DCIT, New Delhi V. M/s. Super Plastic Coats (P) Ltd., New Delhi

ITA 1904/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6232 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 22-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJIV MALHOTRA
• Assessee Lawyers: VED JAIN ADV ASHISH CHADHA; ABHISHEK JAIN CAS
• Keywords: Validity of assessment; Tax effect
• Section: 143(3); 153A; 80IB; 147; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL -- (DELHI BENCH F NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI O.P. KANT ITA NO. 1904/DEL/2013 - DO - :2006 - 07 ITA NO. 1973/DEL/2013 - DO - :2003 - 04 ITA NO. 1913/DEL/2013 - DO - :2004 - 05 ITA NO. 1910/DEL/2013 - DO - :2005 - 06 ITA NO. 1971/DEL/2013 - DO - :2007 - 08 ITA NO. 1972/DEL/2013 - DO - :2008 - 09 DEPUTY CIT, VS. M/S. SUPER PLASTIC COATS CENTRAL CIRCLE - 13, (P)LTD., WEST PUNJAB NEW DEL HI. BAGH, NEW DELHI. (PAN: AA E C S2311M) (APPELLANT) (RESPONDENT) ITA NO. 1934/DEL/2013 ASSESSMENT YEAR: 200 3 - 0 4 ITA NO. 19 35 /DEL/2013 - DO - :200 4 - 0 5 ITA NO. 19 36 /DEL/2013 - DO - :200 5 - 0 6 ITA NO . 193 7 /DEL/2013 - DO - :200 6 - 0 7 ITA NO. 19 38 /DEL/2013 - DO - :200 7 - 0 8 ITA NO. 19 39 /DEL/2013 - DO - :2008 - 09 M/S. SUPER PLASTIC COATS VS. DCIT/ACIT, (P)LTD., WEST PUNJAB CENTRAL CIRCLE - 13, BAGH, NEW DELHI. NEW DELHI . (PAN: AAECS2311M) (APPELLANT) (RESPONDENT) ASSESSEE BY: S /S HRI VED JAIN, ADV. , ASHISH CHADHA & ABHISHEK JAIN, CAS D EPARTM ENT BY: SHRI RAJIV MALHOTRA, CIT( DR ) DATE OF HEARING : 23 . 0 3 .201 6 DATE OF PRONOUNCEMENT: 30 : 0 3 .201 6 ORDER 2 PER I.C. SUDHIR : JUDICIAL MEMBER AT THE OUTSET OF HEARING, THE LEARNED AR POINTED OUT THAT THE APPEAL FOR THE ASSESSMENT YEAR 2005 - 06 PREFERRED BY THE REVENUE IS HAVING TAX EFFECT BELOW RS.10 LACS, HENCE, THESE ARE NOT MAINTAINABLE IN VIEW OF CBDT CIRCULAR NO. 21/2015 DATED 10.12.2015. THE LEARNED CIT(DR) DID NOT REBUT THE ABOV E SUBMISSION. IT IS AN ADMITTED POSITION THAT THE CBDT CIRCULAR/INSTRUCTIONS PRESCRIBING THE MONITORY LIMIT FOR PREFERRING APPEAL BY THE REVENUE AT DIFFERENT FORUMS ARE HAVING STATUTORY FORCE UNDER SEC. 268A OF THE INCOME - TAX ACT, 1961. WE THUS DISMISS TH E SAID APPEAL AS SUCH AS NOT MAINTAINABLE. 2. IN THE APPEALS FOR THE ASSESSMENT YEARS 2003 - 04, 2004 - 05, 2005 - 06, 2006 - 07 AND 2007 - 08, THE REVENUE HAS RAISED COMMON ISSUE QUESTIONING THE VALIDITY OF ACTION OF THE LEARNED CIT(APPEALS) IN DELETING THE ADDIT ION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DENIAL OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SEC. 80IB OF THE ACT. 3. THE SUBMISSIONS OF THE LEARNED AR REMAINED THAT THESE APPEALS ARE ALSO NOT MAINTAINABLE SINCE THE ASSESSMENT YEAR 2001 - 02, THE BENE FIT OF THE CLAIMED DEDUCTION UNDER SEC. 80IB OF THE ACT WAS BEING ALLOWED TO THE ASSESSEE. HE SUBMITTED THAT IN THE ASSESSMENT YEAR 2001 - 02, THE ASSESSMENT 3 WAS ULTIMATELY FRAMED UNDER SEC. 147/143(3) OF THE ACT AND THE CLAIM WAS ALLOWED. HE POINTED OUT THA T EVEN OTHERWISE , THE ASSESSMENT S FRAMED IN ALL THESE YEARS INCLUDING ASSESSMENT YEAR 2008 - 09 UNDER SEC. 153A READ WITH SECTION 143(3) OF THE INCOME - TAX ACT, 1961 IN ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND IN ABSENCE OF PEND ENCY OF THE ASSESSMENT ON THE DATE OF SEARCH , ARE VOID AB - INITIO IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF KABUL CHAWLA ITA NO. 707/2014 DECISION DATED 28.8.2015 . THE LEARNED AR SUBMITTED FURTHER THAT IN THE A SSESSMENT YEARS 2006 - 07 AND 2007 - 08 BESIDES THE ISSUE OF ELIGIBILITY OF DEDUCTION UNDER SEC. 80IB, THE REVENUE HAS ALSO RAISED THE ISSUE OF VALIDITY OF ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CREDITS AGAINST NON - EXISTENT SALES THROUGH SHRI RAV INDER YADAV, DELETED THE LEARNED CIT(APPEALS) IS COVERED BY THE DECISION OF DELHI BENCH OF THE ITAT IN THE CASE OF DCIT VS. NORTHERN STRIPS LTD. ITA NOS. 1269 TO 1271/DEL/2013 (ASSESSMENT YEARS 2006 - 07 TO 2008 - 09) ORDER DATED 23.9.2014 UPHELD BY THE HON' BLE JURISDICTIONAL HIGH COURT OF DELHI VIDE ITS ORDER DATED 21.8.2015 IN ITA 365/2015 AND ORS. HE ALSO POINTED OUT THAT IN THE ASSESSMENT YEAR 2008 - 09, THE REVENUE HAS RAISED ONLY ONE ISSUE I.E. THE BOGUS SALES MADE THROUGH SHRI RAVINDER Y ADAV , WHICH IS COVERED BY THE 4 ORDER OF THE ITAT IN FAVOUR OF THE ASSESSEE AS DISCUSSED ABOVE IN THE CASE OF NORTHERN STRIPS LTD. (SUPRA). 4. SINCE THE ISSUE REGARDING THE VALIDITY OF INITIATION OF PROCEEDINGS UNDER SEC. 153A OF THE ACT, QUESTIONED BY THE ASSESSEE IN ITS APPEALS FOR THE ASSESSMENT YEARS 2002 - 03, 2003 - 04 TO 200 8 - 0 9 GOES TO THE ROOT OF THE MATTER, HENCE, WE PREFER RED TO ADJUDICATE UPON IT FIRST. 5. IN SUPPORT OF THE GROUNDS RAISING THE ISSUE OF VALIDITY OF INITIATION OF PROCEEDINGS UNDER SEC. 153A OF THE ACT, THE LEARNED AR SUBMITTED THAT SEARCH OPERATION UNDER SEC. 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 28.8.2008 BUT NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND ON THE DATE OF SEARCH ASSESSMENT FRAMED ON T HE BASIS OF ORIGINAL RETURN OF INCOME WAS NOT PENDING. HE SUBMITTED THAT IN THE ASSESSMENT ORDERS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, THERE IS NO REFERENCE IN RESPECT OF ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER HIMSELF HAS STATED THAT MR. PRAVEEN BANSAL, THE DIRECTOR OF THE ASSESSEE COMPANY WAS ASKED TO FURNISH DETAILS OF THE EXPENDITURE INCURRED BY HIM THROUGH HIS CREDIT CARDS . HE SUBMITTED THAT THE LEARNED CIT(APPEALS) HAS REJECTED THE GROUNDS RAISED BE FORE HIM ON THE ISSUE WITH THIS FINDING THAT ONCE PROCEEDINGS UNDER SEC. 153A /153C OF THE 5 ACT ARE INITIATED, PROCEEDINGS UNDER SEC. 143/147 OF THE ACT ABATE AND REVIVE ONLY WHEN ORDER UNDER SEC. 153A/153C IS ANNULLED. HE PLACED RELIANCE ON THE FOLLOWING D ECISIONS: I) CIT VS. KABUL CHAWLA [2016] 380 ITR 573 (DELHI); 28.8.2015 (DELHI HC); II) PRINCIPAL CIT VS. MUREJE PAPER MILLS LTD. [2016] 380 ITR 571 (DEL.). 6. THE LEARNED CIT(DR) ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF THE AUTH ORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE WAS NOT ELIGIBLE FOR THE DEDUCTION CLAIMED UNDER SEC. 80IB OF THE ACT AS IT WAS NOT MANUFACTURING AND NOT PRODUCING ANY GOODS DIFFERENT FROM THE RAW - MATERIAL PURCHASED AND USED BY IT. 7. AFTER HAVING GONE THR OUGH THE DECISIONS RELIED UPON BY THE LEARNED AR, WE FIND THAT THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF KABU L CHAWLA (SUPRA) HAS BEEN PLEASED TO SUMMARIZE THE FOLLOWING REQUIREMENTS FOR THE VALIDITY OF INVOCATION OF THE PROVISIONS LAID DOWN UNDER SEC. 153A OF THE ACT: 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DECISIONS, THE LEGAL POS ITION THAT EMERGES IS AS UNDER: 6 I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A (1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE R ETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE OF THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AO S AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RESPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEAR S IN SEPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHER POST - SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESS MENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RELEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPLETED ASSESSMENT C AN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFA R AS PENDING ASSESSMENTS ARE CONCERNED, THE JURISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. 7 VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 8. WE TH US FIND THAT FOR A VALID INVOCATION OF SECTION 153A OF THE ACT, FULFILLMENT OF TWO REQUIREMENTS ARE MANDATORY, FIRSTLY DURING THE COURSE OF SEARCH, SOME INCRIMINATING MATERIAL HAS BEEN FOUND AND SECONDLY ON THE DATE OF SEARCH, THE ASSESSMENT BASED ON THE R ETURN OF INCOME ORIGINALLY FILED FOR THE YEAR IS NOT PENDING. FULFILLMENT OF BOTH THESE TWO R EQUIREMENTS IN THE PRESENT CASE FOR INITIATION OF PROCEEDINGS UNDER SEC. 153A OF THE ACT ARE ABSENT . FOR THE ASSESSMENT YEAR 2003 - 04, THE ASSESSEE HAS FILED ITS OR IGINAL RETURN OF INCOME ON 27.11.2003. THE ASSESSING OFFICER SELECTED THE CASE FOR SCRUTINY AND CALLED FOR SPECIFIC DETAILS IN RESPECT OF DEDUCTION UNDER SEC. 80IB OF THE ACT AND AFTER EXAMINATION AND INVESTIGATION, HE HAS ALLOWED THE CLAIMED DEDUCTION VID E ORDER DATED 30.3.2006. SIMILAR DEDUCTION HAS BEEN ALLOWED IN THE ASSESSMENT FRAMED UNDER SEC. 143(3) OF THE ACT ON 22.12.2006 IN THE ASSESSMENT YEAR 2004 - 05. FOR THE REMAINING ASSESSMENT YEARS, THE RETURN FILED UNDER SEC. 143(1) OF THE ACT HAS BEEN ACCEP TED AND NO NOTICE UNDER SEC. 143(2) OF THE ACT WAS ISSUED WITHIN THE PRESCRIBED TIME 8 LIMIT, THUS, THERE WAS NO PENDENCY OF THE ASSESSMENT ON THE DATE OF THE SEARCH . BESIDES, IN THE ASSESSMENT YEAR 2001 - 02, THE CLAIMED DEDUCTION UNDER SEC. 80IB OF THE ACT A FTER EXAMINING THE MANUFACTURING ACTIVITY DONE BY THE ASSESSEE HAS BEEN ALLOWED IN THE ASSESSMENT FRAMED UNDER SEC. 147/143(3) OF THE ACT ON 30.11.2006. IN THE ASSESSMENT YEAR 2002 - 03 RETURN HAS BEEN PROCESSED UNDER SEC. 143(1) ACCEPTING THE CLAIMED DEDUCT ION. NO NEW FACT HAS BEEN REVEALED DURING THE ASSESSMENT YEARS UNDER CONSIDERATION DURING THE COURSE OF SEARCH. IN OTHER WORDS, NO INCRIMINATING MATERIAL WAS FOUND ON THE DATE OF THE SEARCH TO JUSTIFY THE INITIATION OF PROCEEDINGS UNDER SEC. 153A OF THE A CT . WE THUS RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE ABOVE CITED CASE OF KABUL CHAWLA (SUPRA) HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SEC. 153A OF THE ACT IN THE PRESENT CASE IN THE ABSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH AND IN ABSENCE OF PENDENCY OF ASSESSMENT PROCEEDINGS ON THE DATE OF THE SEARCH. THE INVOCATION OF THE PROVISIONS OF SECTION 153A OF THE ACT IS THUS HELD AS INVALID AND VOID - AB - INITIO. IN CONSEQUENCE, THE ASSESSMENTS FOR THE ASSESSMENT YEARS UNDER CONSIDERATION FRAMED IN FURTHERANCE TO THE SAID INITIATION OF PROCEEDINGS UNDER SEC. 153A OF THE ACT ARE HELD AS VOID AND THE SAME ARE ACCORDINGLY QUASHED. THE GROUNDS NOS. 1 TO 5 OF THE APPEALS 9 PREFERRED BY THE ASSESSEE FOR THESE ASSESSMENT YEARS I.E. 2003 - 04 TO 2008 - 09 INVOLVING THE ISSUE ON THE VALIDITY OF INITIATION OF PROCEEDINGS UNDER SEC. 153A AND THE ASSESSMENTS FRAMED IN FURTHERANCE THERETO ARE ALLOWED. 9. THOUGH IN VIEW OF THE ABOVE FINDINGS ON THE VALIDITY OF ASSESSMENTS FRAMED UNDER SEC. 153A/143(3) OF THE INCOME - TAX ACT, 1961 DECIDED IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, THE REMAINING GROUNDS RAISED ON THE MERITS OF ADDITIONS UPH ELD/DELETED BY THE LEARNED CIT(APPEALS) QUESTIONED IN THE APPEALS PREFERRED BY THE PARTIES HAVE BECOME INFRUCTUOUS, STILL WE FIND THAT THE ASSESSEE HAS GOT GOOD CASE EVEN ON THE MERITS OF THE ADDITIONS UPHELD BY THE LEARNED CIT(APPEALS) QUESTIONED IN THE A PPEALS PREFERRED BY THE REVENUE . 10. IN ALL THESE APPEALS PREFERRED BY THE REVENUE, AS DISCUSSED ABOVE, A COMMON ISSUE REGARDING ELIGIBILITY OF THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SEC. 80IB OF THE ACT ALLOWED BY THE LEARNED CIT(APPEALS) HAS BEEN QUESTIONED BY THE REVENUE FOR THE ASSESSMENT YEARS 2003 - 04 TO 2007 - 08. 11. IN SUPPORT OF THE GROUNDS INVOLVING THE ISSUES REGARDING ELIGIBILITY OF THE ASSESSEE FOR CLAIMING DEDUCTION UNDER SECTION 80IB OF THE ACT, THE LEARNED CIT(DR) TRIED TO JUSTIFY TH E ASSESSMENT ORDER WITH THE SUBMISSION 10 THAT THE ASSESSEE WAS NOT ENGAGED IN THE MANUFACTURING OR PRODUCTION OF AN ARTICLE OR THING AND AS PER THE SHOW - CAUSE NOTICE ISSUED BY CUSTOM AND CENTRAL EXCISE DEPARTMENT, THE ACTIVITY WAS NOT MANUFACTURING AND THUS THE ASSESSING OFFICER WAS RIGHT IN DISALLOWING THE CLAIMED DEDUCTION UNDER SEC. 80IB OF THE ACT. THE LEARNED CIT(DR) SUBMITTED THAT NO NEW PRODUCT IS MADE OUT BY THE ACTIVITIES OF THE ASSESSEE ON THE FILMS AFTER PURCHASING IT FROM JINDAL . THE LEARNED AR ON THE OTHER HAND SUBMITTED THAT THE CASE OF THE ASSESSEE OF TREATING THE RAW - MATERIAL IN SUCH A WAY THAT CHARACTERISTIC AND USE OF THE RAW - MATERIAL COMPLETELY CHANGES AND THE INPUT AND OUTPUT ARE TOTALLY DIFFERENT CHARACTER HAS BEEN ACCEPTED BY THE DEPARTME NT ITSELF IN THE ASSESSMENT YEARS 2001 - 02 AND 2002 - 03 AS WELL. IN THE ASSESSMENT YEAR 2001 - 02, THE ASSESSMENTS UNDER SEC. 143(3) OF THE ACT WERE FRAMED ACCEPTING THE CLAIMED DEDUCTION UNDER SEC. 80IB OF THE ACT. THEREAFTER, REOPENING PROCEEDINGS UNDER SEC. 147 WERE INITIATED AND AFTER DISCUSSING AND VERIFYING THE SUBMISSION OF THE ASSESSEE, THE CLAIMED DEDUCTION HAS BEEN ALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENTS FRAMED ON 30.11.2006. AGAIN IN THE ASSESSMENT YEAR 2002 - 03, THE RETURN CLAIMING THE DE DUCTION HAS BEEN ACCEPTED. THE ASSESSING OFFICER WAS THUS NOT JUSTIFIED IN DEVIATING FROM ITS STAND TAKEN ON THE ISSUE IN ABSENCE OF ANY CHANGE IN THE FACTS OF THE CASE IN THE SUBSEQUENT YEARS. THE LEARNED CIT(APPEALS) WITHOUT APPRECIATING THIS 11 MATERIAL A SPECT HAS DELETED THE DISALLOWANCE . HE SUBMITTED THAT THROUGH CORONATION AND ANTI - STATIC TREATMENT, THE NORMAL POPP FILM GETS QUOTED/TREATED IN SUCH A WAY THAT THE NEW PRODUCT BECOMES MORE USEFUL AND H AS MORE STRENGTH, T HUS, THE PROCESS AMOUNTS TO MANUFACT URE. THE ASSESSEE BY ITS MANUFACTURING PROCESS TREATS THEM AND MAKES THEM USEABLE FOR PRINTING. A SIMPLE EXAMPLE IS THE WRAPPERS OF UNCLE CHIPS/LAYS. THE SAID PACKETS ARE MADE OF THE SAID FILMS WHICH ARE PROCURED BY THE ASSESSEE FROM JINDAL POLYESTER LTD. THE RAW - MATERIAL IS OF SUCH QUALITY THAT NO PRINTING CAN BE DONE ON THE SAME. THE ASSESSEE PROCURED THE RAW MATERIAL AND THE OUTPUT WHICH IT PRODUCES IS READY FOR THE METALLIC QUOTING WHICH CAN BE SEEN ON THE INNER SIDE OF THE WRAPPERS/PACKETS OF LAYS/UNC LE CHIPS. THE CORONA TREATED AND ANTI - STATIC TREATED FILMS ARE SUPPLIED TO CUSTOMERS WHO DO THE METALLIC QUOTING ON THE SAID SEEDS ON WHICH THE FINAL PRINTING TAKES PLACE. BY THE ASSESSEES PROCESS, THE PLAIN FILM CHANGES ITS CHARACTER WHICH AT FIRST DOES NO CATCH FIRE AND AT THE SAME TIME BECOMES PRINTABLE. THE LEARNED AR POINTED OUT THAT FOR THE ABOVE ACTIVITY, THE ASSESSEE HAS SET UP A FACTORY MAKING INVESTMENT OF RS.1,20,87,285 IN THE PLANT AND MACHINERY BESIDES OTHER INVESTMENTS IN GENERATORS, FITTINGS ETC. THESE MACHINERY CONSISTS OF ANTI - STATIC COATER, CORONA TREATMENT PLANT, ETC. IT HAD ALSO OBTAINED INDUSTRIAL LICENSE FROM DIRECTORATE OF INDUSTRIES FOR CARRYING OUT THE ABOVE 12 MANUFACTURING ACTIVITY. BESIDES, IT HAS GOT A POLLUTION CONTROL CERTIFICATE AND IT IS REGISTERED WITH THE EXCISE DEPARTMENT AS WELL. THE ASSESSEE HAS BEEN PAYING EXCISE DUTY ON ITS FINISHED PRODUCTS REMOVED FROM THE FACTORIES WHICH IS LEVIABLE UNDER SEC. 3 OF CENTRAL EXCISE ACT ON ALL EXCISABLE GOODS MANUFACTURED OR PRODUCED IN I NDIA. THE CENTRAL EXCISE IS LEVIED ONLY WHEN SUCH MANUFACTURING PROCESS IS INVOLVED. THE LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER IN THE PRESENT CASE HAS MADE HIS OWN BELIEF WHICH IS AGAINST THE FACTS OF THE CASE AND IS WHOLLY BASED ON THE SO - CAUSE NOTICE ISSUED BY THE EXCISE DEPARTMENT WHICH WAS DULY RESPONDED AND THE EXPLANATION OF THE ASSESSEE HAS BEEN ACCEPTED BY THE EXCISE AUTHORITIES. THE DECISION RELIED UPON BY THE ASSESSING OFFICER FOR DISALLOWING THE CLAIM HAVING DISTINGUISHABLE FACTS ARE AL SO NOT RELEVANT AND DISCUSSING THE SAME THE LEARNED CIT(APPEALS) HAS RIGHTLY COME TO THE CONCLUSION THAT THE ASSESSEE WAS ELIGIBLE FOR THE CLAIMED DEDUCTION UNDER SEC. 80IB OF THE ACT BEING INVOLVED IN THE MANUFACTURING. THE LEARNED CIT(APPEALS) HAD ALSO I SSUED A LETTER TO THE EXCISE DEPARTMENT ON 23.11.2012 TO ASCERTAIN THE FINAL OUTCOME OF THE SHOW - CAUSE NOTICE ISSUED BY THEM TO THE ASSESSEE BUT THEY DID NOT BOTHER TO RESPOND THE SAME. 12. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT THE FIRST APPELLA TE ORDER ON THE ISSUE IS COMPREHENSIVE AND REASONED ONE AND IT IS ALSO BASED 13 UPON THE RATIOS LAID DOWN IN SEVERAL DECISIONS FOLLOWED BY HIM. THERE IS NO DISPUTE THAT ACTIVITIES OF THE ASSESSEE ON THE FILMS PURCHASED BY IT FROM JINDAL POLYESTER LTD. GO THRO UGH DIFFERENT ACTIVITIES LIKE ANTI - STATIC/CORONA TREATMENT/QUOTING; SLITTING/CUTTING/REBINDING OF TREATED FILMS; PACKING OF FINISHED PRODUCTS, FINISHED GOODS (CORONA TREATMENT FILMS) AND THEN DISPATCH. THUS, THE FILMS USED AS RAW - MATERIAL IS CONVERTED INTO ENTIRELY A NEW PRODUCT USEFUL FOR ITS CUSTOMER FOR PRINTING THE SAME USEABLE AS WRAPPERS FOR THE PRODUCTS OF ITS CUSTOMERS LIKE UNCLE CHIPS/LAYS. THE PACKETS CONTAINING THE PRODUCTS OF ITS CUSTOMERS ARE MADE OF THE SAME FILMS PRODUCED BY THE ASSESSEE AFTE R PUTTING ITS ACTIVITIES DISCUSSED ABOVE ON THE SAID RAW - FILMS PURCHASED FROM JINDAL POLYESTER LTD. IT HAS NOT BEEN REBUTTED BY THE REVENUE THAT THE RAW - MATERIAL IS OF SUCH QUALITY THAT NO PRINTING CAN BE DONE ON THE SAME AND IT IS POSSIBLE ONLY AFTER THE OUTPUT MADE BY THE ASSESSEE THROUGH THE ABOVE DISCUSSED PROCESS OF THE FILMS WHICH BECOME READY FOR THE METALLIC QUOTING ON WHICH FINAL PRINTING TAKES PLACE. THUS, WE FIND THAT THE END - PRODUCT HAS DIFFERENT IDENTITY AFTER THE MANUFACTURING PROCESS OF THE ASSESSEE. BESIDES, IN THE EARLIER ASSESSMENT YEARS 2001 - 02 AND 2002 - 03, THE REVENUE ITSELF HAS ACCEPTED THE CLAIMED DEDUCTION UNDER SE C. 80IB OF THE ACT OF THE ASSESSEE ON THE SAME MANUFACTURING PROCESS AND WHEN THERE IS NO CHANGE IN THOSE FACTS OF THE CAS E, THE REVENUE IS NOT JUSTIFIED IN DEVIATING 14 FROM ITS STAND . WE THUS DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER HOLDING THE ASSESSEE ELIGIBLE FOR THE CLAIMED DEDUCTION UNDER SEC. 80IB OF THE ACT AS THE ACTIVITIES WERE AMOUNTING TO MANUFACTURING. TH E SAME IS UPHELD. THE GROUNDS RAISING THE ISSUE IN THE APPEALS PREFERRED BY THE REVENUE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION ARE THUS DISMISSED. 13. THE OTHER GROUNDS RAISED IN THE APPEALS OF THE REVENUE IN THE ASSESSMENT YEARS 2006 - 07, 2007 - 08 AND 2008 - 09 IS REGARDING THE VALIDITY OF ACTION OF THE LEARNED CIT(APPEALS) IN DELETING THE ADDITION MADE ON ACCOUNT OF SALES TREATED AS UNEXPLAINED RECEIPTS. 14. AT THE OUTSET OF HEARING, THE LEARNED AR POINTED OUT THAT THE ISSUE RAISED HAS ALREADY B EEN DECIDED BY THE DELHI BENCH OF THE ITAT IN FAVOUR OF THE ASSESSEE IN THE CASE OF DCIT VS. NORTHERN STRIPS LTD. AND ORS. ITA NOS. 1269, 1270 AND 1271/DEL/2013 (ASSESSMENT YEARS 2006 - 07 TO 2008 - 09) VIDE ORDER DATED 23.9.2014, WHICH HAS BEEN NOW UPHELD B Y THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI VIDE ITS ORDER DATED 21.8.2015 IN ITA NOS. 365/2015 & ORS. 15 1 5 . THE LEARNED CIT(DR) PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT THE ASSESSING OFFICER HAD MADE ADDITIONS ON ACCOUNT OF RECEIPTS FROM THE BANK ACCOUNT OF SHRI RAVINDER YADAV. THE DEPARTMENT HAD MADE AN INVESTIGATION IN RESPECT OF BANK ACCOUNT OF MR. RAVINDER YADAV, WHEREIN IT WAS TRANSPIRED THAT HE WAS DEPOSITING HUGE AMOUNT OF CASH IN THE BANK ACCOUNT AND GOT DEMAND DRAFT AND PAY ORDER ISSUED IN THE NAME OF DIFFERENT PARTIES. THE LEARNED CIT(APPEALS) WITHOUT APPRECIATING THIS MATERIAL ASPECT OF THE ISSUE HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED RECEIPTS. 16. ON HAVING GONE THROUGH THE ORDER S OF THE AUTHORITIES BELOW, WE FIND THAT ON BEING ASKED BY THE INVESTIGATING AGENCY, MR. YADAV STATED THAT HE USED TO WORK FOR M/S. SWASTIK PIPES LTD., HE WAS GETTING THE CASH FROM THE EMPLOYEES OF THIS GROUP COMPANIES AND DEPOSITED THE SAME IN THE BANK AC COUNT FOR GETTING THE DEMAND DRAFT /PAY ORDERS ISSUED. IN THIS ACTIVITY, MR. YADAV USED TO GET A COMMISSION @ RS.250 PER ONE LAC RUPEES. AS PER HIS STATEMENT, HE WAS CARRYING OUT THIS ACTIVITY FOR THREE COMPANIES I.E. ASSESSEE COMPANY, M/S. SUPER PLASTIC CO ATS PVT. LTD., M/S. NORTHERN STRIPS LTD. AND M/S. SWASTIK PACKAGING. THE ASSESSING OFFICER ON THE BASIS OF STATEMENT OF MR. YADAV WORKED OUT THE DETAILS OF MONEY TRANSFERRED FROM HIS BANK 16 ACCOUNT TO THE BANK ACCOUNT OF THE ABOVE THREE ENTITIES AND CONSEQ UENTLY ASKED EACH OF THESE COMPANIES TO FURNISH THE DETAILS OF THE TREATMENT BEING GIVEN ABOUT THE RECEIPTS OF SUCH MONEY IN THEIR BOOKS OF ACCOUNT. THE ASSESSEE COMPANY HAD STATED THAT THEY HAD RECEIVED THESE MONEYS BY WAY OF DEMAND DRAFT/PAY ORDERS WHICH WERE ISSUED FROM THE BANK ACCOUNT OF MR. RAVINDER YADAV BUT THESE MONEYS HAD BEEN DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AS SALES AND DETAILS IN THIS REGARD WERE FURNISHED. THE LEARNED CIT(APPEALS) HAS ACCEPTED THE SUBMISSIONS OF THE ASSESSEE WITH THI S FINDING THAT MR. YADAV WAS ACTING AS COMMISSION AGENT FOR PURCHASING AND SUPPLYING THE BANK DRAFT/PAY ORDERS TO VARIOUS PARITIES AGAINST CASH INCLUDING THE ASSESSEE AND THAT THERE WAS NO BUSINESS OF THE ASSESSEE COMPANY OTHER THAN TRADING AND MANUFACTURI NG OF POLY FILMS AND RELATED PRODUCTS. THUS, IT IS NOT SUSTAINABLE TO HOLD THAT THE ENTIRE RECEIPTS ARE TAXABLE AS UNEXPLAINED DEPOSITS. THE LEARNED CIT(APPEALS) NOTED FURTHER THAT ADDITION OF BANK CREDIT, ITS PEAK AND PROFIT ALREADY HAVING BEEN TAXED IN THE HANDS OF MR. YADAV CANNOT BE SUSTAINED IN THE HANDS OF THE ASSESSEE COMPANY. UNDER SIMILAR SET OF FACTS IN THE CASE OF NORTHERN STRIPS LTD. (SUPRA), THE DELHI BENCH OF THE ITAT HAS DECIDED AN IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE UPHOLDING THE FIRS T APPELLATE ORDER DELETING SIMILAR ADDITION. THE APPEALS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE ITAT IN THAT CASE HAVE 17 ALSO BEEN REJECTED BY THE HON'BLE JURISDICTIONAL HIGH COURT OF DELHI VIDE THIS ORDER DATED 21.8.2015 (SUPRA). WE THUS DO NOT F IND INFIRMITY IN THE FIRST APPELLATE ORDER ON THE ISSUE WHICH IS COMPREHENSIVE AND REASONED ONE AND IN ABSENCE OF REBUTTAL OF THE ABOVE DISCUSSED FACTS NOTED BY THE LEARNED CIT(APPEALS) IN THE PRESENT CASE. THE SAME IS UPHELD. THE GROUNDS INVOLVING THE ISS UE ARE ACCORDINGLY REJECTED. 1 7 . IN RESULT, THE APPEAL S FILE D BY THE REVENUE ARE DISMISSED AND THOSE FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 . 0 3 . 201 6 SD/ - SD/ - ( O.P . K A NT ) ( I.C. UDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 / 0 3 /201 6 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR 18 DATE DRA FT DICTATED DIRECTLY ON COMPUTER 2 9 . 0 3 .201 6 DRAFT PLACED BEFORE AUTHOR 2 9 . 0 3 .2016 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 2 9 .03 .2016 APPROVED DRAFT COMES TO THE SR.PS/PS 2 9 . 0 3 . 2016 KEPT FOR PRONOUNCEMENT ON 30 .03 .2016 FILE SENT TO THE BENCH CLERK 31 . 0 3 .2016 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.