THEN OUGHT TO HAVE DECIDE D THE QUESTION OF VALIDITY OF IMPUGNED ASSESSMENT PROCEEDINGS U/S 153A / 153B. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE APPEL LANT'S CASE, THE PROCEEDINGS OF SEARCH CONDUCTED AGAINST THE ASSESSE E MAY KINDLY BE DECLARED TO BE NULL AND VOID AND THE IMPUGNED ASSES SMENT MADE U/S 153A MAY ALSO KINDLY BE DECLARED TO BE NULL AND VOI D. 5. THE LD. CIT(A) HAS ERRED IN PLACING RELIANCE ON THE ALLEGED STATEMENT RECORDED U/S 132(4). THE SAID ALLEGED ADMISSION IS PATENTLY ILLEGAL, AS THE SURRENDER IN THE STATEMENT U/S 132(4) WAS FETCH ED BY THE ADI UNDER PRESSURE AND COERCION. THE RESULT OF SEARCH C ONDUCTED U/S 132 ALSO PROVES THAT NO UNACCOUNTED MONEY, BULLION, JEW ELLERY OR ANY OTHER UNACCOUNTED MOVABLE OR IMMOVABLE PROPERTY WER E FOUND DURING SEARCH NOR ANY SUCH UNDISCLOSED INVESTMENTS /ASSETS / PROVED UNACCOUNTED EXPENDITURE FOUND AS A RESULT OF SEARCH AND ALSO DURING DEEP POST SEARCH INVESTIGATION. THE FACT THAT THE A SSESSEE HAS NOT SUCH REAL INCOME WAS DERIVED BY THE ASSESSEE, AS HA D BEEN FORCIBLY FETCHED DURING THE COURSE OF STATEMENTS U/S 132(4). 6. THE LD. CIT(A) HAS ERRED IN BRUSHING ASIDE THE ASSESSEE'S CONTENTION THAT THE STOCK INVENTORY WAS FRAUDULENTLY INFLATED BY THE ADI WING TO SUPPORT WRONG HYPOTHETICAL SURRENDER, WHICH WOULD H AVE BEEN APPARENTLY VISIBLE, IF THE LD. CIT(A) WOULD HAVE SU MMONED THE ORIGINAL STOCK INVENTORIES, WHICH BY ITSELF WILL EX POSE THE SUBSEQUENT INSERTIONS MADE IN THE SAID STOCK INVENTORIES BY TH E ADI WING MERELY TO SUPPORT THE WRONG AND ILLEGAL SURRENDER OF HYPOT HETICAL INCOME. 3 7. THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING THE F ACT THAT WHAT WAS RECORDED IN THE STATEMENT U/S 132(4) EVEN WITH REGA RD TO ALLEGED HYPOTHETICAL INCOME IS THAT THE SAID INCOME HAS BEE N DERIVED FROM THE INDUSTRIAL UNDERTAKING ELIGIBLE FOR GRANT OF DE DUCTION U/S 80IB. THUS, EVEN IF ALLEGED SURRENDER IS CONSIDERED, WHAT WAS SURRENDERED WAS 'INCOME NOT LIABLE TO TAX OR INCOME ELIGIBLE FO R GRANT OF 100% DEDUCTION U/S 80IB' AND NOT AS INCOME LIABLE TO TAX . 8. THAT THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING THE ASSESSEE'S CONTENTION THAT THE ENTIRE INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING INCLUDING THE ALLEGED ADDITIONAL INCOME GOT SURRENDERED IN THE STATEMENT U/S 132(4) IS CLEARLY EXEMPT U/S 8 0IB(5), AS THE ADDITIONAL INCOME EVEN AS PER THE SAID STATEMENT U/ S 132(4) WAS DERIVED FROM THE SAID INDUSTRIAL UNDERTAKING ELIGIB LE FOR GRANT OF DEDUCTION U/S 80IB. 9. THAT ON THE FACTS AND CIRCUMSTANCES OF THE ASSE SSEE'S CASE THE LD. CIT(A) OUGHT TO HAVE HELD THAT THE ENTIRE INCOME IS ELIGIBLE FOR GRANT OF DEDUCTION U/S 80IB AND OUGHT TO HAVE ACCEPTED TH E NIL INCOME DECLARED BY THE ASSESSEE AFTER CLAIMING 100% DEDUCT ION IN RESPECT OF INCOME DERIVED FROM THE SAID INDUSTRIAL UNDERTAKING . 10. THE LD. CIT(A) HAS ERRED IN HOLDING THAT THERE IS NO OCCASION TO ALLOW ANY DEDUCTION U/S 80IB, AS THERE WILL BE LOSS AFTER EXCLUDING THE ALLEGED UNACCOUNTED STOCK OF RS. 20,00,000/- AS PER FINDINGS GIVEN BY HIM IN PARA B OF THE IMPUGNED ORDER. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT( A) OUGHT TO HAVE HELD THAT THE ALLEGED ADDITIONAL INCOME WILL ALSO B E ELIGIBLE FOR GRANT OF DEDUCTION U/S 80IB, WHICH IS SELF EVIDENT FROM T HE STATEMENTS RECORDED U/S 132(4) ON WHICH THE AO AND LD. CIT PL ACED RELIANCE. 11. THE LD. CIT(A) HAS ERRED IN NOT GIVING ANY SPE CIFIC FINDING WITH REGARD TO STATUTORY CLAIM OF ADDITIONAL DEPRECIATION, CLAI MED IN THE RETURN OF INCOME. 12. THE LD. CIT(A) HAS ALSO ERRED IN NOT ACCEPTING THE ASSESSEE'S CONTENTION THAT NO ALLEGED UNEXPLAINED STOCKS WERE FOUND DURING SEARCH. 4 13. THE LD. CIT(A) HAS ALSO ERRED IN NOT ACCEPTING THE APPELLANT'S CONTENTION THAT NO UNDISCLOSED INCOME CAN BE VALIDL Y ADDED AS INCOME LIABLE TO TAX IN THE HANDS OF THE ASSESSEE, AS NO UNACCOUNTED ASSETS, CASH, JEWELLERY, BULLION OR ANY OTHER UNEXP LAINED MOVABLE OR IMMOVABLE ASSETS WERE FOUND DURING THE SEARCH NOR D URING POST SEARCH INVESTIGATION. 14. THE LD. CIT(A) OUGHT TO HAVE HELD THAT NO ADDI TION CAN BE VALIDLY MADE ON ACCOUNT OF ALLEGED UNEXPLAINED STOCK FOR AY 2008-09 (YEAR ENDED ON 31.3.2008), AS THE SEARCH WAS CONDUCTED ON 16.7 .2008. 15. THE LD. CIT(A) OUGHT TO HAVE CANCELLED THE LEV Y OF INTEREST U/S 234A, 234B AND 234C. 16. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTE R, MODIFY ANY OF THE GROUNDS OF APPEAL ON OR BEFORE ITS HEARING BEFORE Y OUR HONOURS. 2 GROUNDS NO. 1 & 16 ARE GENERAL IN NATURE WHILE GRO UNDS NO. 2 TO 6 AND 12 TO 14 WERE NOT PRESSED, SO THESE GROUNDS, DO NOT REQUIRE ANY ADJUDICATION ON OUR PART. 3. VIDE GROUNDS NO. 7 TO 10, THE GRIEVANCE OF THE ASS ESSEE RELATES TO THE GRANT OF DEDUCTION UNDER SECTION 80IB OF THE I. T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) IN RESPECT OF ADDITIONAL INCOME. 4. FACTS RELATED TO THESE ISSUES IN BRIEF ARE THAT T HE ASSESSEE ORIGINALLY FILED ITS E-RETURN OF INCOME ON 25/09/20 08 SHOWING NIL INCOME. 5 IN THIS CASE, SEARCH UNDER SECTION 132 OF THE ACT W AS CARRIED OUT AT THE RESIDENCE/BUSINESS PREMISES OF SHRI JAI PRAKASH GOY AL, SHRI OM PRAKASH GOYAL ALONG WITH THEIR VARIOUS ASSOCIATES CONCERNS SITUATED IN AND AROUND BALOTRA (BARMER) ON 16/07/2008 AND SUBSEQUENT DAYS, WHEREIN SEVERAL INCRIMINATING DOCUMENTS ALONG WITH CASH, JEWELLERY AND OTHER VALUABLE ARTICLES WERE FOUND AND SEIZED FROM THE VARIOUS PRE MISES OF THE GROUP SEARCHED. THEREFORE, A NOTICE UNDER SECTION 153A O F THE ACT WAS ISSUED TO THE ASSESSEE. IN COMPLIANCE TO THE SAID NOTICE, THE ASSESSEE FILED ITS RETURN OF INCOME UNDER SECTION 153A OF THE ACT DECL ARING TOTAL INCOME OF RS. NIL ON 31/03/2009. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE WAS ENG AGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF CLOTHES AND HAD SHOWN GROSS TOTAL INCOME OF RS. 13,38,038/- FROM THE BUSINESS, WHICH IN TURN HA D BEEN CLAIMED AS DEDUCTION UNDER SECTION 80IB(5) OF THE ACT FOR THE ASSESSMENT YEAR 2004- 05 AND THE SUBSEQUENT YEARS. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD NOT BEGUN TO MANUFACTURE OR PRODUCE AN Y ARTICLES OR THINGS AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF OCTOBER 1994 AND ENDING ON 31 ST DAY OF MARCH 2004 AND THEREFORE, THE ASSESSEE WAS NOT ELIGIBLE FOR ANY DEDUCTION UNDER SECTION 80IB(5) OF THE ACT. HE, THEREFORE, ASKED THE ASSESSEE TO SHOW-CAUSE AS TO W HY THE CLAIM FOR 6 DEDUCTION UNDER SECTION 80IB(5) OF THE ACT SHOULD N OT BE DISALLOWED. THE ASSESSEE SUBMITTED TO THE ASSESSING OFFICER AS UNDE R:- 'WE BEG TO INVITE YOUR HONOURS KIND CONSIDERATION TOWARDS THE FOLLOWING FACTS AND SUBMISSIONS IN REPLY TO THE AFORESAID SHO W CAUSE NOTICE: 1. THE ASSESSEE SUBMITTED THE RETURN OF INCOME FOR AY 2004-05 DECLARING LOSS OF RS.600/- ON 31.3.2005. THIS RETURN OF INCOM E WAS INTER-ALIA ACCOMPANIED BY THE AUDITED STATEMENTS ALONG WITH AU DITORS REPORT IN PRESCRIBED FORM NO. 10CCB, WHICH IS REQUIRED FOR CL AIMING DEDUCTION U/S 80LB OF L.T. ACT 1961. THUS, THE ASSESSEE HAD DULY CLAIMED DEDUCTION U/S 80LB IN THE INITIAL YEAR AY 2004-05 ALSO. IT IS INC ORRECT TO SAY THAT NO DEDUCTION WAS CLAIMED U/S 80LB FOR AY 2004-05. SINC E THERE WAS A DECLARED LOSS OF RS. 600/-, THERE WAS NO OCCASION TO DEDUCT ANY AMOUNT U/S 80LB FROM SUCH DECLARED LOSS. HOWEVER, THE CLAIM FOR DED UCTION U/S 80LB WAS SPECIFICALLY MADE IN THE SAID RETURN OF INCOME. THE SUBMISSION OF AUDIT REPORT IN THE PRESCRIBED FORM FOR PURPOSES OF GRANT OF DEDUCTION U/S 80LB IS AN ELOQUENT PROOF OF THE FACT THAT SUCH DEDUCTION U /S 80LB WAS CLAIMED IN THE INITIAL YEAR AY 2004-05 ALSO. THE CORRECTNESS O F THE AFORESAID CLAIM FOR GRANT OF DEDUCTION U/S 80LB WAS ACCEPTED BY DEPARTM ENT BY PROCESSING AND ACCEPTING THE RETURN OF INCOME U/S 143(1). NO NOTIC E U/S 143(2) WAS ISSUED BEFORE THE EXPIRY OF THE PRESCRIBED TIME LIMIT. THU S, THE MATTER RELATING TO GRANT OF DEDUCTION U/S 80LB ACHIEVED FINALITY IN TH E BASE YEAR AY 2004-05. 2. LIKEWISE, THE ASSESSEE FURNISHED RETURNS OF INCO ME FOR ALL THE SUBSEQUENT YEARS INTER-ALIA ALONG WITH THE AUDIT REPORTS IN TH E PRESCRIBED FORM 10CCB AS REQUIRED FOR CLAIMING DEDUCTION U/S 80LB OF L.T. ACT 1961. THE RETURNS OF INCOME FOR ALL THE SUBSEQUENT YEARS HAD ALSO BEEN A CCEPTED U/S 143(1) AND NO NOTICE U/S 143(2) WAS ISSUED BEFORE THE EXPIRY O F THE TIME LIMIT. THE MATTER RELATING TO GRANT OF DEDUCTION U/S 80LB HAD THUS ACHIEVED FINALITY FOR ALL THE SUBSEQUENT ASSESSMENT YEARS ALSO, WHICH HAD BEEN ACCEPTED U/S 143(1) BEFORE CONDUCTING OF THE SEARCH ON 16.7.2008 . 3. SCOPE OF ASSESSMENT/ REASSESSMENT U/S 153A IS CO NFINED ONLY IN RELATION TO INCOME DETECTED AS A RESULT OF SEARCH. THE POINT S WHICH HAVE ACHIEVED FINALITY CONCLUDED POINTS, WHICH WERE ACCEPTED IN A SSESSMENTS U/S 143(1) OR 7 143(3) CANNOT BE REEXAMINED, REVIEWED OR RECONSIDER ED IN AN ASSESSMENT / REASSESSMENT U/S 153A. 3.I THE CLAIM FOR GRANT OF DEDUCTION U/S 80LB HAD A LREADY BEEN MADE AND ACCEPTED IN ASSESSMENTS U/S 143(1) FOR AY 2004-05 A ND VARIOUS SUBSEQUENT YEARS, WHICH HAD ACHIEVED FINALITY IN ALL THOSE YEA RS, WHERE INTIMATION / ASSESSMENT U/S 143(1) HAD BEEN ISSUED PRIOR TO COMM ENCEMENT OF THE SEARCH. THE POINT RELATING TO GRANT OF DEDUCTION U/S 80LB T HUS, STOOD CONCLUDED AND HAD ACHIEVED FINALITY, WHICH CANNOT BE VALIDLY REEX AMINED, RECONSIDERED OR REVIEWED BY YOUR HONOUR IN THE PRESENT PROCEEDINGS U/S 153A. THE ASSESSEE HAS ALSO PLACED RELIANCE UPON THE FOLL OWING JUDICIAL DECISIONS:- A. L.M.U. INTERNATIONAL LTD. V/S DY. CIT (2008) 22 S.O.T. 315 (KOL.). = (2008) 119 TTJ 214 B. SUNCITY ALLOYS (P) LTD. V. ACIT (2009) 124TTJ (J D) 624. 4. WITHOUT PREJUDICE TO AFORESAID SUBMISSIONS, WE B EG TO INVITE YOUR HONOURS KIND ATTENTION TOWARDS THE FOLLOWING FACTS : 4.I THE COPY OF RETURN OF INCOME ALONGWITH AUDITED STATEMENTS AND AUDITORS REPORT IN THE PRESCRIBED FORM 10CCB ANNEXED WITH TH E RESPECTIVE RETURNS OF INCOME FULLY SUPPORTS THE ELIGIBILITY FOR GRANT OF DEDUCTION U/S 80IB IN THE INITIAL YEAR AY 2004-05 AND ALL THE SUBSEQUENT YEAR S UNDER CONSIDERATION. THE SIGNIFICANCE OF AUDITORS REPORT CAN BE APTLY EX PLAINED BY QUOTING THE SPEECH OF THE HON'BLE FINANCE MINISTER, WHICH IS RE PRODUCED BELOW: THE HON'BLE FINANCE MINISTER IN HIS BUDGET SPEECH D T. MAY 2, 2005 AT THE TIME OF PASSING OF THE FINANCE BILL 2005 IN THE LOK SABHA STATED AS UNDER : 'THE FRINGE BENEFIT TAX IS A PRESUMPTIVE TAX. A P RESUMPTIVE TAX IS NECESSARY BECAUSE YOU HAVE TO AVOID INVENTIVE ACCOU NTING PRACTICES. PEOPLE CAN SHIFT THE CLASSIFICATION OF EXPENDITURE FROM ON E HEAD OF ACCOUNT TO ANOTHER. SO, IF WE HAVE PRESUMPTIVE TAX AND HAVE AN ACCOUNT TO ANOTHER. SO, IF WE HAVE PRESUMPTIVE TAX AND HAVE AN EXHAUSTI VE LIST OF ACCOUNTING HEADS AND HAVE A UNIFORM BASE, THE SCOPE FOR EVASIO N IS VERY VERY LIMITED. 8 WHAT WE ARE DOING IS ELIMINATING THE ENTIRE DISCRET ION. WHAT WE ARE ASKING HIM IS TO FILE A TAX AUDIT CERTIFICATE SAYING ACCOR DING TO HIS TAX AUDITOR THESE ARE THE EXPENDITURE UNDER THE VARIOUS HEADS INCLUDE D IN THE NEW CHAPTER. LF THE TAX AUDITOR CERTIFIES THAT THESE ARE THE HEADS, THE OFFICER HAS NO DISCRETION. THE LNCOME-TAX OFFICER HAS TO ACCEPT TH AT TAX AUDIT CERTIFICATE UNLESS IT TURNS OUT TO BE A PATENTLY FALSE CERTIFIC ATE. WE WILL ACCEPT THAT CERTIFICATE OF THE TAX AUDITOR.' 4.II THE AUDITED BALANCE SHEET ANNEXED WITH THE RE TURN OF INCOME FOR THE BASE YEAR AY 2004-05 INTER-ALIA SHOWS THAT PLANT AN D MACHINERY VALUED AT RS. 1,14,908/- HAD BEEN INCURRED FOR INSTALLATION O F PLANT AND MACHINERY CONSISTING OF JIGARS AND PADDING MACHINE ETC. APART FROM THE PLANT AND MACHINERY TOTAL COST OF LAND AND BUILDING INCURRED BY THE ASSESSEE AMOUNTED TO RS. 14,88,180/-. YOUR KIND ATTENTION IS INVITED TOWARDS THE SCHEDULE OF FIXED ASSETS, WHICH GIVES COMPLETE DETA ILS OF THE VARIOUS ITEMS OF FIXED ASSETS PURCHASED, INSTALLED AND USED BEFOR E THE CLOSE OF THE RELEVANT ACCOUNTING YEAR ENDED ON 31.3.2004. KINDLY PERUSE THE AUDITED MANUFACTURING ACCOUNT A ND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON 31 .3.2004. THE MANUF ACTURING ACCOUNT INTER-ALIA REVEALS THAT GREY CLOTH WAS PURCHASED AN D VARIOUS PROCESSES OF MANUFACTURE / PRODUCTION WERE CARRIED OUT, AS IS EV IDENT FROM THE FACT THAT THE EXPENSES FOR RAW MATERIAL CONSUMED WERE ALSO IN CURRED DURING THE YEAR ENDED ON 31.3.2004. EXPENSES FOR WAGES WERE ALSO INCURRED, AS IS EVID ENT FROM THE SAID MANUFACTURING ACCOUNT. THE PRODUCTION COMMENCED ON OR ABOUT 15.3.2004, THE DETAILS OF WAGES IS MADE TO VARIOUS EMPLOYEES FOR THE MONTH OF MARCH 2004 ARE SELF EVIDENT FROM THE WAGES REGIS TER AND THE STATUTORY RETURNS SUBMITTED TO THE ESI COPIES OF THE STATUTOR Y RETURNS GIVEN TO THE ESI AUTHORITIES SHOWING THAT THIS INDUSTRIAL UNDERTAKIN G WAS COVERED UNDER THE ESI ACT W.E.F. 15/03/2004, IS ANNEXED HEREWITH. THE PRODUCTION THUS, COMMENCED IN THE MONTH OF MA RCH 2004, WHICH IS FURTHER CORROBORATED BY THE FACT THAT FINI SHED GOODS WAS SOLD TO THE CUSTOMER BEFORE END OF THE RELEVANT ACCOUNTING YEAR ENDED ON 31.3.2004. 9 THE AFORESAID FACTS EMERGING FROM THE EVIDENCE, A UDITED STATEMENTS AND AUDITORS REPORT ALREADY EXISTING ON RECORDS CLE ARLY PROVE THAT THE INDUSTRIAL UNDERTAKING OWNED BY THE ASSESSEE STARTE D MANUFACTURE / PRODUCTION ACTIVITIES WELL BEFORE 31 ST DAY OF MARCH 2004. 4.III YOUR HONOUR HAVE INTER-ALIA OBSERVED IN PARA (II) ON PAGE 4 OF SHOW CAUSE NOTICE THAT ,,THE ARTICLES OR THINGS EVEN IF PRODUCED, ARE QUITE INSIGNIFICANT IN VALUE AND QUANTITY AND THEREFORE, IT CANNOT BE SAID THAT THE FIRM HAS STARTED PRODUCTION AND MANUFACTURING OF AR TICLES OR THINGS IN THE RELEVANT ACCOUNTING YEAR'. THE PROVISIONS OF SECTION 80LB DOES NOT PRESCRIBE THAT SUBSTANTIAL QUANTITY OF FINISHED GOODS SHOULD BE PRODUCED BEFOR E THE PRESCRIBED DATE. THE DEDUCTION U/S 80IB IS CLEARLY ALLOWABLE EVEN IF THE ASSESSEE HAD MANUFACTURED SMALL QUANTITY OF FINISHED GOODS BEFOR E THE PRESCRIBED DATE. EVEN IF THE ASSESSEE WOULD NOT HAVE MADE SATE IF AN Y FINISHED GOODS BEFORE 31.3.2004 AND WOULD HAVE ONLY OBTAINED TRIAL PRODUC TION, THE ASSESSEE WOULD HAVE BEEN TREATED AS AN INDUSTRIAL UNDERTAKIN G ELIGIBLE FOR GRANT OF DEDUCTION U/S 801B. THE USE OF WORDS 'THE ARTICLES OR THINGS EVEN IF PRODUCED' IN THE SHOW CAUSE NOTICE ITSELF CLEARLY I NDICATES THAT YOUR HONOUR WERE SATISFIED THAT SOME INITIAL PRODUCTION HAD BEE N CARRIED OUT BEFORE 31.3.2004, WHICH ACCORDING TO THE DEPARTMENT IS INS IGNIFICANT. THE EXTENT OF PRODUCTION ACTIVITIES OR CARRYING OUT OF LARGE V OLUME OF PRODUCTION ACTIVITIES BEFORE 31.3.2004 IS NOT THE MANDATORY RE QUIREMENT FOR GRANT OF DEDUCTION U/S 80IB, BUT WHAT IS REQUIRED IS THAT TH E INDUSTRIAL UNDERTAKING SHOULD BEGIN TO MANUFACTURE OR PRODUCE ARTICLES BEF ORE END OF 31.3.2004. THUS, EVEN IF THE PRODUCTION STARTS ON LAST DAY I.E .31.3.2004, THE INDUSTRIAL UNDERTAKING WILL BE ELIGIBLE FOR GRANT OF SUCH DEDU CTION. LN THE PRESENT CASE THE PRODUCTION ACTIVITIES COMMENCED ON 15.3.2004 AS IS EVIDENT FROM THE WAGES REGISTER, ESI RECORDS, PURCHASE BILLS, SALE B ILLS AND VARIOUS OTHER EVIDENCE OF CONTEMPORARY PERIOD, AS PROVED FROM THE AUDITED STATEMENTS AND AUDITORS REPORT. 4.IV THE PAYMENT OF EXPENDITURE OF FUEL ETC. WAS M ADE IN THE NEXT YEAR, AS BILLS FOR SUCH EXPENDITURE WERE RECEIVED IN THE SUBSEQUENT YEAR. 4.V YOUR HONOUR HAVE OBSERVED THAT IN THE AUDIT REP ORT THE PLOT HAVING AN AREA OF 3755 SQ. MTR. HAS BEEN SHOWN AS PLOT OF LAND TAKEN 'ON RENT'' 10 THEREAFTER, YOUR OBSERVATIONS ARE BASED ON WRONG SU SPICIONS. THE FIRST SUSPICION IS THAT HEAVY RENT WOULD HAVE BEEN PAYABL E FOR RENT OF SUCH BIG SIZE PLOT OF RENT WHEREAS NO EXPENSES UNDER THE HEA D PAYMENT OR RENT HAS BEEN SHOWN. YOU ARE FURTHER PRESUMED THAT IN THE AB SENCE OF LAND AND BUILDING, IT IS NOT POSSIBLE TO RUN THE PLANT AND F ACTORY. AII THESE PRESUMPTIONS ARE BASED ON WRONG SUSPICIONS. THE LAN D IN QUESTION WAS TAKEN ON LEASE (DESCRIBED AS TAKEN ON RENT IN THE A UDIT REPORT) FROM RLLCO. AN APPLICATION FOR ALLOTMENT WAS SUBMITTED ON 15.3. 2003. THE ALLOTMENT LETTER AND NO OBJECTION CERTIFICATE WAS ISSUED BY R IICO ON 27.2.2004. LNSTALLATION OF PLANT AND MACHINERY NAMELY JIGARS A ND PADDING MACHINE HARDLY REQUIRE A WEEKS TIME. THE COST OF LAND AND B UILDING AS WELL AS PLANT AND MACHINERY INCURRED BEFORE 31.3.2004 ARE FULLY V ERIFIABLE FROM THE AUDITED STATEMENTS ANNEXED WITH THE RETURNS OF INCO ME. 5. IT WILL BE IMPERATIVE TO INVITE YOUR HONOURS KIN D ATTENTION THAT THE INDUSTRIAL UNDERTAKING BELONGING TO THE ASSESSEE WA S REGISTERED AS A MANUFACTURER BEFORE 31/03/2004 BY ALL THE CONCERNIN G GOVERNMENT DEPARTMENTS UNDER VARIOUS PROVISIONS OF LAW APPLICA BLE TO SUCH FACTORIES. SUCH REGISTRATION IS GRANTED AFTER NECESSARY SATISF ACTION AND PHYSICAL VERIFICATION OF THE CONCERNED INDUSTRIAL UNDERTAKIN G AS PER THE RELEVANT PROVISIONS OF LAW. WE ARE ANNEXING HEREWITH COPIES OF THE FOLLOWING REGISTRATION CERTIFICATE ETC. FOR YOUR READY PERUSA L. 5.I COPY OF RETURN IN PRESCRIBED FORM NO. 6 SUBMITT ED TO THE ESI AUTHORITIES SHOWING THAT THE INDUSTRIAL UNDERTAKING WAS COVERED UNDER ESI SCHEME W.E.F. 15.3.2004. THIS RETURN WAS ALSO ACCOMPANIED BY THE DETAILS OF WAGES PAID TO VARIOUS EMPLOYEES FOR THE MONTH OF MARCH 20 04. THE PAYMENT OF ESI DUES OF RS. 767/- WAS ALSO MADE IN RESPECT OF W AGES PAID IN MARCH 2004. COPY OF CHALLAN RECEIPT OF RS. 767/- IS ALSO ANNEXE D. 5.II COPY OF ALLOTMENT LETTER AND NOC ISSUED BY RII CO ON 27.2.2004. 5.III COPY OF CERTIFICATE OF REGISTRATION ISSUED BY THE SALES TAX AUTHORITIES UNDER THE PROVISIONS OF CST ACT, WHICH IS VALID W.E .F. 31.1.2004. 5.IV COPY OF REGISTRATION CERTIFICATE ISSUED BY DIS TRICT LNDUSTRIES CENTRE. BARMER TO THE ASSESSEE AS SSI UNIT W.E.F. 30.1.2004 . 11 5.V COPY OF REGISTRATION CERTIFICATE ISSUED BY THE REGISTRAR OF FIRM ON 25.2.2004. 5.VI THE INDUSTRIAL UNDERTAKING BELONGING TO THE AS SESSEE WAS ALSO REGISTERED BY THE CENTRAL EXCISE AUTHORITIES VIDE R EGISTRATION NO. TEMPE9607BXM001 ON 24.3.2004, AS MANUFACTURER OF EX CISABLE GOODS. COPY OF REGISTRATION CERTIFIED ISSUED BY THE EXCISE AUTHORITIES IS ALSO ENCLOSED HEREWITH. 5.VII COPY OF RETURNS SUBMITTED IN THE PRESCRIBED F ORM UNDER EXCISE LAWS ALONG WITH PROOF OF PAYMENT OF EXCISE DUTY PERTAINI NG TO PRODUCTION OF MARCH 2004 IS ALSO ANNEXED HEREWITH. THE AFORESAID REGISTRATION CERTIFICATES GRANTED BY THE RESPECTIVE AUTHORITIES AFTER CONDUCTING NECESSARY ENQUIRIES AND INVESTIGAT IONS IN ACCORDANCE WITH THE RELEVANT PROVISIONS OF LAW, CONCLUSIVELY PROVE THAT THE INDUSTRIAL UNDERTAKING HAD STARTED PRODUCTION ACTIVITIES BEFOR E 31.3.2004.' 5. THE ASSESSING OFFICER DID NOT FIND MERIT IN THE SU BMISSIONS OF THE ASSESSEE BY OBSERVING AS UNDER:- I. THE ASSESSEE HAS HEAVILY RELIED UPON THE AUDIT REPORT IN FORM NO. 10CCB FOR CLAIMING DEDUCTION U/S 80IB(5) OF THE I.T. ACT, 1961. HOWEVER, MERE PREPARING AND FILING OF AUDIT REPORT IN ITSELF IS N OT THE ONLY REQUIREMENT FOR ELIGIBILITY FOR ALLOWING DEDUCTION U/S 80IB(5) OF T HE I. T. ACT, 1961. THERE ARE MANY OTHER BASIC CONDITIONS WHICH ARE TO BE FULFILL ED BY THE ASSESSEE FOR CLAIMING ANY DEDUCTION U/S 8OIB(5) OF THE I. T. ACT , 1961. THE FIRST AND FOREMOST CONDITION IS THAT THE ASSESSEE HAS TO BEGI N TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS AT ANY TIME DURING THE P ERIOD BEGINNING ON THE 1 ST OCTOBER, 1994 AND ENDING ON 31ST DAY OF MARCH, 2O04 AND AS DISCUSSED ASSESSEE HAS FAILED TO ESTABLISH THAT IT HAD BEGUN TO PRODUCE ARTICLES OR THINGS BY 31/03/2004. II. THE ASSESSEE HAS FAILED TO BRING ON RECORD ANY MATERIALISTIC EVIDENCE IN THE FORM OF PURCHASE BILLS, SALES BILLS, ELECTRICIT Y BILLS ETC. PERTAINING TO THE PERIOD 01.04.2003 TO 31.03.2004 TO SHOW THAT ANY BU SINESS ACTIVITIES WERE CARRIED OUT PRIOR TO 31 .O3.2004. 12 III. IT IS SEEN THAT THE ASSESSEE HAS NOT SHOWN TO HAVE INCURRED ANY EXPENDITURES TOWARDS FUEL/ELECTRICITY CHARGES. THE ASSESSEE HAS CLAIMED THAT THE BILLS FOR ELECTRICITY CHARGES WERE RAISED IN THE SUBSEQUENT FINANCIAL YEAR I.E. F.Y. 2004-05. HOWEVER, THE ASSESSEE HAS N OT FURNISHED THE COPY OF SUCH ELECTRICITY BILLS IF ANY, PERTAINING TO THE F. Y. 2003-04 BUT RAISED IN F.Y. 2OO4-05 BY THE ELECTRICITY BOARD. IV. IN SUPPORT OF ITS CLAIM THAT THE UNIT HAD START ED FUNCTIONING BY 31.03.2004, THE ASSESSEE HAS PRODUCED COPIES OF CER TIFICATES ISSUED BY VARIOUS GOVERNMENT DEPARTMENTS SUCH AS RIICO, ESI, SALES TAX, DISTRICT INDUSTRIES CENTRE, REGISTRAR OF FIRMS, CENTRAL EXCI SE DEPARTMENT ETC. HOWEVER, PERUSAL OF ALL THESE DOCUMENTS SHOWS THAT THE ASSESSEE FIRM WAS REGISTERED UNDER THE RESPECTIVE LAWS OF THOSE DEPAR TMENTS AND AS SUCH THE CERTIFICATES/DOCUMENTS FURNISHED BY THE ASSESSEE CA N'T BE TAKEN AS A PROOF FOR STARTING OF MANUFACTURING OR PRODUCING ANY ARTI CLES OR THINGS. V. ON VERIFICATION OF THE LETTER DATED 27.02.2004 I SSUED BY RAJASTHAN STATE INDUSTRIAL DEVELOPMENT AND INVESTMENT CORPORATION L TD (RIICO), IT IS SEEN THAT THE LAND FOR THE UNIT WAS ALLOTTED ONLY ON 27. 02.2004 AND THE ASSESSEE WAS REQUIRED TO TAKE THE POSSESSION OF THE LAND WIT HIN 60 DAYS OF THE ISSUE OF THE SAID LETTER. THIS FACT CLEARLY SHOWS THAT TH ERE WAS VIRTUALLY NO TIME TO COMPLETE THE ENTIRE FACTORY EQUIPPED WITH VARIOUS P LANTS AND MACHINERIES SO AS TO START FULL FLEDGED MANUFACTURING ACTIVITIE S BY 31.03.2004. 13. FROM THE GIVEN FACTS AND FOREGOING DISCUSSION I T IS PROVED BEYOND DOUBT THAT THE ASSESSEE HAD NOT BEGUN TO MANUFACTURE OR P RODUCE ANY ARTICLES OR THINGS AT ANY TIME DURING THE PERIOD BEGINNING ON T HE 1 ST DAY OF OCTOBER, 1994 ENDING ON 31 ST DAY OF MARCH, 2004 WHICH IS THE PRIME REQUIREMENT FOR OF THE CLAIM OF DEDUCTION U/S 80IB(5) OF THE I. T. ACT, 1961, SINCE THE ASSESSEE HAS FAILED TO FULFILL THE VERY PRIME REQUI REMENT REQUIRED FOR DEDUCTION U/S 80IB(5) IT IS NOT ELIGIBLE FOR THE DE DUCTION U/S 80IB(5) FOR ANY OF THE ASSESSMENT YEARS. 6. THE ASSESSING OFFICER ALSO OBSERVED THAT DURING THE COURSE OF SEARCH AT THE BUSINESS PREMISES OF THE ASSESSEE, A DIFFERE NCE IN THE FORM OF EXCESS STOCK WAS FOUND AND THE ASSESSEE OFFERED RS. 20,00,000/- AS AN 13 ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION WHICH WAS CLAIMED AS EXEMPTED UNDER SECTION 80IB OF THE ACT. THE ASSESS ING OFFICER DID NOT ALLOW THE DEDUCTION UNDER SECTION 80IB(5) OF THE AC T ON THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE BY OBSERVING THAT TH E INCOME WAS FROM UNACCOUNTED STOCK AND THEREFORE, SAME WOULD NOT FAL L UNDER ANY HEAD OF INCOME AS ENVISAGED IN SECTION 14 OF THE ACT AND SE PARATE TREATMENT TO THIS UNDISCLOSED INCOME HAS TO BE GIVEN BY ASSESSIN G IT AS INCOME FROM UNDISCLOSED SOURCE. ACCORDINGLY, DEDUCTION UNDER S ECTION 80IB(5) OF THE ACT WAS NOT ALLOWED. 7. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A), WHO SUSTAINED ADDITION MADE BY THE ASSESSING OFFICE R BY OBSERVING IN PARA 6.3 AND 6.3.1 OF THE IMPUGNED ORDER AS UNDER:- 6.3 I HAVE CONSIDERED THE SUBMISSION OF LD. A.R A ND HAVE PERUSED THE MATERIAL. THE APPELLANT HAS GONE TO THE EXTENT OF A LLEGING THAT THE STOCK INVENTORY PREPARED AT THE TIME OF SEARCH WAS FRAUDU LENTLY TEMPERED. AS PER THE APPELLANT, IN THE STOCK INVENTORY ONE MORE ITEM AT SR. NO. 169 VALUED AT RS. 19,21,075/- HAS BEEN INSERTED. SECONDLY THE STO CK RECEIVED ON JOB WORK WAS EARLIER NOT VALUED BUT LATER ON VALUE FOR THE S AME WAS MENTIONED AND INCLUDED IN THE STOCK. THE APPELLANT HAS THUS STATE D THAT NO UNACCOUNTED STOCK WAS FOUND AND THE ALLEGED ADMISSION RECORDED IN THE STATEMENT DATED 30.7.2008 WAS NEITHER TRUE AND NOR VOLUNTARY. ON PE RUSAL OF THE P.B. PAGE 9 AND 18 BEING THE LAST PAGES OF THE INVENTORY, IT IS SEEN THAT THOUGH ITEM NO. 169 HAS BEEN ADDED IN THE INVENTORY AS PER P.B. PAG E 18, THIS P.B. PAGE 18 (INTERNAL PAGE ANN. S-9) CONTAINED THE SIGNATURE OF THE PARTY AND ALSO CONTAIN THE SIGNATURE OF BOTH THE PANCHAS AS WELL A S AUTHORIZED OFFICER. THE ITEM AT SR. NO. 169 IS ' BILTY- DADA NO. 96'. WHATE VER PHYSICAL INVENTORY WAS 14 PREPARED AT THE TIME OF SEARCH, ONE CANNOT GO BACK TO THE CONTEMPORARY TIMING OF THE SEARCH NOW AT THIS STAGE. HOWEVER, IT IS QUITE POSSIBLE THAT ONE LOT RECEIVED VIDE BILLITY NO. 96 MIGHT BE LYING AT SOME PART OF THE BUSINESS PREMISES OF THE APPELLANT WHICH COULD NOT COME TO T HE NOTICE IMMEDIATELY AND WHEN LASTLY IT CAME TO THE NOTICE OF THE SEARCH PARTY, THEY HAVE INCLUDED IT AS PART OF THE STOCK. IN ANY CASE, VERY IMPORTANT AND DECIDING POINT IS THAT THE STATEMENT OF SH. AGARWAL WAS RECO RDED ON THIS ISSUE NOT IMMEDIATELY DURING THE CONDUCT OF THE SEARCH ON 16. 7.2008 BUT THESE WERE RECORDED AFTER 14 DAYS I.E. ON 30.7.2008. ONE CAN S OMETIME BE UNDER PRESSURE WHEN ACTUAL SEARCH OPERATION IS GOING ON I N THE BUSINESS AND RESIDENTIAL PREMISES BUT THE CONTENTION THAT EVEN A FTER 14 DAYS OF SEARCH, THE PARTNER OF THE APPELLANT SH. AGARWAL NOT ONLY A DMITTED THE UNACCOUNTED EXCESS STOCK BUT ALSO OFFERED IT FOR TA XATION WAS UNDER COERCION OR SOME PRESSURE, IS TOTALLY BASELESS AND IS REJECTED. ANOTHER IMPORTANT AND CLINCHING FACT IN THE INSTANT CASE IS THAT THEREAFTER EVEN IN THE RETURN OF INCOME FILED BY THE APPELLANT ON 30.9 .2008, THE APPELLANT HAS INCLUDED THE EXCESS STOCK OF RS. 20 LAKHS IN HIS MA NUFACTURING AND TRADING ACCOUNT IN A.Y 2008-09 AND FURTHER HAS INCLUDED RS. 15 LAKHS IN THE RETURN FILED U/S L53A FOR A.Y 2007-08, THUS TOTAL ADMISSIO N OF RS. 35 LAKHS AS UNACCOUNTED INCOME. 6.3.1 ANOTHER ARGUMENT THAT AUTHORIZED OFFICER TOO K THE PHYSICAL STOCK OF 16.7.2008 WHEREAS THEY HAVE DEDUCTED CLOSING STOCK AS PER BOOKS AS ON 3I.3.2008 AND THEREBY ARRIVED AT THE EXCESS STOCK. THOUGH APPARENTLY IT IS NOT A CORRECT APPROACH OF THE AUTHORIZED OFFICER BU T SIMULTANEOUSLY THE APPELLANT HAS ALSO FAILED TO GIVE DETAILS OF THE RE CORDED PURCHASE MADE AFTER 31.3.2008 TILL THE DATE OF SEARCH SO AS TO ARRIVE A T THE EXCESS STOCK EVEN AS PER APPELLANT'S VERSION. IN ANY CASE, IT WILL BE AT THE COST OF REPETITION THAT APPELLANT ITSELF HAS INCLUDED RS. 35 LAKHS AS ADDIT IONAL SURRENDERED INCOME ON ACCOUNT OF EXCESS STOCK IN RETURN OF A.Y 2007-08 ( RS. 15 LAKHS) & A.Y 2008-09( RS. 20 LAKHS). THE OTHER ARGUMENT TAKEN BY A.R. OF THE APPELLANT HAVE BEEN DULY CONSIDERED AND FOUND TO BE HAVING NO MERITS IN VIEW OF THE ABOVE FACTS. SIMILARLY THE CASE LAWS CITED BY THE A .R. OF THE APPELLANT ARE IN RELATION TO SURRENDER DURING THE COURSE OF SEARCH W HEREIN THE ASSESSEE RETRACTED THE STATEMENT AND HAS NOT SHOWN THE ADMIT TED/SURRENDERED INCOME IN THE RETURN OF INCOME. HOWEVER, IN THE INS TANT CASE, THE APPELLANT HAS ON ITS OWN INCLUDED THE INCOME SURRENDERED DURI NG THE COURSE OF SEARCH IN THE RETURN OF INCOME FILED. HENCE THOSE C ASE LAWS ARE NOT AT ALL 15 APPLICABLE IN THE INSTANT CASE. ACCORDINGLY, THESE GROUNDS TAKEN BY THE APPELLANT ARE REJECTED. NOW THE DEPARTMENT IS IN APPEAL. 8. LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUT STATED THAT THIS ISSUE IS COVERED BY THE ORDER DATED 30/11/2012 OF T HIS BENCH OF THE TRIBUNAL IN I.T.A.NO. 145/JU/2012 FOR THE A.Y. 2004 -05 IN THE CASE OF OM PRAKASH KAILASH KUMAR, HUF, BALOTRA VS. ACIT, CENTR AL CIRCLE-1, JODHPUR . IT WAS ALSO SUBMITTED THAT THE SAID CASE ALSO BELON GS TO THE SAME GROUP, TO WHICH THE ASSESSEE BELONGS AND THAT THE SEARCH W AS CONDUCTED SIMULTANEOUSLY IN BOTH THE CASES ON 16/07/2008 AND SUBSEQUENT DAYS. 9. IN HIS RIVAL SUBMISSIONS, LEARNED D.R. ALTHOUGH SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW, BUT COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 10 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT A SIMILAR ISSUE HAVING IDE NTICAL FACTS HAS BEEN ADJUDICATED BY THIS BENCH OF THE TRIBUNAL VIDE ORDE R DATED 30/11/2011 IN THE AFORESAID REFERRED TO CASE OF OM PRAKASH KAILAS H KUMAR, HUF, BALOTRA 16 VS. ACIT, CENTRAL CIRCLE-1, JODHPUR WHEREIN THE REL EVANT FINDINGS HAVE BEEN GIVEN IN PARA 16 TO 18 WHICH READ AS UNDER:- 16. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT CERTAIN INCRIMINA TING DOCUMENTS WERE FOUND DURING THE COURSE OF SEARCH AND ON THE BASIS OF THOSE DOCUMENTS, UNACCOUNTED TURNOVER RELAEVANT TO THE ASSESSMENT YE AR UNDER CONSIDERATION WAS WORKED OUT AT RS. 4,83,06,145/- A ND THE PROFIT ON THE SAID TURNOVER WAS DETERMINED AT RS. 60 LAKHS, WHICH THE ASSESSEE OFFERED FOR TAX IN THE RETURN FILED UNDER SECTION 1 53A OF THE ACT AND THE SAID ADDITIONAL INCOME WAS OFFERED FOR TAX. HOWEVE R, THE ASSESSING OFFICER DID NOT ALLOW DEDUCTION UNDER SECTION 80IB( 5) OF THE ACT ON THE SAID ADDITIONAL INCOME OF RS. 60 LAKHS. IN THE PRE SENT CASE, IT IS NOTICED THAT THE ASSESSING OFFICER IN PARA 8.3 OF THE ASSES SMENT ORDER OBSERVED AS UNDER:- 8.3 THE ASSESSEES ARGUMENT THAT THE INCLUSION OF ADDITIONAL INCOME AS ALLEGED INCOME FROM UNDISCLOSED SOURCES A ND TREATING THE SAME AS TAXABLE INCOME IS WRONG, HAS ALSO BEEN CAREFULLY GONE THROUGH. THE DECISION RELIED UPON BY THE ASSE SSEE IN THIS REGARD HAVE ALSO BEEN CAREFULLY VERIFIED. IN THE C ASE OF THE ASSESSEE DURING THE COURSE OF SEARCH EVIDENCES REGA RDING UNACCOUNTED TURNOVER WERE FOUND AND THE UNDISCLOSED INCOME HAS BEEN DETERMINED ON THE BASIS OF SUCH EVIDENCES . THEREFORE, THE ASSESSEES ARGUMENT THAT THE UNDISCLOSED INCOME HAS BEEN ARRIVED AT WITHOUT ANY BASIS OR ANY ASSETS FOUND IS NOT CORRECT. IN VIEW OF THESE FACTS THE DECISION RELIED UPON BY THE ASSESSEE ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS T HE CASE OF THE ASSESSEE IS DISTINGUISHABLE ON THE FACTS. (EMPHASI S IS OURS) 17. SIMILARLY, IN PARA 8.4 OF THE ASSESSMENT ORDER , THE ASSESSING OFFICER OBSERVED AS UNDER:- 8.4 THE ASSESSEES ARGUMENT THAT NO ADDITION ON A CCOUNT OF ALLEGED UNDISCLOSED INCOME CAN BE MADE MERELY ON TH E BASIS OF STATEMENTS RECORDED DURING THE COURSE OF SEARCH IS ALSO NOT CONVINCING. THE DECISION RELIED UPON BY THE ASSESS EE IN THIS REGARD AS ALSO NOT APPLICABLE TO THE FACTS OF PRESE NT CASE. HERE 17 IN THIS CASE THE UNDISCLOSED INCOME HAS BEEN DETERM INED ON THE BASIS OF EVIDENCES REGARDING UNACCOUNTED TURNOVER F OUND DURING THE COURSE OF SEARCH. THEREFORE, IT CANNOT BE SAID THAT THE ADDITIONAL UNDISCLOSED INCOME IS SUBJECTED TO TAX O NLY ON THE BASIS OF STATEMENT RECORDED. THERE IS A SOUND BASE FOR CALCULATION OF SUCH UNDISCLOSED INCOME WHICH HAS BE EN COMPUTED KEEPING IN VIEW THE TREND OF GROSS PROFIT IN THE CASE OF THE ASSESSEE. (EMPHASIS IS OURS) 18. FROM THE ABOVE OBSERVATIONS, IT IS CLEAR THAT THE UNACCOUNTED TURNOVER WAS FOUND DURING THE COURSE OF SEARCH AND THE INCOME WAS DETERMINED ONLY ON THE BASIS OF THAT UNACCOUNTED TU RNOVER, WHICH WAS OFFERED BY THE ASSESSEE AS ADDITIONAL INCOME AND TA X WAS PAID THEREON. IN THE PRESENT CASE, NOTHING IS BROUGHT ON RECORD T O SUBSTANTIATE THAT THE TURNOVER IN QUESTION WAS DERIVED BY THE ASSESSE E FROM ANY OTHER SOURCE AND NOT FROM THE INDUSTRIAL UNDERTAKING. ON A SIMILAR ISSUE, HON'BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS. ALLIED INDUSTRIES [2009] 31 DTR 323 (HP) HAS HELD THAT TH E ADDITIONAL INCOME SURRENDERED BY THE ASSESSEE FIRM HAVING BEEN ADDED TO THE INCOME OF THE BUSINESS ITSELF, IT IS TO BE CONSIDERED WHILE W ORKING OUT DEDUCTION UNDER SECTION 80IB OF THE ACT, IN THE ABSENCE OF AN Y FINDING OF ANY AUTHORITY THAT THE SAID INCOME WAS DERIVED FROM ANY UNDISCLOSED SOURCE. IN THE PRESENT CASE ALSO NOTHING IS BROUGH T ON RECORD TO SUBSTANTIATE THAT THE ADDITIONAL INCOME WAS EARNED BY THE ASSESSEE ON THE UNDISCLOSED TURNOVER, WHICH WAS NOT DERIVED FRO M THE INDUSTRIAL UNDERTAKING. IN THE INSTANT CASE, IT IS ALSO NOTIC ED THAT THE ASSESSING OFFICER HIMSELF WHILE FRAMING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT FOR ASSESSMENT YEARS 2003-04 TO 2005-06 MAD E CERTAIN ADDITIONS ON ACCOUNT OF VARIOUS DISALLOWANCES, IN T HE INCOME DECLARED BY THE ASSESSEE, BUT ALLOWED DEDUCTION UNDER SECTIO N 80IB OF THE ACT BY HOLDING THAT IT WAS GENERATED FROM THE BUSINESS. FO R THE YEAR UNDER CONSIDERATION ALSO ALTHOUGH UNDISCLOSED TURNOVER BY THE ASSESSEE WAS FOUND, BUT NOTHING IS BROUGHT ON RECORD TO SUBSTANT IATE THAT THIS TURNOVER WAS NOT GENERATED FROM THE INDUSTRIAL UNDE RTAKING OWNED BY THE ASSESSEE. THEREFORE, THE ADDITIONAL PROFIT OF THE INDUSTRIAL UNDERTAKING WAS ELIGIBLE FOR DEDUCTION UNDER SECTIO N 80IB OF THE ACT. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) AND 18 DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION UND ER SECTION 80IB OF THE ACT ON THE ADDITIONAL INCOME OF RS. 60 LAKHS. 11 . SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE, THEREFO RE, BY RESPECTFULLY FOLLOWING THE ORDER DATED 30/11/2012 IN I.T.A.NO. 1 45/JU/2012 FOR THE A.Y. 2004-05 IN THE CASE OF OM PRAKASH KAILASH KUMA R, HUF VS. ACIT, JODHPUR, THE IMPUGNED ORDER IS SET ASIDE AND THE AS SESSING OFFICER IS DIRECTED TO ALLOW CLAIM OF THE ASSESSEE UNDER SECTI ON 80IB OF THE ACT ON THE SURRENDERED INCOME OF RS. 20,00,000/-. 12 . AS REGARDS TO GROUND NO. 11, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS GROUND MAY BE TREATED AS ACADEM IC IN NATURE AND REGARDING GROUND NO. 15, IT WAS COMMON CONTENTION O F BOTH THE PARTIES THAT IT IS CONSEQUENTIAL IN NATURE, WE ORDER ACCORD INGLY. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. (ORDER PRONOUNCED IN THE COURT ON 10 TH JANUARY, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 10 TH JANUARY, 2014. 19 VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.