LG Electronics India Private Ltd., Greater Noida V. ACIT, Noida

ITA 1668/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65768 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-09-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 06-04-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHUMANA SEN
• Assessee Lawyers: AAKANSHA GOEL
• Keywords: Reopening of assessment; Audit objection; Wrong claim; Revised return
• Section: 143(3); 147; 148; 10; 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1668/DEL/2011 ASSESSMENT YEAR : 2001-02 LG ELECTRONICS INDIA ACIT, PVT. LTD., PLOT NO.51, CIRCLE NOIDA, SURAJPUR KASNA ROAD, V. NOIDA, UP. UDYOG VIHAR, GREATER NOIDA, UP. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AAACL AAACL AAACL AAACL- -- -1745 1745 1745 1745- -- -Q QQ Q APPELLANT BY : SHRI SUMANT CHADHA, SHRI VEENU AGARWAL & MS. AAKANSHA GOEL. RESPONDENT BY : MS. SHUMANA SEN, DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 24.1.2011. THE GROUNDS RAISED BY THE ASSESSE E ARE AS UNDER:- 1. THE LD CIT(A) HAS ERRED BOTH ON LAW AS WELL AS ON F ACTS AND CIRCUMSTANCES OF THE CASE BY NOT ACCEPTING THAT THE RE OPENING OF THE ASSESSMENT IS BAD IN LAW, MADE AFTER THE EXPIRY OF FOUR YEARS AND ALL THE CONDITIONS AS LAID DOWN IN THE PROV ISO TO SEC. 147 FOR REOPENING THE ASSESSMENT ARE NOT APPLICABLE TO THE ITA NO1668/DEL/2011 2 CIRCUMSTANCES OF THE APPELLANT. THE NOTICE U/S 148 WAS ISSUED AFTER THE EXPIRY OF FOUR YEARS AND HENCE BARRED BY T HE TIME LIMITATION AS PROVIDED IN SECTION. THE LD CIT(A) HAS ERRED BOTH ON LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE BY HOODING THAT THE ESCAPEMEN T OF INCOME IS BY REASON OF FAILURE ON THE PART OF THE ASSESSE E TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IN RESPECT OF DEDUCTION U/S 80JJAA. 2. WITHOUT PREJUDICE TO ABOVE THE LD CIT(A) HAS ERRE D BOTH ON LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CA SE BY NOT ACCEPTING THAT THE CLAIM OF THE APPELLANT AMOUNTING TO ` .44,95,566/- U/S 80JJAA HAS BEEN WRONGLY DISALLOWED BY ACIT. THE LD CIT(A) HAS ERRED BOTH ON LAW AS WELL AS ON FACT S AND CIRCUMSTANCES OF THE CASE BY HOLDING THAT DISALLOWANCE OF THE DEDUCTION CLAIM OF ` .44,95,566/- MADE BY THE ASSESSEE COMPANY UNDER THE PROVISIONS OF SECTION 80JJAA OF THE INCOME T AX ACT, 1961 IN RESPECT OF THE EMPLOYMENT OF NEW WORKMEN BY ASSISTANT COMMISSIONER IS CORRECT BY TAKING A NARROWER INTERPRETATION OF THE WORDS EMPLOYED DURING THE PREV IOUS YEAR APPEARING IN SEC. 80JJAA OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING THE INTENTION OF THE PROVISIONS OF SEC. 8 0JJAA TO CREATE EMPLOYMENT OPPORTUNITY THROUGHOUT THE YEAR A ND HAS TAKEN INTERPRETATION OF THE PROVISIONS OF SEC. 80JJAA IN SUCH A MANNER THAT WILL RESULT INTO ABSURD RESULTS I.E. FOR D EDUCTION U/S 80JJAA EMPLOYEE SHOULD JOIN ON OR BEFORE 4 TH JUNE, OF A YEAR SO AS TO COMPLETE 300 DAYS IN THE YEAR OF JOINING ITSELF. ITA NO1668/DEL/2011 3 3. THE ASSESSEE CRAVES TO ADD, LEAVE ALTER DELETE RECTIF Y AND MODIFY ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMP ANY IS ENGAGED IN THE TRADING, MANUFACTURING, MARKETING AN D SALE OF ELECTRONICS AND ELECTRICAL APPLIANCES AND PRODUCTS. T HE RETURN OF INCOME WAS ORIGINALLY FILED ON 29.1.2001 AND REVISED RETURN WAS FILED ON 6.8.2002 WHICH WAS RE-REVISED ON 26.11.2002 WHEREI N THE CLAIM OF DEDUCTION U/S 80JJAA WAS MADE. THE CASE WAS SELECTED FO R SCRUTINY. THE ASSESSMENT WAS COMPLETED AFTER MAKING CERTAIN ADDIT IONS ON ACCOUNT OF PRELIMINARY EXPENSES, FOREIGN EXCHANGE FLU CTUATION LOSS AND PROVISION DISALLOWED, FURTHER AN AMOUNT OF ` .44,95,566/- WAS ALLOWED AS DEDUCTION U/S 80JJAA ON THE BASIS OF A CLAIM MADE BY ASSESSEE. THEREAFTER ON 17.2006 THE REVENUE ISSUED A NOTICE U/ S 154 BASED ON THE AUDIT OBJECTION REGARDING WRONG CLAIM OF DEDUCT ION U/S 80JJAA OF THE ACT. THE ASSESSEE FILED ITS REPLY ON 17.4.2006 WHI CH WAS ACCEPTED BY THE DEPARTMENT AND NO FURTHER PROCEEDINGS WERE IN ITIATED U/S 154 OF THE ACT. THEREAFTER, A NOTICE U/S 147 OF THE ACT DATED 31.3.2008 WAS ISSUED BY THE CIT, NEW DELHI DIRECTING THE ASSESSEE TO FI LE RETURN OF INCOME REQUIRED U/S 148 OF THE ACT. IN THE REASONS REC ORDED RECEIVED BY THE ASSESSEE VIDE LETTER DATED 27.8.2008, THE ASSESSEE WAS INFORMED THAT DURING THE PREVIOUS YEAR 1999-2000 AND 2000-01 REGULAR WORKMEN TOTALING 48 + 5 RESPECTIVELY WERE EMPLOYED B Y IT AND SINCE THE NUMBER OF REGULAR WORKMEN EMPLOYED DURING THE P REVIOUS YEAR WAS LESS THAN 10% OF THE EXISTING NUMBER OF 220 WORKMEN , NO DEDUCTION WAS ALLOWABLE IN RESPECT OF ADDITIONAL WAGE S PAID TO REGULAR WORKMEN. THEREFORE, THE DEDUCTION OF ` .44,95,566/- WRONGLY ALLOWED NEEDS TO BE WITHDRAWN. IN RESPONSE TO THE ABOVE, THE ASSESSEE COMPANY FILED ITS REPLY ON 8.9.208 WHEREIN IT EXPLAI NED THAT DEDUCTION ITA NO1668/DEL/2011 4 CLAIMED U/S 80JJAA OF THE ACT WAS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND ALSO CHALLENGED THE REOPENING OF THE CASE U/S 147 OF THE ACT WHICH WAS AFTER THE END OF FOUR YEARS FROM THE RE LEVANT ASSESSMENT YEAR. THE ASSESSEE COMPANY ALSO FILED AN APPLICAT ION U/S 144A OF THE ACT AND MADE A REQUEST TO QUASH THE PROC EEDINGS AGAINST THE ASSESSEE COMPANY BEING UNJUSTIFIED AND BAD IN THE EY ES OF LAW. THE ASSESSING OFFICER, HOWEVER, COMPLETED THE RE-ASSESSMENT U/S 147, 143(3) ON 29.12.2008 AND MADE AN ADDITION ON ACCOUN T OF DISALLOWANCE OF DEDUCTION U/S 80JJAA OF THE ACT. 3. DISSATISFIED WITH THE ORDER, THE ASSESSEE COMPANY FILE D APPEAL BEFORE THE LD CIT(A) AND SUBMITTED AS UNDER:- I) THAT REOPENING OF ASSESSMENT AFTER THE EXPIRY OF FOUR Y EARS WAS BAD IN LAW AND ALL THE CONDITIONS AS LAID DOWN IN PROVISO TO SECTION 147 FOR REOPENING THE ASSESSMENTS WERE NOT APPLICABLE TO THE CIRCUMSTANCES OF THE APPELLANT. II) THAT THERE WAS A FULL AND TRUE DISCLOSURE OF ALL MATER IAL FACTS BY THE COMPANY WHICH WAS NECESSARY FOR MAKING ASSESSMENT . III) THAT ASSESSEE HAD ITSELF DISCLOSED THE PARTICULARS AND CALCULATION OF DEDUCTION CLAIMED U/S 80JJAA AND HAD ATTACHED THE SAME ALONG WITH SECOND REVISED RETURN. IV) THAT AS PER PROVISIONS OF SECTION 147 OF THE ACT, A CASE MAY BE REOPENED FOR RE-ASSESSMENT EVEN AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR IF THE ASSESSEE HAD NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY F OR ASSESSMENT. V) THAT DEPARTMENT WAS VERY MUCH AWARE OF THE CLAIM OF DEDUCTION BY THE ASSESSEE COMPANY WHICH WAS EXCLUSIVELY ITA NO1668/DEL/2011 5 MADE THROUGH A REVISED RETURN AND THAT THE ISSUE AGAIN FOUND MENTION WHEN AUDIT PARTY HAD RAISED OBJECTION. THERE FORE, THE LD AR ARGUED BEFORE LD CIT(A) THAT IT COULD NOT BE SAID THAT THE ASSESSEE HAS NOT FULLY AND TRULY DISCLOSED ALL AND HAD HIDDEN MATERIAL FACT NECESSARY FOR ASSESSMENT. RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS:- 1. TRANSWORLD INTERNATIONAL INC. V. JCIT 273 ITR 242 (D EL.). 2. INDIAN & EASTERN NEWSPAPER SOCIETY V. CIT 119 ITR 99 6 (SC). 3. SUPREME TREVES LTD. V. DCIT 182 TAXMAN 216 (BOM.). 4. JINDAL PHOTO FILM LTD. V. CIT 234 ITR 170 (DEL.). 5. ITO V. NAWAB MIR BARKAT ALI KHAN BAHADUR 97 ITR 239 (SC). 6. SETH BROTHERS V. JCIT 169 CTR 519 (GUJ.). 7. SIMPLEX CONCRETE PILES (INDIA) LTD. V. DCIT 262 ITR 605. THEREFORE, IN VIEW OF THE ABOVE JUDGMENTS IT WAS ARGU ED BEFORE LD CIT(A) THAT REOPENING WAS BAD IN LAW. REGARDING MERI TS OF THE CASE, THE ASSESSEE SUBMITTED THAT NUMBER OF WORKMEN AS ON THE LAST DAY OF THE PRECEDING FINANCIAL YEAR I.E. 31 ST MARCH, 2000 WAS 220 AND TOTAL WORKMEN WHO COMPLETE 300 DAYS OF WORKING DURING FINA NCIAL YEAR 2000-01 WAS 53 WORKMEN. IT WAS FURTHER EXPLAINED THAT FIVE WORKMEN WERE APPOINTED DURING FINANCIAL YEAR 2000-01 ITSELF AND 48 WORKMEN WERE APPOINTED DURING FINANCIAL YEAR 1999-00 AFTER 4 TH JUNE 1999 AND THUS THOSE ALSO HAD COMPLETE 300 DAYS OF WORKING DURING FINANCIAL YEAR 2000-01. THEREFORE, THE ASSESSEE CLAIMED THAT DURING FI NANCIAL YEAR 2000-01 INCREASE IN WORKMEN WAS MORE THAN 10% OF 220 WORKMEN AND ACCORDINGLY DEDUCTION WAS CORRECTLY CLAIMED AND ALLO WED BY THE ASSESSING OFFICER IN ORIGINAL ASSESSMENT ORDER. THE ASSESSEE FU RTHER SUBMITTED BEFORE LD CIT(A) THAT THE PURPOSE OF ENACTI NG SECTION 80JJAA ITA NO1668/DEL/2011 6 AS GIVEN IN CLAUSE 39 OF FINANCE NO.2 BILL OF 1998 WA S TO PROVIDE AN INCENTIVE IN THE FORM OF SPECIAL DEDUCTION AGAINST BU SINESS PROFITS OF THE COMPANY AND THE PROVISION WAS INTENDED TO ENCOURA GE EMPLOYERS TO FURTHER GENERATE MORE EMPLOYMENT OPPORTUNITIES. T HUS, IF THE CONTENTION OF DEPARTMENT WAS TO BE TAKEN AS CORRECT T HEN IT WILL DEFEAT THE WHOLE PURPOSE OF ENACTING SECTION 80JJAA OF THE A CT. THEREFORE, IT WAS ARGUED THAT ADDITIONAL WAGES PAID TO WORKMEN EMPL OYED FOR LESS THAN 300 DAYS IN 1999-2000 WERE ELIGIBLE FOR DEDUCTI ON DURING SUCCEEDING YEAR WHEN THEY COMPLETED THEIR 300 DAYS OF WORKING. 4. THE LD CIT(A) AFTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE AND UPHELD THE REOPENING OF CASE U/S 147 OF THE ACT AND U PHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THIS TRIB UNAL. 6. AT THE OUTSET, THE LD AR SUBMITTED THAT CLAIM U/S 80JJAA WAS FILED ALONG WITH THE SECOND REVISED RETURN ON 26.11.2002 AN D INVITED OUR ATTENTION TO PAGES 36 TO 38 OF PAPER BOOK WHEREIN AU DIT REPORT IN FORM NO.10DA SHOWING CALCULATION OF CLAIM U/S 80JJAA WAS PL ACED. HE FURTHER TOOK US TO PAGE 51 WHEREIN HE INVITED OUR ATTENTION TO DEDUCTION U/S 80JJAA ALLOWED BY THE ASSESSING OFFICER IN ORIGINAL ASSESSM ENT ORDER. OUR ATTENTION WAS ALSO INVITED TO PAGE 54 OF THE PAP ER BOOK WHEREIN A NOTICE U/S 154 OF THE ACT WAS PLACED. IN VIEW OF THE ABOVE, THE LD AR ARGUED THAT ASSESSING OFFICER HAD AGREED TO THE CLAIM O F ASSESSEE AND HAD DULY ALLOWED THE SAME IN THE ASSESSMENT ORDER AND TH EREAFTER EVEN REVENUES CONTENTION OF RECTIFYING THE ALLEGED MISTAKE U/S 154 WAS ALSO NOT SUCCESSFUL AND THAT IS WHY THE REVENUE INITI ATED PROCEEDINGS U/S 147 OF THE ACT AFTER EXPIRY OF FOUR Y EARS ON THE BASIS OF ITA NO1668/DEL/2011 7 NON DISCLOSURE OF ALL MATERIAL FACTS BY ASSESSEE. THE LD A R FURTHER SUBMITTED THAT PARTICULARS AND CALCULATION OF DEDUCTI ON U/S 80JJAA WAS FULY DISCLOSED INFORM NO.10DA AND THEREFORE THERE WAS NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE THE MATERIAL FACTS. RELIA NCE WAS PLACED ON THE FOLLOWING JUDGMENTS:- 1. CIT V. EICHER LTD. 163 TAXMAN 259 (DELHI) 2. MRS. SARLA SHREEDHARAN V. ITO 12 TTJ 220 (DEL.). 3. 3. SUPREME TREVES (P) LTD. V. DCIT 182 TAXMAN 216 (B OM.) 4. CIT V. SIMBHOLI SUGAR MILLS LTD. 333 ITR 470 (DEL.). 5. NIHILENT TECHNOLOGIES (P) LTD. V. DCIT 243 CTR 77 (B OM.) 6. JASYANT AGRO CHEMICALS LTD. V. ITO 241 CTR 424 (BOM.) 7. TITANOR COMPONENTS LTD. V. ACIT (BOM.) 8. HINDUSTAN PETROLEUM CORPN. LTD. V. DCIT 328 ITR 534 (BOM.). 9. ANIL RADHAKRISHNA WANI V. ITO (MUM.). 10.VIKTRAM KOTHARI V. STASTE OF UP. 200 TAXMAN 152 ( ALLAHBAD). 7. IN VIEW OF THE ABOVE JUDGMENTS, THE LD AR ARGUED THAT SINCE THE ASSESSEE HAD DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS FOR THE ASSESSMENT AND IF THE ASSESSING OFFICER DID NOT DISCUSS THE DE DUCTION U/S 80JJAA IN ASSESSMENT ORDER BUT ALLOWED THE SAME AT T HE END THERE IS NO FAILURE ON THE PART OF ASSESSEE. THE LD AR FURTHER STATED THAT IN HARI OM TRADING CO. V. CIT 263 ITR 437, A DIVISION B ENCH OF PUNJAB & HARYANA HIGH COURT HAD OBSERVED THAT AN ASSESSEE HAS NO CONTROL OVER THE WAY AN ASSESSMENT ORDER IS DRAFTED AND THE ISSUE WHIC H ARE ACCEPTED BY ASSESSING OFFICER DO NOT FIND MENTION IN TH E ASSESSMENT ORDER AND ONLY SUCH POINTS ARE TAKEN NOTE OF ON WHIC H THE ASSESSEES EXPLANATION ARE REJECTED. ON MERITS, HE ARGUED THAT AS ON 31.3.2000 THERE WERE 220 WORKMEN, FIVE WERE ADDED IN THE CURR ENT YEAR WHO HAD ITA NO1668/DEL/2011 8 COMPLETED 300 DAYS OF WORKING IN THE CURRENT YEAR AN D 48 WERE EMPLOYED DURING PRECEDING YEAR WHO HAD COMPLETED 300 DAYS OF WORKING DURING THE YEAR UNDER CONSIDERATION. HE INVITED OUR ATTENTION TO PAGE 12 AND INVITED OUR ATTENTION TO CLAUSE 39 OF FINANCE NO.2 BILL OF 1998 WHEREIN THE SPEECH O F HON'BLE FINANCE MINISTER REGARDING INSERTION OF SECTION 80JJAA WAS PLAC ED. IN VIEW OF THE SPEECH OF HON'BLE FINANCE MINISTER THE LD AR ARGUED T HAT THE LEGISLATURE HAD USED THE WORD EMPLOYED DURING THE YE AR AND NOT APPOINTED DURING THE YEAR AND IN VIEW OF THAT HE AR GUED THAT WORKMEN SHALL BE NEW REGULAR WORKMEN IN THE YEAR IN WHICH HE HAD COMPLETED 300 DAYS OF WORKING. HE FURTHER ARGUED THAT IF THE D EDUCTION WAS MEANT TO BE ALLOWED ONLY IN THE YEAR IN WHICH WORKM EN HAD JOINED THE UNDERTAKING AND WORKED FOR AT LEAST 300 DAYS IN THE SA ME YEAR, THEN FOR THE PURPOSE OF DEDUCTION U/S 80JJAA, THE ASSESSEE MU ST APPOINT THE WORKMEN BY 4 TH JUNE OF THE RELEVANT YEAR BECAUSE THE WAGES PAID TO THE WORKMEN APPOINTED AFTER 4 TH JUNE OF RELEVANT YEAR WILL NOT QUALIFY FOR CLAIMING DEDUCTION UNDER THE SAID SECTION. RELIA NCE WAS PLACED IN THE CASE OF BAJAJ TEMPO 196 ITR 188 PROPOSING THAT LI BERAL VIEW OF THE PROVISIONS OF INCOME TAX SHOULD BE TAKEN WHERE THE OVE RALL OBJECTIVE OF THE PROVISION IS PROMOTING ECONOMIC GROWTH, SIMILARLY RELIANCE WAS PLACED IN THE CASE OF KP VERGHESE V. ITO 131 ITR 597 PROPOSING THAT INTERPRETATION OF STATUTES THAT LEADS TO ABSURDITY, UNJ UST RESULT SHOULD BE AVOIDED. THEREFORE, HE ARGUED THAT IN THE PRESENT CASE ALSO IF THE PROPOSITION OF REVENUE IS TO BE ACCEPTED THEN ASSESSEE WI LL HAVE NO BENEFIT OF AN ADDITIONAL WORKMEN IF HE IS EMPLOYED A FTER 4 TH JUNE IN A YEAR. 8. THE LD DR, ON THE OTHER HAND, ARGUED THAT SECTION 80JJAA OF THE ACT IS CLEARLY WORDED AND IT CLEARLY REFERS TO WORKME N EMPLOYED IN PREVIOUS YEAR. HE FURTHER ARGUED THAT EVERY YEAR IS A DIFFERENT YEAR AND ITA NO1668/DEL/2011 9 ARGUMENT OF LD AR CLEARLY INTERMINGLES DIFFERENT YEA RS. THEREFORE, ANY WORKMEN EMPLOYED IN THE PRECEDING YEAR CANNOT BE SAI D TO BE EMPLOYED IN THE YEAR UNDER CONSIDERATION FOR THE PUR POSE OF CLAIM U/S 80JJAA OF THE ACT. REGARDING REOPENING, THE LD DR A RGUED THAT INFORMATION BY AN AUDIT PARTY WAS A VALUABLE PIECE O F INFORMATION AND WAS A VALID INFORMATION FOR INITIATING ACTION U/S 14 7/148 OF THE ACT. RELIANCE WAS PLACED ON THE JUDGMENT IN THE CASE OF HO NDA SEIL POWER PRODUCTS LTD. 197 TAXMAN 415 AND IN THE ESS KAY ENGINE ERING CO. V. CIT 247 ITR 818. THE LD AR IN HIS REJOINDER SUBMITTED THAT ALL MATERIAL INFORMATION WAS SUBMITTED ALONG WITH THE RETURN OF I NCOME AND ARGUED THAT THE CASE LAW RELIED UPON BY THE LD DR IN THE CA SE OF ESS KAY ENGINEERING CO. PVT. LTD. IS DIFFERENT FROM THE FACT S AND CIRCUMSTANCES OF THE PRESENT CASE. HE FURTHER ARGUED THAT WORKMEN IN THE SECTION EXCLUDED CASUAL WORKERS AND REITERATED HIS STAND THAT 3 00 DAYS OF WORKING PERIOD HAS TO BE CALCULATED FROM THE DATE O F APPOINTMENT TILL THE PERIOD WHEN IT COMPLETE 300 DAYS OTHERWISE NO EMP LOYER WOULD RECRUIT WORKER AFTER 5 TH JUNE AS THAT WILL NOT ENTITLE IT FOR ADDITIONAL DEDUCTION U/S 80JJAA OF THE ACT. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES A ND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE CASE OF THE ASSESSEE WAS REOPENED ON THE BASIS THAT ASSESSING OFFICER HAD GIVEN WRONG DEDUCTION U/S 80JJAA OF THE ACT. THE ASSESSING OFF ICER IN THE ORIGINAL ASSESSMENT ORDER THOUGH MENTIONS ABOUT THE FACT OF CLAIM BY THE ASSESSEE U/S 80JJAA BUT DOES NOT DISCUSS IT IN THE ASSESSME NT ORDER AND AT THE END ALLOWS DEDUCTION AS CLAIMED BY THE ASSESSE E WITHOUT RAISING ANY QUERY IN THIS REGARD. IT IS ESTABLISHED LAW THAT REOPENING AFTER FOUR YEARS IS LEGAL IF THE ASSESSEE HAD NOT PROVIDE D ALL MATERIAL FACTS ALONG WITH RETURN OF INCOME AND OR DURING ASSESSME NT PROCEEDINGS. THE PROVISO TO SECTION 147 READS AS UNDER: - ITA NO1668/DEL/2011 10 SECTION 147: SECTION 147: SECTION 147: SECTION 147: PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEV ANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECT ION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELE VANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASONS OF THE FAILURE ON THE PART OF ASSESSEE TO MAKE A RETURN U/S 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB SECTION (1) OF SECTI ON 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATE RIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. 10. IN THE PRESENT CASE, THOUGH ASSESSEE HAD FURNISHED AUD IT REPORT IN FORM NO.10DA AS REQUIRED U/S 80JJAA BUT A PERUSAL O F AUDIT REPORT PLACED AT PAGE 37 OF PAPER BOOK WOULD REVEAL THAT A NNEXURE TO AUDIT REPORT IS NOT IN THE PRESCRIBED FORM. A NEW COLUMN 5 (B) HAS BEEN INSERTED BY AUDITOR TO SHOW NUMBER OF WORKMEN EMPLOYE D IN THE YEAR 1999-2000. THIS COLUMN IS NOT PART OF ANNEXURE AS REQU IRED BY THIS SECTION AND FORM NO.10DA. PERHAPS THIS COLUMN HAS BEEN INSERTED BY AUDITOR TO MISLEAD THE DEPARTMENT REGARDING ELIGIBIL ITY OF WORKMEN EMPLOYED IN THE YEAR 1999-2000 FOR CALCULATION OF W ORKMEN EMPLOYED DURING THE YEAR UNDER CONSIDERATION. THE REPORT HAS B EEN OBTAINED BY ASSESSEE AND IT CAN BE SAID THAT INSERTION OF COLUMN 5(B) MUST HAVE BEEN ON THE INSTRUCTIONS OF ASSESSEE AS THE BENEFIT WAS TO BE ENJOYED BY ASSESSEE AND NOT BY C.A. THE ASSESSEE IN A WAY THROUGH AUDIT REPORT HAD TRIED TO MISLEAD THE DEPARTMENT BY SHOWING NUMBER OF NEW REGULAR WORKMEN AT 53. THEREFORE, THE ASSESSEE HAD NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS FOR CLAIMING DEDUCTION U/S 80JJAA AND IS CLEARLY HIT BY THE PROVISO TO SECTION 147. THE HON'B LE DELHI HIGH COURT ITA NO1668/DEL/2011 11 IN THE CASE OF HONDA SEIL POWER PRODUCT 197 TAXMAN 4 15 HELD THAT MERELY BECAUSE MATERIAL EMBEDDED IN MATERIAL OR EVID ENCE WHICH THE ASSESSING OFFICER COULD HAVE UNCOVERED BUT DID NOT UNCO VER IS NOT A GOOD GROUND TO DENY OR STRIKE DOWN NOTICE FOR RE-ASSESSM ENT. 11. EXPLANATION (1) TO SECTION 147 FURTHER STATES THAT PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER E VIDENCE FROM WHICH MATERIAL EVIDENCE COULD HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHI N THE MEANING OF THE FORGOING PROVISION. THEREFORE, KEEPING IN VIEW T HE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT ASSESSEE HAD NOT DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS. THEREFOR E, RE-ASSESSMENT AFTER THE FOUR YEARS WAS IN ACCORDANCE WITH LAW. 12. AS REGARDS THE MERITS OF THE CASE, REGARDING CLAIM U/S 80JJAA THE SECTION READS AS UNDER:- (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE BEING AN INDIAN COMPANY INCLUDES ANY PROFITS AND GAINS DERIVED FROM A NY INDUSTRIAL UNDERTAKING ENGAGED IN THE MANUFACTURE OR PRODUCTION OF ARTICLES OF THINGS THERE SHALL SUBJECT TO THE CONDIT IONS SPECIFIED IN SUB SECTION (2) BE ALLOWED AS DEDUCTION OF AN AMOUN T EQUAL TO 30% OF ADDITIONAL WAGES PAID TO THE NEW REGULAR WORK MEN EMPLOYED BY THE ASSESSEE IN THE PREVIOUS YEAR FOR THREE ASSESSMENT YEARS INCLUDING THE ASSESSMENT YEAR RELEVANT TO T HE PREVIOUS YEAR IN WHICH SUCH EMPLOYMENT IS PROVIDED. 13. THE EXPLANATION TO SECTION DEFINES REGULAR WORKME N WHICH DOES NOT INCLUDE:- ITA NO1668/DEL/2011 12 A) CASUAL WORKER. B) ANY OTHER WORKMEN EMPLOYED FOR A PERIOD OF LESS THAN 300 DAYS DURING THE PREVIOUS YEAR. C) A WORKMEN EMPLOYED THROUGH CONTRACT LABOUR. THE DEFINITION OF NEW WORKMEN IN SECTION ALONG WITH EXPLANATION CLEARLY PROVIDES THAT DEDUCTION WILL BE AVAILABLE ON LY IF THE NEW WORKMEN IS EMPLOYED FOR A PERIOD OF 300 DAYS IN THE P REVIOUS YEAR AND THERE IS NO REFERENCE TO THE NEW EMPLOYEES EMPLOYED I N THE PRECEDING YEAR FOR ELIGIBILITY U/S 80JJAA. FORM NO.10DA WHICH IS REQUIRED FOR MAKING CLAIM U/S 80JJAA ALSO DOES NOT HAVE ANY COLUMN IN RESPECT OF EMPLOYEE EMPLOYED DURING THE PRECEDING YEAR. THE AR GUMENT TAKEN BY LD AR THAT EMPLOYEES EMPLOYED IN THE PRECEDING YE AR WHO HAD NOT COMPLETED 300 DAYS IN THAT YEAR SHOULD BE TAKEN IN T HE CURRENT YEAR WHEN HE COMPLETES 300 DAYS IS OF NO FORCE. IN VIEW OF THE ABOVE, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD CI T(A). 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. 15. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH DAY O F NOVEMBER, 2012. SD/- SD/- (U.B.S. BEDI) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 09.11.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. ITA NO1668/DEL/2011 13 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 10.9.2012 DATE OF DICTATION 2.11.2012 DATE OF TYPING 3.11.2012 DATE OF ORDER SIGNED BY 9.11.2012 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET 9.11.2012 & SENT TO THE BENCH CONCERNED.