ITO, Haridwar V. M/s. Laxmi Electronics, Haridwar

ITA 2528/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86609 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Business income; Document seized; Opportunity of being heard; Principle of natural justice; Assessment record; Documents seized
• Section: 143(3); 133(6); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D , NEW DELHI) BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 2528/DEL/2013 ASSESSMENT YEAR : 2009-10 ITO, WARD-1, VS. M/S. LAXMI ELECTRONICS, HARDWAR, F-15, INDUSTRIAL AREA, HARDWAR GIR / PAN:AACFL6648R I.T.A.NO. 2818/DEL/2013 (ASSESSMENT YEAR 2009-10) M/S. LAXMI ELECTRONICS, VS. ITO, WARD-1, F-15, INDUSTRIAL AREA, HARDWAR HARDWAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAURAV DUDEJA, SR. DR RESPONDENT BY : SHRI ASHWANI TANEJA, ADV. ORDER PER T.S. KAPOOR, AM: THESE ARE CROSS APPEALS FILED BY REVENUE AND ASSES SEE AGAINST THE ORDER OF LD. CIT(A) DATED 13.02.2013. THE GROUNDS OF APPEAL TAKEN BY REVENUE AS WELL AS BY ASSESSEE ARE REPRODUCED BELOW : I) I.T.A.NO. 2528/DEL/2013: I. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN ALL OWING THE DEDUCTION U/S 80-IC WITHOUT APPRECIATING THE FACTS THAT THE M ANUFACTURING ACTIVITIES AS CLAIMED BY THE ASSESSEE ARE NOT PROVE D ON THE BASIS OF EVIDENCE/ DOCUMENTS FURNISHED BY THE ASSESSEE FIRM. ITA NO.2528.2818/DEL/2013 2 2. THE LD. CIT (A) ERRED IN LAW AND ON FACTS IN ALL OWING THE RELIEF AGAINST THE ADDITION MADE IN THE CASE OF UNCONFIRME D SUNDRY CREDITORS WITHOUT APPRECIATING THE FACTS THAT THE NOTICES U/S 133(6) SENT TO THE PARTIES FROM WHOM SO CALLED CONFIRMATIONS WERE FILE D BY THE ASSESSEE WERE RETURNED UN- SERVED WITH THE POSTAL REMARK THA T THE PARTIED ARE NOT KNOWN INCOMPLETE ADDRESS. THEREFORE THE CONFI RMATIONS FILED BY THE ASSESSEE ARE NOT RELIABLE. 3. THAT THE ORDER OF THE LD. CIT(A) BE SET-ASIDE A ND THAT OF THE AO BE RESTORED. II) I.T.A.NO. 2418/DEL/2013: 1.THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT DEL ETING THE ENTIRE ADDITION OF RS. 3,69,73,180/- MADE BY LD. A.O. AND THAT TOO BY HOLDING THAT SUFFICIENT OPPORTUNITY OF HEARING WAS PROVIDED BY LD. AO. 2. THAT IN ANY VIEW OF THE MATTER AND IN ANY CASE, THE ACTION OF LD. CIT(A) IN SUSTAINING THE PART OF TOTAL ADDITION OF RS. 3,69,73,1801- MADE BY LD. A.O. IS BAD IN LAW AND AGAIN T THE FACT S AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLO WANCE OF RS.5,20,5501- U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. 4. THAT IN ANY VIEW OF THE MATTER AND IN ANY CASE, THE ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.5,20,55 01- U/S 40(A)(IA) IS BAD IN LAW AND AGAINST THE FACTS AND C IRCUMSTANCES OF THE CASE. 5. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF T HE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN PASSING THE IMPUGNED ORDER CONTRARY TO LAW AND FACTS AND WITHOUT PROVIDI NG ADEQUATE OPPORTUNITY OF HEARING AND WITHOUT CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING DEDUCTIO N U/S 80-IC AT RS.75,76,278/-. THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY. AS PER ITA NO.2528.2818/DEL/2013 3 FACTS NOTED IN ASSESSMENT ORDER, THE ASSESSEE HAD C LAIMED INCOME FROM RUNNING A BUSINESS UNDERTAKING IN THE NAME AND STYL E OF M/S. LAXMI ELECTRONICS, F-15, INDUSTRIAL AREA, HARDWAR THE NET INCOME OF WHICH WAS CLAIMED TO BE EXEMPT U/S 80-IC OF THE ACT. DURING ASSESSMENT PROCEEDINGS, THE A.O. DISALLOWED THE CLAIM OF ASSESSEE U/S 80-IC BY NARRATING FOLLOWING OBJECTIONS IN THE ASSESSMENT ORDER: 1. THE ASSESSEE HAS NOT PRODUCE STOCK REGISTER ETC . 2. THE RECORDS OF THE ASSESSEE HAS SHOWN MAXIMUM PU RCHASE AT FARIDABAD AND NOT IN HARDWAR, WHEREAS ASSESSEE CLAI MED DEDUCTION U/S 80LC AGAINST NOTIFIED AREA IN HARDWAR DISTRICT IN UTTRAKHAND STATE. THE ASSESSEE IS DOING BUSINESS AT FARIDABAD WHERE HE HAS PURCHASED RAW MATERIALS AND MANUFACTURING ACTIVITY ON IT AT FARIDABAD. THERE IS NO EVIDENCE THAT MANUFACTURING HAS BEEN PERFORMED IN NOTIFIED AREA AT HARDWAR. 3. THAT THE ASSESSEE HAS NOT PRODUCED ANY TRANSPORT BILL IN SUPPORT OF MOVEMENT OF RAW MATERIAL. 4. IN SOME BILLS ASSESSEE MENTIONED BRANCH OFFICE P LOT NO-36, GROUND FLOOR, NEW DLF INDUSTRIAL AREA FARIDABAD AND OFFICE F-15, INDUSTRIAL AREA HADIWAR, THERE IS NO ANY MENTIONING OF THE PLACE FROM WHERE THE SALE WAS MADE BUT MERELY MENTIONED THE DE STINATION ADDRESS AS F-15, HARDWAR WHICH IS NOT POSSIBLE TO D ELIVER. 5. THE ASSESSEE FAILED TO FURNISH THE DETAILS OF IN PUT VAT. 6. THE ASSESSEE ALSO FAILED TO ESTABLISH THE ELECTR ICITY BILL IN ACCORDANCE WITH ITS CLAIMED MANUFACTURING ACTIVITIE S. 7. THE ASSESSEE HAS CLAIMED AS WINDUP ITS ACTIVITY THAT EVEN NO ONE COULD INVESTIGATE THE ACTUAL ACTIVITY OF THE AS SESSEE AT THE UNIT SITUATED AT HARDWAR. THE ASSESSEE HAS FURNISHED SOM E BILLS FOR THE MACHINERY PURCHASED WHICH COULD NOT BE VERIFIED FRO M THE PREMISES AS THE BUSINESS HAS BEEN CLAIMED AS CLOSED AND ALSO SEEN THAT BILLS FURNISHED BY THE ASSESSEE THERE IS NO STAMPING OF C HUNIGI OR CHOWKI OF TRADE TAX DEPARTMENT.' IN THE LEDGER COPY OF MAC HINERY THE PAYMENT HAVE BEEN SHOW FROM CANARA BANK WHICH BANK ACCOUNT IS NOT APPEAR IN THE BALANCE SHEET. 8. ASSESSEES HAVE NO ESI REGISTRATION IN SUPPORT OF LABOUR ENGAGED AND PAYMENT TO THEM AN ALSO NO ANY BILLS VO UCHER FILED IN SUPPORT OF WAGES PAYMENT SHOWN IN P & L ACCOUNT. ITA NO.2528.2818/DEL/2013 4 9. FOR VERIFICATION OF BUSINESS ACTIVITIES THE ITI OF THIS OFFICE HAS VISITED THE BUSINESS PREMISES WHICH ADDRESS PROVIDE D BY THE ASSESSEE AND REPORTED THAT THE BUSINESS OF THE ASSESSEE HAS SHIFTED FROM THIS BUILDING. 10. IN SUPPORT OF HIS BUSINESS DISCONTINUATION NO I NTIMATION FOR BUSINESS DISCONTINUATION AND SALES OF MACHINERY HAS BEEN FILED BY THE ASSESSEE. 11. MAJOR PURCHASE HAS BEEN SHOWN BY THE ASSESSEE F ROM M/S LAXMI ENTERPRISES WHO IS THE PARTNER OF THE ASSESSE E FIRM AND DOING BUSINESS OF MANUFACTURING OF ELECTRICAL ITEMS MENTI ONED IN THE AUDIT REPORTS OF M/S LAXMI ENTERPRISES, AND NOT CLAIMED D EDUCTION U/S 80RE AS THE SAME IS NOT SITUATED UNDER NOTIFIED AREA. 12. ON CONFIRMATION FROM THE PARTY FROM WHOM PURCHA SE SHOWN BY THE ASSESSEE MAJOR DIFFERENCE FOUND IN THE PURCHASE LEDGER OF THE ASSESSEE AND IN THE BOOKS OF PARTY FROM WHOM PURCHA SES SHOWN. 13. THE PARTY FROM WHOM CONFIRMATION HAVE BEEN RECE IVED MENTIONED IN HIS LETTER PAD THEY ARE MANUFACTURER N OT TRADER. IT APPEARS THAT ASSESSEE HAS PURCHASE OF GOODS NOT RAW MATERIAL FOR MANUFACTURING ACTIVITY. 14. TRADING ACCOUNT ASSESSEE HAS DEBITED JOB WORK E XPENSES AT RS. 14,53,890/- WHICH REVEALS THAT ASSESSEE HAS DOING B USINESS ON JOB WORK BASIS NOT HE WAS DOING MANUFACTURING. 3. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.15.62 CRORES UNDER THE HEAD PURCHASES AND ASSESS EE WAS UNABLE TO FURNISH COMPLETE BILLS AND VOUCHERS, THEREFORE, TO VERIFY T HE PURCHASES DECLARED BY ASSESSEE, NOTICES U/S 133(6) WERE ISSUED TO PARTIES FROM WHOM PURCHASES WERE MADE. ON THE BASIS OF CONFIRMATIONS RECEIVED FROM VARIOUS PARTIES, THE A.O. OBSERVED THAT THERE WERE DIFFERENCES BETWEEN T HE AMOUNT OF PURCHASES DECLARED BY ASSESSEE AND THOSE CONFIRMED BY THE PAR TIES. HE ARRIVED AT A TOTAL DIFFERENCE OF RS.3,69,73,180/- AS NOTED IN PA GE 3 OF ASSESSMENT ORDER. THEREFORE, ASSESSEE WAS SHOW CAUSED AS TO WHY THE D IFFERENCE BE NOT DISALLOWED AGAINST THE PURCHASES BUT NO COMPLIANCE IN RESPECT OF SUCH SHOW CAUSE NOTICE WAS MADE AND THEREFORE, A.O. MADE ADDI TION OF THAT AMOUNT. ITA NO.2528.2818/DEL/2013 5 4. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAD DECLARED SUNDRY CREDITORS AT RS.5,48,89,899/-. THE ASSESSEE WAS RE QUIRED TO FURNISH COMPLETE POSTAL ADDRESS AND CONFIRMATION FORM SUNDRY CREDITO RS. IN COMPLIANCE, ASSESSEE FURNISHED POSTAL ADDRESS AND ALSO FILED CO NFIRMATION LETTERS ON THE LETTER HEAD OF THE PARTIES. THE A.O. SUSPECTED THE SE CONFIRMATIONS AND, THEREFORE, ISSUED NOTICES U/S 133(6) TO THE CREDITO RS FOR CONFIRMATION OF BALANCES. IN RESPONSE TO THE NOTICES, ONLY 5 PARTI ES RESPONDED WHEREIN HE FOUND CERTAIN DISCREPANCIES BUT DID NOT MAKE ANY AD DITION ON ACCOUNT OF DIFFERENCES AS HE HAD ALREADY MADE ADDITION EARLIER IN RESPECT OF SUCH DIFFERENCES OUT OF PURCHASES. IN RESPECT OF OTHER PARTIES FROM WHOM CONFIRMATIONS WERE NOT RECEIVED, THE A.O. SHOW CAUS ED THE ASSESSEE AS TO WHY THE AMOUNT OF RS.4.65.11.519/- REPRESENTING CRE DIT BALANCES OF THOSE PARTIES BE NOT DISALLOWED ON ACCOUNT OF BOGUS LIABI LITY. IN COMPLIANCE TO THE SAME, NOBODY APPEARED OR FIELD ANY SUBMISSION AND, THEREFORE, THE A.O. MADE ADDITION ON ACCOUNT OF UNCONFIRMED CREDITS. 5. THE A.O. FURTHER MADE DISALLOWANCES FOR VIOLATIO NS PROVISIONS OF SECTION 40(A)(IA) FOR PAYMENTS MADE BY ASSESSEE ON ACCOUNT OF JOB WORK AND FREIGHT CHARGES. AGGRIEVED, THE ASSESSEE FILED APP EAL BEFORE LD. CIT(A) AND MADE VARIOUS SUBMISSIONS. THE ASSESSEE EXPLAINED C OMPLETE PROCESS OF MANUFACTURE OF GOODS AND ALSO FIELD VARIOUS SUBMISS IONS. THE CRUX OF SUBMISSIONS AS REPRODUCED IN LD. CIT(A)S ORDER ARE REPRODUCED BELOW: 2. THE RAW MATERIAL USED IN EVERY STEP OF MANUFACT URING HAS BEEN PASTED IN FRONT OF THE MANUFACTURING STEP. ALSO, W E ARE SUBMITTING THE BILL OF MATERIAL REQUIRED FOR THE PRODUCT OF DIFFER ENCE SPECIFICATION AS ANNEXURE 2. 3. THE EXCISE SEARCH/SURVEY WAS CONDUCTED AT THE APPELLANT PREMISES AT F 15, INDUSTRIAL AREA, HARIDWAR ROAD WH EREIN THE PANCHNAMA RECORDED THE ITEMS AND RECORDS SEIZED FRO M THE AFORESAID PREMISE OF THE APPELLANT WHICH INCLUDES RAW MATERIA L REGISTER, STOCK ITA NO.2528.2818/DEL/2013 6 REGISTER, INVOICE BOOK ETC. ALSO, A STATEMENT OF TH E PERSON IN-CHARGE OF THE FACTORY AT THE TIME THE SURVEY WAS ALSO RECORDE D. THE TYPE AND QUANTUM OF THE RECORDS SEIZED FURTHER SUBSTANTIATE THE APPELLANTS' CONTENTION AND CLAIM THAT MANUFACTURING ACTIVITIES WERE BEING CARRIED ON AT THE AFORESAID PREMISE, SINCE THE SURVEY/SEARC H WAS CARRIED OUT BY AN EXTERNAL GOVERNMENT AUTHORITY BEING CENTRAL- EXCISE DEPARTMENT. COPY OF THE ABOVE IS ATTACHED HEREWITH FOR YOUR REFERENCE AS ANNEXURE 3. 4. FURTHER TO SUBSTANTIATE THE AUTHENTICITY IN REGA RD TO THE PURCHASE OF RAW MATERIAL AND SALE OF FINISHED PRODUCTS AT THE F ACTORY AT F-15 INDUSTRIAL AREA HARDWAR, WE SHALL LIKE SUBMIT THAT THE SALES TAX ASSESSMENT OF THE FIRM HAS BEEN COMPLETED VERY RECE NTLY AFTER VERIFYING ALL THE RELEVANT RECORDS BY DEPUTY COMMIS SIONER OF COMMERCIAL TAX, HARIDWAR THE ASSESSMENT ORDER OF T HE VAT TAX FOR THE YEAR UNDER CONSIDERATION IS BEING ATTACHED HERE WITH AS ANNEXURE 4. 5. THE PLACE WHERE MANUFACTURING ACTIVITIES WERE BE ING CARRIED ON BY THE APPELLANT WAS RENTED UNDER THE PLOT WAS U NDER THE JURISDICTION OF UPSIDC. AS PER REGULATIONS AND NORM S UPSIDC IS TO BE INFORMED WHEN MANUFACTURING ACTIVITIES ARE DISCO NTINUED. THE APPELLANT HAD DULY INFORMED UPSIDC AND COPY OF THE APPLICATION SUBMITTED TOGETHER WITH THE CHALLAN FOR FEE DEPOSIT ED WITH THE GOVERNMENT IS ATTACHED HEREWITH FOR YOUR VERIFICATI ON AS ANNEXURE 5. 6. THE APPELLANTS HAD BEEN CARRYING ON MANUFACTURIN G ACTIVITIES IN NOTIFIED AREA. A CERTIFICATE TO THIS EFFECT ISSU ED BY THE LEKHPAL (TEHSILDAR, HARIDWAR) IS BEING ATTACHED HEREWITH AS ANNEXURE 6. 7. THE APPELLANT FIRM HAS OBTAINED A CERTIFICATE F ROM THE CHARTERED ENGINEER WHO HAD PERSONALLY VISITED THE F ACTORY OF THE APPELLANT AT F-15 INDUSTRIAL AREA HARDWAR AND HAD V ERIFIED THE INSTALLATION OF PLANT & MACHINERY AND RAW MATERIAL AT THE UNIT. COPY OF THE CERTIFICATE DATED 30.03.2008 GIVEN BY THE C HARTERED ENGINEER IS BEING ATTACHED HEREWITH FOR YOUR REFERENCE AS AN NEXURE 7. 8. THE APPELLANT WAS GETTING JOB WORK DONE FOR A S MALL PART OF THE ENTIRE MANUFACTURING PROCESS WHICH IS CALLED TORRID CORE (T-IO) WHICH INVOLVES WINDING THREE TYPES OF WIRES ON A BA RE CORE WHERE NUMBER OF TURNS GIVEN TO EACH WIRE DEPENDS ON THE W ATTAGE OF THE MOUNTED PCB ORDERED BY THE CUSTOMER. THE ENTIRE MANUFACTURING PROCESS IS DONE ON A CONVE YOR BELT WHICH IS WORKED UPON BY SEVERAL WORKERS AT THE SAME TIME AND THUS WINDING OF ITA NO.2528.2818/DEL/2013 7 THE WIRES ON THE BARE CORE IS SUB-LETTED TO ENSURE CONTINUOUS AND UNINTERRUPTED MANUFACTURE. WINDING OF THE WIRES ON THE BARE CORE IS ALSO TIME CONSUMING AND THEREFORE TO EXPEDITE THE M ANUFACTURING PROCESS THE APPELLANT GETS JOB WORK DONE FOR THE SA ME. FURTHER, TORRID CORE IS NOT READILY AVAILABLE IN THE MARKET. A SAMPLE OF TORRID CORE (T-IO) IS ENCLOSED HEREWITH AS ANNEXURE 8 YOUR VERIFICATION. 9. DECLARATION UNDER NOTIFICATION 50/2003 WITH THE DEPARTMENT OF EXCISE HAS BEEN FILED BY THE APPELLANT. COPY OF TH E SAME IS ATTACHED HEREWITH FOR YOUR REFERENCE AS ANNEXURE 9. THUS FROM OUR ABOVE SUBMISSIONS IT IS EVIDENT THAT MANUFACTURING ACTIVITIES L1'ERE BEING CARRIED ON BY THE APPELLANT AT THE AFORESAID PREMISES AND THERE IS NO AMBIGUITY IN THE APPELLANT S' CONTENTION AND ITS CLAIM FOR DEDUCTION UNDER 80 IC. THE FACT THAT THE APPELLANT WAS CARRYING ON MANUFACTURING ACTIVITIES AT F 15, INDUS TRIAL AREA, HARIDWAR HAS BEEN DULY SUBSTANTIATED WITH THE DOCUM ENTARY EVIDENCE BEING SUBMITTED HEREWITH AND THUS DEDUCTION U/S 80I C IS TENABLE AND CANNOT BE DISALLOWED.' 6. LD. CIT(A) OBTAINED REMAND REPORT FORM A.O. THE RELEVANT OBSERVATION OF A.O. IN THE REMAND REPORT AS NOTED B Y LD . CIT(A) IN HIS ORDER IS REPRODUCED BELOW: IT IS FURTHER SUBMITTED THAT THE ASSESSEE FIRM VID E ITS WRITTEN SUBMISSION DATED 14.09.2011 MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD FURNISHED THE CHART SHOWING THE MAN UFACTURING PROCESS. COPY OF THE LETTER IS ENCLOSED COPIES OF T HE VAT RETURNS WERE ALSO FURNISHED ALONG WITH THIS LETTER. THE SALES AN D PURCHASES MENTIONED IN THE COPY OF THE ORDER PASSED U/S 25(7) READ WITH SECTION 31 OF VAT ACT PASSED ON 28.12.2012 BY THE DC (ASSES SMENT), COMMERCIAL TAX, HARIDWAR FURNISHED BEFORE YOUR GOOD -SELF TALLIED WITH THE SALES AND PURCHASES SHOWN IN THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING ON 31.03.2009 RELEVANT TO ASSESSMEN T YEAR 2009-10. TOTAL SALES DECLARED BY THE ASSESSEE BEFORE THE VAT TAX AUTHORITIES AT RS.17,33,1 2,706/- AS DECLARED IN THE PROFIT & LOSS ACCOUNT FOR THE FINANCIAL YEAR 2008-09 RELEVANT TO ASSESSMENT YEAR 2009-10. ITA NO.2528.2818/DEL/2013 8 PURCHASES DECLARED AT RS.15,84, 67,764/- TALLIED WI TH THE PURCHASES SHOWN IN THE PROFIT & LOSS ACCOUNT. 7. LD. A.R. WAS ASKED TO COMMENT ON THIS REPORT. T HE REJOINDER TO REMAND REPORT IS REPRODUCED AS UNDER: 1. AS REGARDS THE POINT NO.1 OF THE PAGE 2 OF THE ASSESSMENT ORDER I SHALL LIKE TO SUBMIT THAT THE DETAILS OF ST OCKS WERE SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THI S FACT HAS BEEN CONFIRMED BY THE LD. I.T.O. IN POINT NO.1 OF HIS CO MMENTS DATED 23.01.2013 SUBMITTED TO YOUR GOODSELF. 2. AS REGARDS THE POINT NO.2 OF THE ASSESSMENT ORDE R, WE SHALL LIKE TO CLARIFY THAT THE MANUFACTURING PROCESS WAS EXPLA INED IN DETAIL DURING THE HEARING OF THE APPEAL BEFORE YOUR GOODSE LF ON 10.01.2013 AND 11.01.2013, SIR CERTIFICATE DATED 14.06.2006 WA S FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS CONFIRMING THA T THE FACTORY IS SITUATED AT F-15, VILLAGE MAYAPUR, KHASRA NO.45, TH IS FACT WAS ALSO CONFIRMED BY MR. GANGA SARAN GUPTA, OWNER OF THE SA ID PREMISES IN HIS OATH STATEMENT THAT MANUFACTURING WAS CARRIED O UT AND PLANT AND MACHINERY WAS ALSO INSTALLED, BOTH THE ABOVE CERTIF ICATE AND OATH STATEMENT ARE ALREADY ON THE ASSESSMENT RECORDS. F URTHER, WE HAD ALSO SUBMITTED DOCUMENTS RELATING TO AN EXCISE SURV EY CARRIED OUT AT F-15, INDUSTRIAL AREA, VIE ANNEXURE 3 OF OUR SUBMIS SIONS DATED 10.01.2013 WHICH ALSO PROVE THAT ACTUAL MANUFACTURI NG ACTIVITY WAS BEING CARRIED OUT AT F-15, INDUSTRIAL AREA, HARIDWA R. 3. FURTHER AS REGARDS THE POINT NO.3 OF THE ASSESSM ENT ORDER IT IS SUBMITTED THAT LD. INCOME TAX OFFICER IN HIS REPORT HAS CONFIRMED THAT THE DETAILS OF FREIGHT INWARDS ACCOUNT WAS FURNISHE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ARE AVAILABLE ON THE ASSESSMENT FILE. 4. AS REGARDS THE POINT NO. 4 OF THE ASSESSMENT ORD ER WE SHALL LIKE TO SUBMIT THAT SOME OF THE PURCHASES WERE MADE AT F ARIDABAD AND SOME AT HARIDWAR, HOWEVER ALL THE BILLS HAVE THE SA ME VAT NO OF BUYER LAXMI ELECTRONICS, HARIDWAR WHICH PROVES THAT ALL THE PURCHASES PERTAIN TO THE HARIDWAR UNIT IRRESPECTIVE OF WHETHER THE PURCHASES HAVE BEEN MADE AT FARIDABAD OR HARIDWAR, THUS NO NEGATIVE INFERENCE CAN BE DRAWN FROM THE SAME. 5. AS REGARDS THE POINT NO. 5 OF THE ASSESSMENT ORD ER, WE SHALL LIKE TO SUBMIT THAT THE COPIES OF THE VAT RETURNS SHOWIN G THE DETAILS OF INPUT CREDIT & OUTPUT WERE SUBMITTED DURING THE COU RSE OF ASSESSMENT ITA NO.2528.2818/DEL/2013 9 PROCEEDINGS AND A COMPLETE LEDGER ACCOUNT IN RESPEC T OF VAT PAYABLE WAS ALSO SUBMITTED THE LD ITO HAS NOW ENCLOSED THE COPIES OF THE SAME FOR YOUR KIND CONSIDERATIONS VIDE POINT NO. 5. MOREOVER THE VAT ASSESSMENT ORDER HAS BEEN PASSED IN WHICH THE DETAI LS OF VAT INPUT & OUTPUT ARE MENTIONED. THE COPY OF THE VAT ASSESSME NT ORDER HAS ALREADY BEEN SUBMITTED ALONG WITH OUR SUBMISSION DA TED 10.01.2013. 6. AS REGARDS THE POINT NO. 6 OF THE ASSESSMENT ORD ER WE SHALL LIKE TO SUBMIT THAT THE FACTORY OF THE APPELLANT WAS REN TED AND THE BILLS OF ELECTRICITY WERE IN THE NAME OF THE LANDLORD FURTHE R WE SHALL LIKE TO SUBMIT THAT THE COPY OF LEDGER ACCOUNT OF POWER & F UEL WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND EXP ENSES OF RS. 16,52,072/- HAS BEEN INCURRED ON POWER & FUEL AND E LECTRICITY EXPENSES HAS BEEN INCLUDED IN THIS ACCOUNT. COPY OF THE SAME IS AVAILABLE ON ASSESSMENT FILE, AS ALSO CONFIRMED BY THE LD. INCOME TAX OFFICER. 7. AS REGARDS THE POINT NO. 7 OF THE ASSESSMENT ORD ER WE SHALL LIKE TO SUBMIT THAT THE FACTORY OF THE APPELLANT FIRM HA S BEEN SHIFTED TO F- 32 INDUSTRIAL AREA HARIDWAR IN JUNE 2010. FURTHER A S PER THE OATH STATEMENT OF GANGA SARAN GUPTA (OWNER OF THE PREMIS ES AT F-15 INDUSTRIAL AREA HARIDWAR) WAS RECORDED IN WHICH HE MENTIONED THAT THE MANUFACTURING HAD BEEN CARRIED OUT AND PLANT & MACHINERY WERE INSTALLED. FURTHER AS REGARDS THE ADDITIONS TO MACH INERY WE SHALL LIKE TO SUBMIT THAT THE DURING THE YEAR UNDER CONSIDERAT ION NO ADDITIONS WERE MADE TO THE PLANT & MACHINERY THE ADDITIONS WE RE MADE IN THE EARLIER YEARS AND PAYMENT FOR THE SAME HAS BEEN MAD E FROM CANARA BANK ACCOUNT. THE COPY OF LEDGER ACCOUNT OF THE PLA NT & MACHINERY ALONG WITH BILLS OF PURCHASES HAS BEEN SUBMITTED DU RING THE ASSESSMENT PROCEEDINGS AND AVAILABLE ON FILE AND TH E SAME IS FURTHER SUBMITTED BEFORE YOUR GOODSELF VIDE REPLY DATED 10. 01.2013. THE CANARA BANK ACCOUNT IS NOT APPEARING IN THE BALANCE SHEET AS THE SAME HAS BEEN CLOSED PRIOR TO THE ASSESSMENT YEAR U NDER CONSIDERATION. 8. AS REGARDS THE POINT NO. 8 OF THE ASSESSMENT ORD ER WE SHALL LIKE TO SUBMIT THAT THE DETAILS OF LABOUR & WAGES HAS BE EN FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE SAME IS AV AILABLE ON THE ASSESSMENT FILE. THE COMMENTS SUBMITTED BY THE LD I . T. 0. HAVE ALSO CONFIRMED THIS FACT. ITA NO.2528.2818/DEL/2013 10 9. AS REGARDS THE POINT NO. 9 OF THE ASSESSMENT ORD ER, WE HAVE ALREADY SUBMITTED IN POINT NO. 7 ABOVE THAT THE FAC TORY OF THE ASSESSEE FIRM HAS BEEN SHIFTED . 10. AS REGARDS THE POINT NO. 10 OF THE ASSESSMENT O RDER WE SHALL LIKE TO SUBMIT THAT THE APPELLANT FIRM HAS FILED A DECLARATION DATED 09. 11.2010 WITH REGIONAL OFFICER UPSIDC HARIDWAR THAT THE FACTORY OF THE APPELLANT HAS BEEN SHIFTED COPY OF LETTER HAS A LSO BEEN FILED BY THE APPELLANT WITH YOUR GOODSELF VIDE ANUEX-S SUBMITTED ALONG WITH THE SUBMISSIONS DATED 10.01.2013. THE COPY OF THIS LETT ER IS ALSO ALREADY ON ASSESSMENT FILE AS CONFIRMED BY LD I. T. 0. IN H IS COMMENTS DATED 23/01/2013. 11 . AS REGARDS THE POINT NO. 1 I REGARDING THE PUR CHASES MADE FROM THE FIRM M/S LAXMI ENTERPRISES WE SHALL LIKE TO SUB MIT THAT THE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE APPELLA NT HAS MADE PURCHASES FROM VARIOUS PARTIES AND LAXMI ENTERPRISE S IS ONE OF THEM. FURTHER WE SHALL MENTION THAT THE FIRM M/S LAXMI EN TERPRISES HAS BEEN MANUFACTURING THE ITEM WHICH IS REQUIRED AS A RAW MATERIAL FOR THE MANUFACTURING OF MOUNTED PCB BY THE APPELLANT F IRM. THEREFORE THE PURCHASES MADE BY THE APPELLANT FIRM FROM THE F IRM M/S LAXMI ENTERPRISES ARE NORMAL BUSINESS TRANSACTIONS. 12. AS REGARD THE POINT NO. 12 OF THE ASSESSMENT OR DER WE SHALL LIKE TO SUBMIT THAT THE DETAILED REPLY HAS ALREADY BEEN GIV EN OR THIS VIDE OUR SUBMISSION DATED 23.11.2012. PRACTICALLY THERE WERE NO DIFFERENCES IN THE PURCHASES AND THE SAME HAS BEEN EXPLAINED AT LE NGTH BY US IN OUR EARLIER SUBMISSIONS. 13. AS REGARDS THE POINT NO. 1 3 WE SHALL LIKE TO S UBMIT THAT WE HAVE MADE PURCHASES OF RAW MATERIAL FOR THE PURPOSE OF M ANUFACTURE, IT DOES NOT MATTER WHETHER THE SUPPLIER IS A MANUFACTU RER OR TRADER OF THOSE ITEMS. HENCE THIS OBSERVATION OF THE ASSESSIN G OFFICER DOES NOT HAVE ANY BEARING IN OUR CASE. 14. AS REGARDS THE POINT NO. 14 REGARDING THE JOB WORK EXPENSES OF RS. 14,33,890/-DEBITED IN THE TRADING ACCOUNT, WE S HALL LIKE TO MENTION THAT THE TOTAL EXPENSES OF THE APPELLANT FIRM WERE RS.17,70,23,840/- AND THE JOB WORK EXPENSE OF RS.14,53,890/- AMOUNTS TO ONLY 0.82% OF THE TOTAL EXPENSES INCURRED AND CLAIMED BY THE APPE LLANT FIRM. THEREFORE, THE FINDING OF THE LD. A.O. THAT THE APP ELLANT FIRM HAS BEEN DOING THE BUSINESS ON JOB WORK BASIS DOES NOT HOLD GOOD AS IT IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND MATERIAL AVAILABLE ON RECORD. THE APPELLANT FIRM HAS BEEN GETTING DONE A VERY SMALL PART ITA NO.2528.2818/DEL/2013 11 OF THE MANUFACTURING PROCESS FROM OUTSIDE AND THE S AME HAS ALREADY BEEN EXPLAINED IN DETAIL DURING THE COURSE OF HEARI NG BEFORE YOUR GOODSELF. 8. CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTAN CES OF THE CASE, LD. CIT(A) ALLOWED RELIEF TO THE ASSESSEE ON ACCOUNT OF DEDUCTION U/S 80-IC OF THE ACT. REGARDING THE ADDITION MADE BY A.O. BY DI SALLOWING A PART OF PURCHASES ON ACCOUNT OF DIFFERENCE IN PURCHASES CLA IMED AND AS CONFIRMED BY PARTIES, THE LD. CIT(A) ALLOWED PART RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: 4.0 SECOND GROUND CHALLENGES THE ADDITION OF RS. 3,69,73,180/-- BY DISALLOWING CERTAIN PURCHASES ON THE GROUND THAT TH E PURCHASES WERE ALLEGEDLY INFLATED. THE LD. AO ISSUED NOTICES TO TH E PARTIES AND ON THE BASIS OF REPLIES RECEIVED FROM THEM HE WORKED OUT THE ALL EGED INFLATION IN PURCHASES. THE LD. ARS ON THE OTHER HAND, HAVE STRO NGLY REFUTED THIS ALLEGATION AS UNDER:- (A) 'IN THE POINT NO. 4 OF THE ASSESSMENT ORDER I T IS MENTIONED THAT WHEN THE NOTICES VIS 133 (6) WERE ISSUED TO THE FOL LOWING PARTIES BY WHOM PURCHASES HAVE BEEN MADE THEY HAD CONFIRMED LESS PU RCHASES AS COMPARED TO WHAT IS CLAIMED BY THE APPELLANT. THE AMOUNT CLA IMED AND AMOUNT CONFIRMED AS PER ASSESSMENT ORDER IS GIVEN IN THE T ABLE HEREUNDER: S.NO. PARTY AMOUNT AMOUNT DIFFERENCE CLAIMED CONFIRMED 1. M/S DEKE ELECTRONICS 15488288/- 5231150/- 10257138/- 2. M/S ELECTRONIC COMPONENT & 21075707/- 4203217 /- 16872490/- TUNERS 3. M/S INDOTECH MAGNETICS 11934542/- 4088922/- 7845620/- 4. M/S RAMAKRISHNA ELECTRO 17051808/- 16679213/ - 372595/- COMPONENTS (P)LTD. 5 . M/S APEX INDUSTRIES 1625337/- NIL 162533 7/- TOTAL 3,69,73,180/- CONSEQUENTLY THE LD. ASSESSING OFFICER MADE AN ADDI TION OF RS.3,69,73,180/- TO THE INCOME OF THE APPELLANT BEING THE AMOUNT EQU ALS TO THE PURCHASES CLAIMED AND PURCHASES CONFIRMED BY THE PARTIES. THE APPELLANT FIRM HAS NOT BEEN PROVIDED THE OPPORTUNITY TO RECONCILE THE FACT S & FIGURES AND TO CLARIFY THE ABOVE DIFFERENCES. THOUGH IT IS MENTIONED IN TH E ASSESSMENT ORDER THAT A SHOW CAUSE NOTICE DATED 21.12.2011 WAS ISSUED BUT N O SUCH NOTICE HAS BEEN ITA NO.2528.2818/DEL/2013 12 SERVED ON THE ASSESSEE AS THE NOTICE WAS SERVED BY AFFIXTURE AT THE FACTORY PREMISES. I SHALL ALSO LIKE TO DRAW YOUR ATTENTION TO THE FACT THAT IT OF THE INCOME TAX DEPARTMENT HAS VISITED THE FACTORY PREMI SES ON 16.1.2011 AND HAS REPORTED THAT THE BUSINESS OF THE APPELLANT FIR M HAS BEEN SHIFTED FROM F- 15 INDUSTRIAL AREA HARDWAR. THE REPORT OF THE ITI I S ON THE FILE OF THE LD. ASSESSING OFFICER MENTIONING THE FACT THAT THE PREM ISES OF THE APPELLANT HAVE BEEN SHIFTED. WHEN SUCH A REPORT WAS AVAILABLE ON T HE RECORDS THEN THE ISSUANCE OF NOTICE DATED 21.12.2011 ON THE SAME ADD RESS COULD NOT BE TREATED AS VALID AS THE SAME COULD NOT BE SERVED. T HE FINAL OPPORTUNITY WAS GIVEN TO THE APPELLANT BY NOTICE DATED 21.12.2011 W HICH AS STATED ABOVE IS NOT A VALID NOTICE AS THE SAME COULD NOT BE SERVED. THEREFORE, IT IS SUBMITTED THAT THE ASSESSMENT ORDER WAS PASSED WITHOUT PROVID ING A FINAL OPPORTUNITY TO THE APPELLANT. NOW MY SUBMISSION WITH REGARD TO THE ABOVE ADDITION OF RS.3,69,73,180/- IS AS UNDER: I SHALL LIKE TO BRING ON THE RECORD THE FACT THAT T HE LD. ASSESSING OFFICER HAS CALCULATED THE WRONG AMOUNT IN THE COLU MN NO. 3 OF THE ABOVE TABLE AS THE PURCHASES CLAIMED BY THE APPELLANT IS DIFFERENT FROM THE AMOUNT CALCULATED BY THE LD. ASSESSING OFFICER.' THE LD. A SSESSING OFFICER FAILED TO APPRECIATE THE FACT THAT THE CREDIT TOTAL OF THE LE DGER ACCOUNT SUBMITTED BY THE APPELLANT INCLUDES THE OPENING BALANCE CARRIED FORWARD FROM THE PRECEDING FINANCIAL YEAR. THERE IS ONE MORE FACT WH ICH 1 SHALL LIKE TO BRING ON RECORD THAT THE AMOUNT GIVEN IN THE COLUMN NO. 4 OF THE ABOVE TABLE IS ALSO NOT CORRECT AS IT IS THE YEAR END BALANCE OF L EDGER ACCOUNT AS SUBMITTED BY THE PARTY AND NOT THE AMOUNT OF SALES CONFIRMED BY THE PARTY DURING THE FINANCIAL YEAR 2008-09. THE ACTUAL PURCHASE FROM TH E ABOVE PARTIES AS CLAIMED BY THE APPELLANT AND AMOUNT CONFIRMED BY TH E PARTY IS GIVEN IN THE TABLE HEREUNDER: S.NO. PARTY AMT. CLAIMED AS PER ASSTT ORDER AMT. ACTUALLY CLAIMED AS PER LAXMI EL.BOOKS AMOUNT OF SALES REFLECTED IN PARTY LEDGER HARDWAR AMT. OF SALES AS REFLECTED IN PARTY LEDGER FARIDABAD TOTAL DIFFERENCE AS EXPLAINED IN RECONCILIATION ENCLOSED 1 M/S. DAKE ELECTRONICS 15488288 12605259 12605299 NIL 2 M/S. ELECTRONIC COMPONENT 21075707 17824370.71 1205513.17 16731930.42 1793744 3.59 -113072.88 ITA NO.2528.2818/DEL/2013 13 & TUNERS 3 M/S. INDOTECH MAGNETICS 11934542 9442915.59 809528.00 8803357.00 9667969 -1 69969.41 4 M/S. RAMAKRISHNA ELECTRO COMPONENTS P.LTD. 17051808 13660059.00 26059.00 13636605.00 13660059. 00 2605.00 5 M/S. APEX INDUSTSDRIES 1625337 2313275.04 NIL 2347231 2347231 -33955.96 THE ABOVE TABLE CLEARLY EXPLAINS THAT THE AMOUNT CA LCULATED BY THE LD. ASSESSING OFFICER AS PURCHASES CLAIMED IS NOT THE A CTUAL AMOUNT REFLECTED IN THE BOOKS OF M/S LAXMI ELECTRONICS AS WELL THE LEDG ER ACCOUNT BEING SUBMITTED BY THE DIFFERENT PARTIES. ALSO THE ABOVE TABLE MAKES IT CLEAR THAT THERE IS NO DIFFERENCE IN THE AMOUNT CLAIMED BY M/S LAXMI ELECTRONICS AND AMOUNT AS REFLECTED BY THE DIFFERENT PARTIES EXCEPT FOR FEW ENTRIES WHICH ARE CLEARLY EXPLAINED IN THE PARTY RECONCILIATION SUBMI TTED HEREWITH AS ANNEXURE BI TO B5. FURTHERMORE WHILE CALCULATING THE AMOUNT CLAIMED AS PURCHASES BY THE APPELLANT THE LD. ASSESSING OFFICER INCLUDED THE OP ENING BALANCE CARRIED FORWARD FROM PRECEDING FINANCIAL YEAR AND CALCULATE D THE AMOUNT 'OF PURCHASES CLAIMED AS GIVEN IN THE TABLE HEREUNDER. SIR IT IS EVIDENT THAT THE LD. ASSESSING OFFICER HAS NOT ACTED JUDICIOUSLY IN MAKING THE ADDITION. S.N. PARTY OPENING BAL. AS PER LAXMI EL. PURCHASE DURING THE YEAR AS PER LAXMI EL. DEBIT NOTE/CHEQUE REVERSED PAYMENTS MADE TO PARTIES HOW AMOUNT WRONGLY CALCULATED AS PER ASSESSMENT ORDER 1 M/S. DEKE ELECTRONICS 2878704 12605259 4325 0 15488288 2 ELECTDORNIC COMPONENT & TUNERS 2991628 17824371 259708 0 21075707 ITA NO.2528.2818/DEL/2013 14 3 INDOTECH MAGNETICS 2203735 9442916 287891 0 11934542 4 RAMAKRISHNA ELECTRO COMPONENTS P. LTD. 3116549 13660059 275200 0 17051808 5 APEX INDUSTRIES 0 2313275 0 1625337 1625337 IN THE ABOVE TABLE IT IS CLEARLY EXPLAINED THAT THE LD. ASSESSING OFFICER HAD CALCULATED THE AMOUNT OF PURCHASES CLAIMED BY NOT T AKING INTO ACCOUNT THE OPENING BALANCE AND ALSO IGNORED THE DEBIT NOTE ENT RIES AND TAKE THE FINAL TOTAL OF THE LEDGER ACCOUNT AS THE AMOUNT CLAIMED A S PURCHASES INSTEAD OF THE ACTUAL PURCHASES DURING THE YEAR REFLECTED IN T HE LEDGER ACCOUNT. FURTHER IN THE CASE OF M/S APEX INDUSTRIES THE LD. ASSESSIN G OFFICER HAS TAKEN THE DEBIT TOTAL AS REFLECTED IN THE LEDGER ACCOUNT OF T HE PARTY. M/S APEX INDUSTRIES CONFIRMED NIL SALES AS ENTIRE SALES MADE BY IT IS TO PLOT NO. 36 NEW DLF INDUSTRIAL AREA FARIDABAD ONLY. THEREFORE IT IS EVIDENT FROM THE ABOVE FACTS THAT T HE AMOUNT CLAIMED BY THE APPELLANT HAS BEEN WRONGLY CALCULATED BY THE LD. AS SESSING OFFICER AND ACTUALLY THERE IS NO DIFFERENCE BETWEEN AMOUNT OF P URCHASES AS SHOWN BY US AND AMOUNT OF SALES SHOWN BY THE ABOVE PARTIES EXCE PT FOR A FEW RECONCILIATION ENTRIES WHICH ARE GIVEN IN THE RECON CILIATION ATTACHED WITH THE CONFIRMATION FROM PARTIES. FURTHER THE LD. ASSESSING OFFICER ALSO FAILED TO AP PRECIATE THE FACT THE AMOUNT CONFIRMED BY THE PARTIES IS THE CLOSING NET BALANCE OF AMOUNT BILLED BY THEM TO F-I 5 INDUSTRIAL AREA HARIDWAR ONLY AND NOT THE ENTIRE SALES MADE BY THEM TO M/S LAXMI ELECTRONICS DURING THE FI NANCIAL YEAR 2008-09. THE AMOUNT CONFIRMED BY THEM IS NOT INCLUSIVE OF TH E AMOUNT BILLED BY THEM TO PLOT NO. 36 NEW DLF INDUSTRIAL AREA FARIDABAD. (B) AS PER THE LEDGER ACCOUNT OF THE PARTY SUBMITTE D BY THEM THERE IS NO DIFFERENCE BETWEEN THE PURCHASES CLAIMED BY THE APP ELLANT AND AS CONFIRMED BY THE PARTIES. ITA NO.2528.2818/DEL/2013 15 (C) THEREFORE IT IS ESTABLISHED FROM THE ABOVE FACT S THAT THE APPELLANT HAS NOT INFLATED ITS CLAIM OF PURCHASES AND HAD SHOWN THE A CTUAL AMOUNT OF PURCHASES MADE BY IT. (D) FURTHERMORE WE SHALL LIKE TO MENTION THAT THE E NTIRE PURCHASE MADE BY THE APPELLANT IS FOR THE F- 15 INDUSTRIAL AREA HARD WAR ONLY. THOUGH SOME OF THE PURCHASES HAVE BEEN MADE AT PLOT NO. 36 NEW DLF INDUSTRIAL AREA FARIDABAD BUT THE ENTIRE STOCK HAS BEEN TRANSFERRED TO F-15 INDUSTRIAL AREA HARDWAR. SIR AS THE FACTS MENTIONED ABOVE CLEARLY EXPLAINS T HAT THE ASSESSE HAS NOT INFLATED THE PURCHASES AND ALL PURCHASE SHOWN ARE G ENUINE AND ACTUAL PURCHASES MADE BY THE APPELLANT DURING THE A.Y. UND ER CONSIDERATION. THEREFORE IT IS PRAYED THAT THE ADDITION OF RS. 3,6 9,73,180/- IS NOT SUSTAINABLE AND LIABLE TO BE DELETED. ' 4.1 THE FINDINGS OF THE LD. AO AND THE AVERMENTS OF THE LD. ARS HAVE BEEN CONSIDERED. RIGHT AT THE OUTSET ONE CANNOT AGREE WI TH THE LD. ARS ON THE POINT THAT INSUFFICIENT OPPORTUNITY WAS PROVIDED TO THE APPELLANT AT THE ASSESSMENT STAGE. IT IS NOT AS IF AN EX-PARTE ORDE R HAS BEEN PASSED. THUS ALL THE PERMUTATION AND COMBINATION PUT FORTH BY THE LD . ARS HAVE TO BE DISMISSED AS AN AFTERTHOUGHT SINCE THE APPELLANT HA S FILED HIS REPLY BASED ON HIS OWN BOOKS OF ACCOUNTS WITHOUT REGARD TO THE FIG URES FORWARDED BY THE PARTIES TO THE A.O. WHEN HE CALLED FOR REQUISITE IN FORMATION FROM THEM. THUS IN PRINCIPLE THE LD. A.O.S STAND IS WORTH SUPPORTI NG. HOWEVER, IN ALL FAIRNESS, THE OPENING BALANCES SHOWN AGAINST THESE PARTIES NEED TO BE EXCLUDED FROM THE TOTAL WORKED OUT BY THE LD. A.O. SINCE THESE BALANCES WOULD NOT CONSTITUTE PART OF TRANSACTIONS RELEVANT FOR THE ASSESSING YEAR UNDER CONSIDERATION. THUS THE OPENING BALANCES IN T HE ACCOUNTS OF THE 5 PARTIES MUST BE SUBTRACTED FROM THE TOTAL ADDITION MADE AND THE RESULTANT AMOUNT IS SUSTAINED OUT OF THE TOTAL ADDITION MADE. 9. AS REGARDS THE ADDITION ON ACCOUNT OF NON CONFIR MATION OF SUNDRY CREDITORS, THE LD. CIT(A) DELETED THE SAME BY HOLD ING AS UNDER: 5.0 THE THIRD GROUND CHALLENGES THE ADDITION MADE OF RS.4,65,1 1,519/- OUT OF SUNDRY CREDITORS ON THE GROUND THAT THE ENQUIRY LETTERS SENT TO THEM CAME BACK UNSERVED. THE LD. ARS CONTEN DED THAT THIS ADDITION WAS NOT MADE ON FACTUALLY CORRECT PREMISES SINCE, AS PER THEIR INFORMATION, THE CONFIRMATIONS WERE RECEIVED. TO GET A CLEAR ITA NO.2528.2818/DEL/2013 16 PICTURE ON THIS ISSUE, THE LD. AO WAS ASKED TO CONF IRM THIS FACT THROUGH THIS OFFICE LETTER DATED 10.01.20L3 AND THE LD. AO DID CONFIRM THAT THE SAID CONFIRMATIONS WERE AVAILABLE ON RECOR D. IN VIEW OF THIS FACT, THE ADDITION MADE IS DELETED SINCE IT WAS MAD E ON A WRONG PREMISE. 10. THE LAST GRIEVANCE OF THE ASSESSEE IS REGARDING ADDITION ON ACCOUNT OF VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. LD. CIT(A) HAS UPHELD THE ADDITION BY HOLDING AS UNDER: 6.0 THE FOURTH GROUND CHALLENGES THE ADDITION OF S .5,20,550/- MADE U/S 40(A)(IA) OF THE ACT. THE LD. ARS HAVE AVE RRED AS UNDER:- 'AGAINST TILE ADDITIONS OF RS. 5,20,550/- BEING DIS ALLOWANCE OF FREIGHT OUTWARD RS. 392550/- & JOB -WORK EXPENSES OF RS. 1, 28,000/- CLAIMED IN THE BALANCE SHEET AS 011 31.03.2009 BY T HE APPELLANT: A) IN THE ABOVE MATTER I SHALL LIKE TO SUBMIT AS UNDER : THE LD. ASSESSING OFFICER HAS MADE AN ADDITION TO T HE INCOME U/S 40 (A)(IA) OF THE INCOME TAX ACT 1961 ON THE GROUND TH AT THERE ARE SOME AMOUNTS DEBITED UNDER THE HEAD FREIGHT OUTWARD TO T HE TUNE OF RS.3,92,550/- & RS. 1,28,000/- UNDER THE HEAD JOB W ORK ON WHICH THE APPELLANT SHOULD HAVE DEDUCTED THE TDS AS MENTIONED U/S 40 (IA) (II) OF THE ACT. AS REGARDS PAYMENT OF FREIGHT I SHALL LIKE TO SUBMI T THAT EVERY CONTRACT FOR PAYMENT OF FREIGHT IS SEPARATE AND DISTINCT. HO WEVER, AS PER SECTION 194C TDS IS TO BE DEDUCTED WHEN PAYMENT EXC EEDS 20,000. IN THE CASE OF THE ASSESSEE, SINCE THE INDIVIDUAL PAYM ENTS WERE BELOW 20,000 THE ASSESSEE WAS NOT OBLIGED TO DEDUCT TDS U /S 194CHENCE, THE ASSESSEE HAS NOT VIOLATED PROVISIONS OF SECTION 40 (A)(IA) OF THE INCOME TAX ACT, 1961 SINCE THERE WAS NOT LIABILITY TO DEDUCT TDS IN THE FIRST PLACE AND THUS THE AMOUNT SHOULD NOT BE DISAL LOWED. AS REGARDS, TDS ON PAYMENTS OF JOB WORK 1 SHALL LIK E TO SUBMIT THAT SECTION 194C OF THE INCOME TAX ACT, 1961 ENVISAGES DEDUCTION OF TDS BY ANY PERSON RESPONSIBLE FOR PAYING ANY SUM TO ANY RESIDENT CONTRACTOR FOR CARRYING OUT ANY WORK (INCLUDING SUP PLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OR A CONTRACT B ETWEEN A SPECIFIED PERSON AND THE RESIDENT CONTRACTOR. IN THE CASE OF THE ASSESSEE THERE WAS NO CONTRACT THAT WAS ENTERED WITH THE PARTY TO WHOM THE JOB WORK ITA NO.2528.2818/DEL/2013 17 WAS ALLOCATED. HENCE, THE ASSESSEE WAS NOT LIABLE TO DEDUCT TDS U/S 194C OF THE INCOME TAX ACT, 1961 SINCE THERE WAS AB SENCE OF A CONTRACT ALTOGETHER. FURTHER, THE ASSESSEE HAS ALSO NOT VIOLATED ANY PROVISIONS OF SECTION 40 (A)(IA) OF THE INCOME TAX ACT, 1961 SINCE THERE WAS NOT LIABILITY TO DEDUCT TDS IN THE FIRST PLACE. THEREFORE, THE AMOUNT PAID/A R JOB WORK SHOULD NOT BE DISALLOWED. ' 6.1 THE LD. AR'S ASSERTION THAT SOME PAYMENTS WERE BELOW S.20,000/- AND THUS NOT SUBJECTED TO TDS IS NOT IN CONSONANCE WITH THE LAW SINCE THE CRITICAL DETERMINANT IS AGGREGATE PAYMENT DURIN G THE YEAR PROVISO TO SECTION 94C(5) OF THE ACT. THUS THIS ADDITION IS SUSTAINED. 11. AGGRIEVED, BOTH THE PARTIES ARE IN APPEAL BEFOR E US. 12. LD. D.R. FIRST TOOK UP ITS APPEAL AND TOOK US T O VARIOUS OBJECTIONS RAISED BY A.O. IN HIS ASSESSMENT ORDER AND SUBMITTE D THAT AGAINST VARIOUS OBJECTIONS OF A.O. LD. CIT(A) AFTER RECORDING SUBMI SSIONS OF THE ASSESSEE HAS GIVEN RELIEF TO THE ASSESSEE BY PASSING A NON S PEAKING ORDER. IT WAS SUBMITTED THAT THERE WAS HARDLY ANY PLANT AND MACHI NERY INSTALLED IN THE FACTORY PREMISES AND INVITED OUR ATTENTION TO PAPER BOOK PAGE 50-52 TO INVITE OUR ATTENTION TO THE NATURE OF PLANT AND MACHINERY AS PER BILLS AND SUBMITTED THAT DURING FINANCIAL YEAS 2007-08 AND 2008-09, THE RE WAS NO FRESH ADDITION OF PLANT AND MACHINERY AND WDV AS ON 31.03.2009 WAS RS.2,76,886/-. HE FURTHER SUBMITTED THAT PLANT AND MACHINERY INCLUDE D DOUBLE SIDED PCB MACHINE WORTH RS.40,000/- AND ONE WAVE SOLDERING MA CHINE WORTH RS.3.68 LACS AND ONE AUTOMATIC CUT AND BEND MACHINE WORTH R S.21,000/-. IT WAS SUBMITTED THAT THE ASSESSEE HAD DECLARED A TURNOVER OF RS.17.33 CRORES WHICH IS NOT POSSIBLE WITH SUCH TYPE OF MACHINERY AND, TH EREFORE, IT WAS SUBMITTED THAT THE UNIT WAS ONLY A PAPER UNIT. TO FURTHER ST RENGTHEN HIS ARGUMENT THAT THE UNIT WAS ONLY A PAPER UNIT HE INVITED OUR ATTEN TION TO PAPER BOOK PAGE 23 AND SUBMITTED THAT PRODUCTION PROCESS FLOW CHART AS FILED BY ASSESSEE WITH ONLY 3 ITEMS OF PLANT AND MACHINERY INSTALLED AT TH E PREMISES WERE NOT ITA NO.2528.2818/DEL/2013 18 COMMENSURATE TO THE PRODUCTION PROCESS CHART AS DEP ICTED BY ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE HAD NO ELECTRICITY CONNECTION AND HAD CLAIMED RS.16.52 LACS ON ACCOUNT OF DIESEL AND OIL FOR GENSET WHICH ITSELF WAS NOT POSSIBLE FOR A VERY SMALL PLANT & MACHINERY . 13. LD. D.R. FURTHER SUBMITTED THAT THE ASSESSEE HA D CLAIMED AN EXPENDITURE OF RS.22.73 LACS ON ACCOUNT OF R&D ACTI VITIES AND IN THIS RESPECT, TOOK US TO PAPER BOOK PAGE 157 AND SUBMITT ED THAT THERE WAS NO EQUIPMENT AS PER BALANCE SHEET FOR CARRYING OUT R&D ACTIVITIES. LD.D.R. SUBMITTED THAT ASSESSEE HAD CLAIMED THAT THERE WAS SEARCH ACTION UNDERTAKEN BY CENTRAL EXCISE DEPARTMENT ON 31.10.2007, HOWEVER , ASSESSEE HAS NOT FURNISHED ANY EVIDENCE REGARDING OUTCOME OF SUCH CE NTRAL EXCISE DEPARTMENT ACTION AND IN SPITE, OF VARIOUS REPEATED REMINDERS DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT FILE C OPY OF DOCUMENTS SEIZED DURING CENTRAL EXCISE SEARCH ACTION. REGARDING THE OBJECTION RAISED BY A.O. THAT MAJOR PURCHASES WERE MADE AT FARIDABAD WHEREAS THE PRODUCTION WAS CLAIMED TO BE AT HARDWAR UNIT HE SUBMITTED THAT THE ASSESSEE DID NOT FILE ANY EXPLANATION. FURTHER INVITING OUR ATTENTION TO THE FACTS THAT THERE WERE LARGE AMOUNT OF DIFFERENCE BETWEEN THE CONFIRMATION RECEI VED IN RESPECT OF PURCHASES AND THOSE CLAIMED BY ASSESSEE, LD. D.R. S UBMITTED THAT THE DIFFERENCES ITSELF PROVE THAT UNIT WAS ONLY A PAPER UNIT. IT WAS SUBMITTED THAT THE CONFIRMATION OF ADDITION ON ACCOUNT OF DIFFEREN CE IN PURCHASES BY LD. CIT(A) ITSELF POINTS OUT THAT LD. CIT(A) WAS NOT FU LLY CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE. IN VIEW OF ABOVE, LD. D.R. SUBMITTED THAT THE A.O. HAD RIGHTLY DISALLOWED THE CLAIM U/S 80-IC OF THE ACT. 14. ARGUING UPON 2 ND GROUND OF APPEAL OF THE REVENUE, LD. D.R. SUBMITTED THAT LD. CIT(A) HAD GIVEN RELIEF TO THE A SSESSEE ON THE BASIS THAT A.O. VIDE LETTER DATED 10.01.2013 HAD ACCEPTED THAT CONFIRMATIONS WERE THEE ITA NO.2528.2818/DEL/2013 19 IN THE FILE AND IN THIS RESPECT LD. D.R. INVITED OU R ATTENTION TO PARA 5 OF LD. CIT(A)S ORDER. HE SUBMITTED THAT THE LETTER DATED 10.01.2013 REGARDING ALLEGED REPLY OF A.O. IS NOT THERE ON RECORD AND LD . CIT(A) HAS RECORDED WRONG FINDINGS. IT WAS FURTHER SUBMITTED THAT IN T HE REMAND REPORT ALSO, THE A.O. HAS NEVER CONFIRMED ABOUT CONFIRMATIONS OF SUN DRY CREDITORS. IT WAS SUBMITTED THAT THE ASSESSEE NEVER FILED THESE CONFI RMATIONS AND IN SUPPORT OF HIS ARGUMENTS, LD. D.R. TOOK US TO WRITTEN SUBMISSI ONS OF ASSESSEE PLACED AT PAPER BOOK PAGE 73 WHEREIN VIDE POINT (D) LD. A.R. HAD SUBMITTED BEFORE LD . CIT(A) THAT CONFIRMATIONS FROM CREDITORS COULD N OT BE SUBMITTED AT THE TIME OF ASSESSMENT. IN VIEW OF ABOVE, LD. D.R. SUB MITTED THAT ON THE ONE HAND, ASSESSEE HAD BEEN SAYING THAT THEY COULD NOT FILE CONFIRMATIONS FROM CREDITORS WHEREAS LD. CIT(A) IS SAYING THAT CONFIRM ATIONS WERE ALREADY THERE AS PER A.O.S CONFIRMATION WHEREAS IN FACT, THERE W AS NO SUCH CONFIRMATIONS BY A.O. EITHER IN REMAND REPORT OR OTHERWISE. THER EFORE, THE FINDINGS OF LD. CIT(A) ARE PERVERSE AND NEED TO BE REVERSED. LD. D .R. AFTER ARGUING THE CASE, WANTED TO FILE WRITTEN SUBMISSIONS ALSO FOR W HICH LD. A.R. HAD NO OBJECTION PROVIDED HE WAS ALSO PROVIDED AN OPPORTUN ITY TO REPLY TO WRITTEN SUBMISSIONS. THEREFORE, LD. D.R. AND LD. A.R. WERE PERMITTED TO FILE WRITTEN SUBMISSIONS. 15. LD. A.R. ON THE OTHER HAND SUBMITTED THAT LD. C IT(A) HAS MADE FACTUAL FINDINGS AS TO THE FACT THAT ASSESSEE WAS A MANUFACTURING UNIT. HE FURTHER SUBMITTED THAT LD. CIT(A) HAD ASKED FOR CER TAIN OTHER DETAILS, WHICH WERE SUBMITTED AND LD. CIT(A) AFTER OBTAINING REMAN D REPORT, HAD ALLOWED DEDUCTION U/S 80-IC OF THE ACT. INVITING OUR ATTEN TION TO COPY OF AUDIT REPORT PLACED AT PAGE 154-155, LD. A.R. SUBMITTED THAT IT IS CLEARLY MENTIONED IN THE AUDIT REPORT THAT THE ASSESSEE WAS INTO MANUFAC TURING OF PCB ELECTRONIC ITEMS. HE FURTHER SUBMITTED THAT THE ASSESSEE WAS A REGISTERED UNIT WITH DISTRICT INDUSTRIES CENTRE, ROORKEE AND SUBMITTED T HAT THE FACT THAT PREMISES OF THE ASSESSEE WERE SEARCHED BY EXCISE DEPARTMENT FURTHER PROVES THAT ITA NO.2528.2818/DEL/2013 20 ASSESSEE WAS INTO MANUFACTURING ACTIVITIES. CONTIN UING HIS ARGUMENTS LD. A.R. SUBMITTED THAT THE SALES TAX RETURN FILED BY A SSESSEE MATCHES WITH THE SALE AND PURCHASE DISCLOSED BY ASSESSEE IN P & L AC COUNT AND FURTHER VAT ASSESSMENT ORDER ITSELF MENTIONS THAT ASSESSEE WAS ENGAGED IN MANUFACTURING OF PCB ITEMS AND IN THIS RESPECT, OUR ATTENTION WAS INVITED TO PAPER BOOK PAGES 37-39. LD. A.R. ALSO TOOK US TO PAPER BOOK P AGE 42 TO HIGHLIGHT A COPY OF CERTIFICATE ISSUED BY TEHSILDAR HARIDWAR T O THE EFFECT THAT THE ASSESSEE HAD BEEN CARRYING OUT MANUFACTURING ACTIVI TIES IN THE NOTIFIED AREA. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD OBTAINED CERTIFICATE FROM CHARTERED ENGINEERS WHO HAD VERIFIED ABOUT THE INST ALLATION OF PLANT AND MACHINERY AND IN THIS RESPECT, OUR ATTENTION WAS IN VITED TO PAPER BOOK PAGE 43. HE FURTHER TOOK US TO PAPER BOOK PAGE 45-57 WH ERE A COPY OF DECLARATION UNDER NOTIFICATION NO.49 &50/2003 FILED WITH EXCISE DEPARTMENT WAS PLACED. CONTINUING HIS ARGUMENTS, LD. A.R. SUBM ITTED THAT EACH AND EVERY OBJECTION OF A.O. WAS MET BY THE ASSESSEE AND IN THIS RESPECT, OUR ATTENTION WAS INVITED TO LD. CIT(A)S ORDER WHEREIN LD. CIT(A) HAS REPRODUCED THE SUBMISSIONS OF THE ASSESSEE IN RESPE CT OF VARIOUS OBJECTIONS RAISED BY A.O. LD. A.R. ALSO TOOK US TO COPY OF RE MAND REPORT PLACED AT PAPER BOOK PAGES 4-6 AND SUBMITTED THAT DURING REMA ND PROCEEDINGS, A.O. HAD VERIFIED ALL DETAILS OF PURCHASE ANDS SALES AND HAD CONFIRMED THAT MANUFACTURING ACTIVITIES WERE CARRIED OUT DURING TH E YEAR UNDER CONSIDERATION. WITHOUT PREJUDICE TO THE ABOVE, LD. A.R. SUBMITTED THAT ORIGINALLY, THE ASSESSEE WAS ALLOWED DEDUCTION U/S 80-IC IN ASSESSMENT YEAR 2007-08 AND CONTINUED TO BE ALLOWED IN ASSESSMENT Y EAR 2008-09 AND FURTHER SUBMITTED THAT THOUGH THE ASSESSMENT IN THO SE YEARS WERE MADE U/S 143(1) BUT THE FACT REMAINED THAT ASSESSEE HAD CLAI MED DEDUCTION IN THOSE ITA NO.2528.2818/DEL/2013 21 YEARS AND THESE WERE ALLOWED AND, THEREFORE, IT WAS ARGUED THAT ON THE BASIS OF CONSISTENCY ALSO DEDUCTION CANNOT BE DENIED. RE LIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWING CASE LAWS: I) CIT VS DELHI PRESSS PATRA PRAKASHAN LTD 355 IT R 14 II) SUBHASH CHANDER SEHGAL VS DCIT 1126/DEL/2008 DT. 27.02.2009 88 ITD 313. III) ITO VS GANGA BEACH RESORTS IN I.T.A.NO. 764/DEL/20 13 B DELHI TRIBUNAL ON 27.09.2013 16. IN VIEW OF ENTIRE FACTS AND CIRCUMSTANCES, LD. A.R. SUBMITTED THAT LD. CIT(A) HAD ALLOWED THE CLAIM CORRECTLY. 17. ARGUING UPON THE 2 ND GROUND OF APPEAL, LD. A.R. SUBMITTED THAT THE A.O. HAD MADE ADDITION ON ACCOUNT OF SUNDRY CREDITO RS AS NOTICES U/S 133(6) WERE RECEIVED BACK WHICH WAS DELETED BY LD. CIT(A) ON THE BASIS OF CONFIRMATION BY A.O. THAT CONFIRMATIONS FROM CREDIT ORS WERE AVAILABLE IN THE FILE. LD. A.R. INVITED OUR ATTENTION TO PAGE 72-75 WHERE IT HAD SUBMITTED THE DETAILED RECONCILIATIONS BEFORE LD. CIT(A). HE FUR THER TOOK US TO PAPER BOOK PAGES 101-135 WHERE COPIES OF BALANCE CONFIRMATIONS ALONG WITH COPIES OF LEDGER ACCOUNT OF CREDITORS WERE PLACED. IT WAS SUBMITTED THAT VIDE LETTER DATED 10.01.2013 THE A.O. HAD CONFIRMED TO LD. CIT( A) ABOUT THE FACT OF CONFIRMATIONS BEING ON RECORD AND THEREFORE, LD. CI T(A) ON THE BASIS OF LETTER RECEIVED FROM A.O., HAD DELETED THE ADDITION S. WITHOUT PREJUDICE TO THE ABOVE, THE LD. A.R. SUBMITTED THAT EVEN IF DISALLOW ANCES ARE UPHELD, THE ADDITION OF INCOME WILL BE DEEMED TO ACCRUE FROM I NDUSTRIAL UNDERTAKING AND SUCH INCOME WAS AGAIN QUALIFIED FOR DEDUCTION U NDER SECTION 80-IC. 17. ARGUING UPON ASSESSEES APPEAL, LD. A.R. SUBMIT TED THAT ADDITIONS WERE MADE BY A.O. BY CONSIDERING WRONG FIGURES OF P URCHASES AND IGNORING ITA NO.2528.2818/DEL/2013 22 THE AMOUNT OF SALES CONFIRMED BY PARTIES. IT WAS S UBMITTED THAT THE A.O. HAD CONSIDERED ALL THE CREDITS IN THE LEDGER ACCOUNT OF PARTIES AS PURCHASES WHICH IS NOT CORRECT AS THE CREDIT BALANCE INCLUDED OPENI NG BALANCES ALSO AND MOREOVER, THE ASSESSEE HAD SUBMITTED THE RECONCILIA TION OF PURCHASES VIS A VIS CONFIRMATIONS FILED BY VARIOUS PARTIES. HE FUR THER SUBMITTED THAT ASSESSEE WAS HAVING 2 UNITS ONE AT HARDWAR AND ANOTHER AT FA RIDABAD AND BOTH THE UNITS WERE DEALING WITH THESE CREDITORS OF ASSESSEE . IT WAS SUBMITTED THAT DURING PROCEEDINGS BEFORE LD. CIT(A) COMPLETE RECON CILIATION WITH THESE SUNDRY CREDITORS WERE FILED AND LD. CIT(A) HAD GIVE N RELIEF ONLY IN RESPECT OF OPENING BALANCES AND HAS IGNORED THE SUBMISSIONS OF THE ASSESSEE REGARDING COMPLETE RECONCILIATION AND IN THIS RESPE CT HE INVITED OUR ATTENTION TO COPY OF WRITTEN SUBMISSIONS AS FILED BY ASSESSEE AS PLACED IN PAPER BOOK PAGES 61-135. HE FURTHER SUBMITTED THAT ADDITIONS WERE MADE AND CONFIRMED BY LD. CIT(A) WITHOUT PROVIDING ASSESSEE A REASONAB LE OPPORTUNITY OF BEING HEARD. HE SUBMITTED THAT THE ASSESSEE SHIFTED BUSI NESS PREMISES AND THEREFORE NOTICES ISSUED COULD NOT BE SERVED UPON T HE ASSESSEE. IN THIS RESPECT, HE INVITED OUR ATTENTION TO PAPER BOOK PAG ES 78-79 WHERE A COPY OF AFFIDAVITS OF PARTNERS OF THE FIRM WAS PLACED. WIT HOUT PREJUDICE LD. A.R. SUBMITTED THAT THERE WAS NO DIFFERENCE BETWEEN THE PURCHASES AS CLAIMED BY ASSESSEE AND THOSE CONFIRMED BY THE PARTIES. HE IN VITED OUR ATTENTION TO PAPER BOOK PAGE 80-84 WHERE COMPLETE RECONCILIATION REGARDING DIFFERENCES WAS PLACED. IN VIEW OF ABOVE, IT WAS SUBMITTED THA T GROUND 1 OF APPEAL BE ALLOWED. 18. ARGUING UPON GROUNDS 3 & 4, LD. A.R. SUBMITTED THAT DISALLOWANCE U/S 40(A)(IA) WOULD INCREASE THE INCOME OF ASSESSEE AND THEREBY INCREASED INCOME WILL AGAIN BE QUALIFIED FOR DEDUCTION U/S 80 -IC. ITA NO.2528.2818/DEL/2013 23 19. WITHOUT PREJUDICE, LD. A.R. SUBMITTED THAT SECT ION 194C WAS NOT APPLICABLE AS THERE WAS NO WRITTEN OR ORAL CONTRACT AND INDIVIDUAL PAYMENTS WERE LESS THAN RS.20,000/- EACH. IT WAS SUBMITTED THAT IN THE ABSENCE OF CONTRACT BETWEEN THE ASSESSEE AND THE OWNER OF THE VEHICLES, THE PROVISIONS OF SECTION 40(A)(IA) WERE NOT APPLICABLE. RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWING CASE LAWS: I) CIT VS D RATIRAM 535 DTR 382 II) CIT VS BHAGWATI STEELS 47 DTR 75 III) C K THAKUR VS ACIT 129 TTJ 01 IV) R P CREATION CO. VS ACIT 30 DTR 569 V) DCIT VS SATISH AGARWAL & CO. 317 ITR 196. VI) BHEIL VS ITO 74 DTR 132 20. REPLYING TO ASSESSEES APPEAL, LD. D.R. SUBMITT ED THAT THE PURCHASE CLAIMED BY ASSESSEE WERE HIGHER IN THE BOOKS OF ACC OUNTS OF ASSESSEE AS COMPARED TO CONFIRMATIONS RECEIVED FROM RESPECTIVE PARTIES WHICH CLEARLY SUGGEST THAT ASSESSEE HAD BEEN PURCHASING FOR FARID ABAD UNIT AND HARDWAR UNIT AND MOST OF THE PURCHASES RELATED TO FARIDABAD UNIT AS IS APPARENT FROM THE CONFIRMATIONS AND RECONCILIATION SUBMITTED BY L D. A.R. LD. D.R. FURTHER SUBMITTED THAT LD. A.R. HAS RECONCILED THE FIGURES OF PURCHASES BY ADDING THE PURCHASES OF BOTH UNITS. IT WAS SUBMITTED THAT MOST OF THE PURCHASES RELATED TO FARIDABAD UNIT AND NOT TO HARDWAR UNIT. HE FURTHER SUBMITTED THAT RECONCILIATION OF PURCHASES HAS BEEN SUBMITTED BY A SSESSEE WITHOUT GETTING IT CERTIFIED FORM THE PARTIES AND WITHOUT OBTAINING RE MAND REPORT AND WITHOUT CONFIRMATION FROM THE A.O. THE CLAIM OF LD. A.R. T HAT EVEN IF DISALLOWANCE IS UPHELD, THE INCREASED INCOME WILL BE AVAILABLE F OR CLAIM U/S 80-IC, LD. D.R. SUBMITTED THAT NO SUCH GROUND WAS TAKEN BEFORE LD. CIT(A) AND BEFORE ITA NO.2528.2818/DEL/2013 24 ITAT AND THE CLAIM FOR DEDUCTION IS ALSO ON THE BAS IS OF FORM 10CCB CERTIFIED BY A CHARTERED ACCOUNTANT. IN VIEW OF AB OVE, IT WAS SUBMITTED THAT BENEFIT OF DEDUCTION U/S 80-IC CANNOT BE GIVEN FOR DISALLOWANCES. 21. REPLYING SPECIFICALLY TO WRITTEN SUBMISSIONS O F LD.D.R., LD.A.R. THROUGH HIS WRITTEN SUBMISSIONS SUBMITTED THAT PROD UCTION ENGINEER OF ASSESSEE FIRM WHO WAS IN-CHARGE OF PRODUCTION WAS P RESENT BEFORE LD. CIT(A) AND SHE HAD EXPLAINED TO HIM THE COMPLETE TR ACK OF MANUFACTURING PROCESS AND USE OF SUCH RAW MATERIAL IN MANUFACTURI NG OF ELECTRONIC PCB. LD. CIT(A) AFTER SATISFYING HIMSELF REGARDING THE P RODUCTION PROCESS AND ACTUAL MANUFACTURING ACTIVITIES BEING CARRIED OUT I N THE PREMISES OF THE ASSESSEE AND AFTER GETTING REMAND REPORT, ALLOWED D EDUCTION U/S 80-IC OF THE ACT. LD. A.R. REITERATED NAMES OF VARIOUS RAW MATE RIAL USED AND PROCESS OF MANUFACTURING WHICH WAS ALREADY SUBMITTED TO LD. CI T(A). REPLYING SPECIFICALLY TO WRITTEN ARGUMENTS OF LD. D.R., LD. A.R. SUBMITTED THAT MOST OF THE PRODUCTION PROCESS WAS MANUAL AND DID NOT RE QUIRE ANY USE OF HEAVY MACHINERY AND THE APPELLANT WAS ABLE TO GENERATE HI GH PRODUCTION AND SUBSEQUENTLY HIGHER SALE WITH SOME AMOUNT OF INVEST MENT IN MACHINERY. LD. A.R. FURTHER SUBMITTED THAT THOUGH THE MANUFACTURIN G FLOW CHART WAS LONG AND COMPLICATED BUT THIS DOES NOT MEAN THAT THE SAM E CAN BE DONE WITH THE USE OF MACHINES ONLY. IT WAS FURTHER SUBMITTED THA T MOST OF THE STEPS IN PRODUCTION FLOW CHART ARE MANUAL WHICH ARE TO BE DO NE BY PHYSICAL LABOUR. LD. A.R. FURTHER SUBMITTED THAT THE FACTORY PREMISE S WERE TAKEN ON RENT AND ELECTRICITY METER WAS IN THE NAME OF OWNER MRS. ASH OK AND SUB METER WAS INSTALLED IN THE FACTORY PREMISES AND AS PER THE AG REEMENT, THE ASSESSEE WAS TO PAY ELECTRICITY CHARGES ON THE BASIS OF READING OF SUB METER. IT WAS FURTHER SUBMITTED THAT APART FROM ELECTRICITY EXPENSES ,THE ASSESSEE HAD SPENT AN ITA NO.2528.2818/DEL/2013 25 AMOUNT OF RS.16.52 LACS AS GENERATOR EXPENSES AS TH E AREA IN WHICH ASSESSEES UNIT IS ESTABLISHED FACED SEVERE POWER C UTS AND MOST OF THE TIME GENERATOR HAD TO BE USED RESULTING INTO HEAVY EXPEN SES. REGARDING ARGUMENT OF LD. D.R. REGARDING RESEARCH AND DEVELOPMENT EXPE NSES, LD. A.R. SUBMITTED THAT R&D WAS CARRIED OUT TO DEVELOP AND M ANUFACTURE THE DIFFERENT SIZES OF THE PRODUCTS FOR DIFFERENT CUSTO MERS ACCORDING TO THEIR SPECIFICATIONS. HOWEVER, IN THE ABSENCE OF LEDGER ACCOUNT OF THIS EXPENDITURE, HE WAS NOT IN A POSITION TO EXPLAIN TH E ACTUAL NATURE OF EXPENDITURE. REGARDING ARGUMENT OF LD. D.R. THAT N ON SUBMISSIONS OF DOCUMENTS SEIZED DURING EXCISE SEARCH ACTION, ITSEL F CREATES DOUBT ABOUT THE UNIT, THE LD. A.R. SUBMITTED THAT THE QUANTUM OF R ECORD SEIZED AS NOTED IN THE PANCHNAMA ITSELF SUBSTANTIATES THE APPELLANTS CONTENTION AND CLAIM OF MANUFACTURING ACTIVITIES WERE BEING CARRIED OUT AT THE AFORESAID PREMISES AS THE SURVEY WAS CARRIED OUT BY EXTERNAL GOVERNMENT A UTHORITY BEING CENTRAL EXCISE DEPARTMENT. REGARDING DIFFERENCE IN PURCHA SES AS ARGUED BY LD. D.R., LD. A.R. SUBMITTED THAT COMPLETE RECONCILIATI ON OF PURCHASES MADE BY ASSESSEE WITH THOSE CONFIRMED BY RESPECTIVE CREDITO RS/ REPLY OF SUPPLIERS WAS FILED DURING PROCEEDINGS AND IN THIS RESPECT, OUR A TTENTION HAS INVITED TO WRITTEN SUBMISSIONS AND IN THE LIGHT OF ABOVE RECON CILIATION STATEMENT, IT WAS SUBITTED THAT ALL THE DIFFERENCES WERE EXPLAINED AN D HENCE, THERE WAS NO DIFFERENCE IN THE BALANCES. AS REGARDS THE ARGUMEN T OF LD. D.R. THAT CONFIRMATION FROM SUNDRY CREDITORS WAS NOT RECEIVED , LD. A.R. STATED THAT THE LD. CIT(A) HAD HELD THAT CONFIRMATIONS WERE IN THE FILE OF A.O. ON THE BASIS OF A LETTER FROM A.O., LD. A.R. SUBMITTED THAT CONF IRMATIONS WERE THERE IN THE FILE OF A.O. AND THAT IS WHY VIDE LETTER DATED 10.01.2013, THE A.O. HAD CONFIRMED ABOUT THE FACT THAT CONFIRMATIONS WERE IN THE FILE. ITA NO.2528.2818/DEL/2013 26 22. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROU GH THE MATERIAL PLACED ON RECORD. FIRST, WE TAKE UP THE APPEAL FILED BY REVENUE. THE 1 ST GROUND OF APPEAL FILED BY REVENUE RELATES TO DELETION OF DISA LLOWANCE CLAIMED U/S 80- IC OF THE ACT. IN THIS RESPECT, WE FIND THAT THE A SSESSEE HAD ALL DOCUMENTS IN ITS POSSESSION TO PROVE THAT MANUFACTURING UNIT WAS SET UP AT HARDWAR AND THAT THE ASSESSEE HAD MADE SALES FROM THAT UNIT. D ESCRIPTION OF SUCH DOCUMENTS AS PLACED IN PAPER BOOK IS COPY OF PROVIS IONAL REGISTRATION WITH DIC PLACED AT PAPER BOOK PAGE 60, COPY OF CERTIFICA TE FROM POLLUTION CONTROL BOARD, COPY OF DECLARATION FILED WITH CENTRAL EXCIS E DEPARTMENT FOR OPERATING FACTORY PLACED AT PAPER BOOK PAGES 45-46 AND PAGE 59 OF THE PAPER BOOK. COPY OF PANCHNAMA ISSUED BY CENTRAL EXCISE D EPARTMENT ON THE OCCASION OF SURVEY CONDUCTED ON THE UNIT ALONG WITH VARIOUS SEIZED DOCUMENTS PLACED AT PAPER BOOK PAGES 31-36, COPY OF VAT ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION PLACED AT PA PER BOOK PAGES 37-39. AS PER REMAND REPORT TURNOVER OF THE ASSESSEE IN MA NUFACTURING AND TRADING ACCOUNT WAS FOUND TO BE MATCHING WITH SAID ASSESSME NT ORDER. COPY OF CERTIFICATE OF CHARTERED ACCOUNTANT CERTIFYING INST ALLATION OF PLANT AND MACHINERY IN THE UNIT IS PLACED AT PAPER BOOK PAGE 43. 23. THE VAT ASSESSING AUTHORITY IN VAT ASSESSMENT O RDER PLACED AT PAPER BOOK PAGES 37-39 HAS NOTED THAT ASSESSEE HAD A MANU FACTURING UNIT WHEREIN THE ASSESSING AUTHORITY HAVE NOTED THE AMOUNT OF PU RCHASES AND INPUT CREDIT OF VAT AMOUNTING TO RS.34.95 LACS HAS BEEN GIVEN T O THE ASSESSEE. THE VAT AUTHORITIES HAVE FURTHER ASSESSED THE ASSESSEE AND AFTER GIVING INPUT CREDIT HAD CALCULATED THE AMOUNT OF VAT PAYABLE ALONG WITH INTEREST DUE THEREON. ALL THESE DOCUMENTS INCLUDING VAT ASSESSMENT ORDER ESTABLISH THAT THERE WAS MANUFACTURING UNIT AND ASSESSEE HAD MADE SALES FROM THIS ITA NO.2528.2818/DEL/2013 27 MANUFACTURING UNIT. MOREOVER, WE FIND THAT THE A.O . DURING REMAND PROCEEDINGS HAD MADE THE FOLLOWING OBSERVATIONS AS IS APPARENT FROM COPY OF REMAND REPORT PLACED AT PAPER BOOK PAGES 4-17. I) THIS IS A FACT THAT ASSESSEE WAS SITUATED AT F-1 5, INDUSTRIAL AREA, HARDWAR BUT THE SAME WAS FOUND LOCKED ON THE DATE O F VISIT OF INCOME TAX INSPECTOR. THE FACTORY WAS SHIFTED TO F-32 INDUSTR IAL AREA, HARDWAR IN THE MONTH OF JUNE 2010. II) THAT STATEMENT OF SHRI GANGASHARAN GUPTA OWNER OF PREMISES OF F-15 INDUSTRIAL AREA, HARDWAR WAS RECORDED ON 16.11.2011 AND IN THE STATEMENT HE HAS ADMITTED THAT MANUFACTURING ACTIVITIES WERE CARRIED OUT IN THE FACTORY PREMISES. III) THAT SALES AND PURCHASES MENTIONED IN THE COPY OF ORDER PASSED U/S 25(7) READ WITH SECTION 31 OF VAT ACT PASSED ON 28. 12.2012 BY DC ASSESSMENT COMMERCIAL TAX HARDWAR WERE MATCHING WIT H THE TOTAL SALES DECLARED BY ASSESSEE BEFORE VAT TAX AUTHORITIES AND WITH THE FIGURES SHOWN IN THE P & L ACCOUNT. 24. THE ARGUMENT RAISED BY LD. D.R. REGARDING INFLA TED PURCHASES IS A MATTER OF RECONCILIATION BETWEEN THE ACCOUNTS FOR W HICH LD. A.R. HAD SUBMITTED DETAILED SUBMISSION BEFORE LD. CIT(A) AND LD. CIT(A) HAD ALLOWED PART RELIEF ON THE BASIS OF SUCH RECONCILIA TIONS. WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF LD. D.R. THAT TURNOVER WAS NOT COMMENSURATE WITH THE AMOUNT INVESTED IN PLANT AND MACHINERY AS THERE MAY BE A CASE AS IN THE PRESENT CASE AS EXPLAINED BY LD. A.R. THAT THE PROC ESS OF MANUFACTURING INVOLVED MORE MANUAL WORK AS COMPARED TO MECHANICAL WORK AND THAT IS WHY LABOUR CHARGES, STAFF SALARY AND JOB WORK CHARG ES TO THE TUNE OF MORE ITA NO.2528.2818/DEL/2013 28 THAN RS.70 LACS WAS PAID. THIS FACT IS VERIFIABLE FROM TRADING AND P & L ACCOUNT. 25. BESIDES ABOVE FACTS AND CIRCUMSTANCES, WE FIND THAT THE PRESENT YEAR WAS NOT THE FIRST YEAR FOR CLAIM OF EXEMPTION AND W AS RATHER 3 RD YEAR OF SUCH CLAIM AND IN THE EARLIER YEARS SUCH CLAIM WAS ALLOW ED THOUGH U/S 143(1). LD. D.R. DID NO BRING TO OUR NOTICE THAT ASSESSMENT OF EARLIER YEARS WERE ALSO REOPENED TO DISALLOW THE CLAIM OF ASSESSEE. AS PER SECTION 80-IC, THE DEDUCTION IS AVAILABLE FOR A PERIOD OF 10 YEARS STA RTING FORM INITIAL ASSESSMENT YEAR AND INITIAL ASSESSMENT YEAR HAS BEE N DEFINED AS ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH UNDERTAKING OR ENTERPRISE BEGINS TO MANUFACTURE AND PRODUCE ARTICLES OR THING S AND IN THE CASE OF ASSESSEE THIS IS NOT AN INITIAL YEAR. LD. A.R. HAS ALSO RELIED UPON THE CASE LAW WITH THE PROPOSITION THAT IF THE CLAIM OF SOME EXEM PTION HAS BEEN ALLOWED IN THE FIRST YEAR, IT COULD NOT BE DENIED IN SUCCEEDIN G YEARS UNLESS THE ASSESSMENT OF INITIAL YEAR IS ALSO DISTURBED. THOU GH THE CASE LAW RELIED UPON BY LD. A.R. RELATES WITH THE CLAIM OF EXEMPTION EXA MINED U/S 143(3) INSTEAD OF U/S 143(1) AS IN THE PRESENT CASE, YET FOR ALL P RACTICAL PURPOSES, THE ASSESSMENT U/S 143(1) AND U/S 143(3) ARE ONE AND SA ME AND THEREFORE, FOR THIS REASON ALSO, THE CLAIM OF ASSESSEE CANNOT BE D ENIED UNLESS IT IS DENIED IN THE INITIAL YEAR WHICH HAS NOT BEEN DONE IN THE PRE SENT CASE. THEREFORE, KEEPING IN VIEW OF ENTIRE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) AND, THEREFORE , GROUND NO.1 OF APPEAL IS DISMISSED. 26. GROUND NO.2 OF APPEAL RELATES TO THE FACT THAT LD. CIT(A) HAD DELETED THE DISALLOWANCE MADE ON ACCOUNT OF SUNDRY CREDITOR S IGNORING THE FACT THAT NOTICES, ISSUED TO CREDITORS, HAD RETURNED UNSERVED . IN THIS RESPECT, WE FIND ITA NO.2528.2818/DEL/2013 29 THAT LD. CIT(A) ON 10.01.2013 HAD WRITTEN A LETTER TO ITO HARDWAR WHEREIN HE HAD ASKED THE A.O. TO CONFIRM AS TO WHETHER THE CONFIRMATIONS WERE PLACED IN THE FILE OR NOT. WE FIND THAT A.O. ON 10 .01.2013 ITSELF HAD CONFIRMED TO LD. CIT(A) DEHRADUN THAT THE NECESSARY CONFIRMATION WERE THERE IN THE FILE. REGARDING ARGUMENT OF LD. D.R. THAT ASSESSEE ITSELF HAD STATED THAT CONFIRMATIONS COULD NOT BE FILED VIDE I TS LETTER DATED 23.11.2012, WE FIND THAT THE DATE OF CONFIRMATIONS OBTAINED BY LD. CIT(A) FROM A.O. IS VIDE LETTER DATED 10.01.2013 WHICH IS AFTER THE DA TE OF SUBMISSIONS AND WE FIND THAT A.O. HAD CONFIRMED THE FACT THAT CONFIRMA TIONS WERE ON RECORD AND A COPY OF LETTER WRITTEN BY LD. CIT(A) AND REPLY SU BMITTED BY ITO, WARD I ON 10.01.2013 IS PLACED ON RECORD. AS THE ADDITION WAS MADE ONLY ON ACCOUNT OF NON CONFIRMATION OF BALANCES BY CREDITOR S AND THEREFORE, GRIEVANCE OF REVENUE IS REMOVED WITH THE FINDING OF A.O. VIDE LETTER DATED 10.01.2013 THAT THE SAME WERE AVAILABLE IN THE FILE AND THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) WITH REGARD TO GROUND NO.2. IN VIEW OF ABOVE, GROUND NO.2 IS ALSO DISMISSED. IN N UTSHELL APPEAL FILED BY REVENUE IS DISMISSED. 27. NOW, COMING TO APPEAL FILED BY ASSESSEE WE FIND THAT ASSESSEE HAS TAKEN TWO GROUNDS OF APPEAL ONE OF WHICH RELATES TO PART CONFIRMATION OF ADDITION OF RS.3,69,73,180/- ON ACCOUNTS OF PARTIAL UPHOLDING OF DISALLOWANCE MADE BY A.O. AND THE OTHER RELATES TO DISALLOWANCE U/S 40(A)(IA) OF THE ACT. AS REGARDS ADDITION ON ACC OUNT OF DIFFERENCE IN CONFIRMATIONS, LD. A.R. SUBMITTED THAT THE ASSESSEE WAS NOT GIVEN NECESSARY OPPORTUNITY TO EXPLAIN THE DIFFERENCE & THEREFORE, THE RECONCILIATIONS WERE FILED. WE FIND THAT THE A.O. HAD MADE DISALLOWANCE OF RS.3,69,73,180/- ON ACCOUNT OF DIFFERENCE IN PURCHASES AS CLAIMED BY AS SESSEE AND AS PER ITA NO.2528.2818/DEL/2013 30 CONFIRMATION OF DIFFERENT CREDITORS. LD. A.R. HAD EXPLAINED THE DIFFERENCE BY SUBMITTING THE RECONCILIATION TO LD. CIT(A) AND HAD ALSO EXPLAINED THE DIFFERENCE BETWEEN THE FIGURES. IT WAS SUBMITTED T HAT LD. CIT(A) HAS NOT ACCEPTED THE RECONCILIATIONS AS HE HELD THEM TO BE AFTERTHOUGHT AND PREPARED BY ASSESSEE ITSELF. LD. CIT(A) HAS ALLOWED PARTIA L RELIEF TO THE ASSESSEE BY HOLDING THAT THE OPENING BALANCE OF PARTIES SHOULD BE EXCLUDED FOR THE PURPOSE OF MAKING ADDITION. THE RELEVANT PARAGRAPH OF LD. CIT(A)S ORDER IS REPRODUCED BELOW: 4.1 THE FINDINGS OF THE LD. AO AND THE AVERMENTS OF THE LD. ARS HAS CONSIDERED. RIGHT AT THE OUTSET ONE CANNOT AGRE E WITH THE LD. ARS ON THE POINT THAT INSUFFICIENT OPPORTUNITY WAS PROV IDED TO THE APPELLANT AT THE ASSESSMENT STAGE. IT IS NOT AS IF AN EXPARTE ORDER HAS BEEN PASSED. THUS ALL THE PERMUTATION AND COMBINATI ON PUT FORTH BY THE LD. ARS HAVE TO BE DISMISSED AS AN AFTERTHOUGHT SINCE THE APPELLANT HAS FILED HIS REPLY BASED ON HIS OWN BOOK S OF ACCOUNTS WITHOUT REGARD TO THE FIGURES FORWARDED BY THE PART IES TO THE AO WHEN HE CALLED FOR REQUISITE INFORMATION FROM THEM. THUS IN PRINCIPLE THE LD. AO'S STAND IS WORTH SUPPORTING. HOWEVER, IN ALL FAIRNESS THE OPENING BALANCES SHOWN AGAINST THESE PARTIES NEED T O BE EXCLUDED FROM THE TOTAL WORKED OUT BY THE LD. AO SINCE THESE BALANCES WOULD NOT CONSTITUTE PART OF TRANSACTIONS RELEVANT FOR TH E ASSESSING YEAR UNDER CONSIDERATION. THUS THE OPENING BALANCES IN T HE ACCOUNTS OF THE 5 PARTIES MUST BE SUBTRACTED FROM THE TOTAL ADDITIO N MADE AND THE RESULTANT AMOUNT IS SUSTAINED OUT OF THE TOTAL ADDI TION MADE. 28. WE FIND THAT ASSESSEE IN THE FORM OF RECONCILIA TION HAS TRIED TO EXPLAIN THE DIFFERENCE BY STATING THAT CREDITORS WERE MAINT AINING TWO SEPARATE ACCOUNTS FOR PURCHASES MADE BY HARDWAR UNIT AND FAR IDABAD UNIT AND, THEREFORE, THERE WAS NO DIFFERENCE IN THE PURCHASES . WE FIND THAT LD. CIT(A) HAS NOT CONSIDERED THESE ARGUMENTS AND HAS SIMPLY A LLOWED RELIEF BY EXCLUDING OPENING BALANCES, WHEREAS IN OUR OPINION, THE ENTIRE RECONCILIATION OF FIGURES SHOULD HAVE BEEN EXAMINED BY LD. CIT(A) AND AFTER GETTING ITA NO.2528.2818/DEL/2013 31 CONFIRMATIONS OF THE SAME FROM RESPECTIVE CREDITORS , SHOULD HAVE EXAMINED THE EXPLANATION OF ASSESSEE. IN VIEW OF ABOVE, GRO UNDS NO.1 AND 2 ARE RESTORED TO THE OFFICE OF LD. CIT(A) FOR RE-ADJUDIC ATION. 29. LD. A.R. HAD ADVANCED VARIOUS ARGUMENTS FOR ITS NON LIABILITY FOR DEDUCTION OF TDS U/S 40(A)(IA) ON VARIOUS COUNTS AN D WE ARE OF THE OPINION THAT THE SAME MAY ALSO BE EXAMINED BY LD. CIT(A) AF RESH IN VIEW OF THE ARGUMENTS ADVANCED BY HIM. THEREFORE, GROUND NOS. 3 & 4 ARE ALSO RESTORED TO LD. CIT(A). 30. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 31. IN NUTSHELL, APPEAL FILED BY REVENUE IS DISMISS ED WHEREAS APPEAL FILED BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 32. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD JAN., 2015. SD./- SD./- (H. S. SIDHU ) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 23.01.2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.2528.2818/DEL/2013 32 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 19/1 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 19,20,21,22 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 22/1/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 23/1/2015 SR. PS/PS 7 FILE SENT TO BENCH CLERK 23/1/2015 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER