The Income-tax Officer, Pathankot V. Sh Raman Mohinderu, Pathankot

ITA 331/ASR/2011

• Counselvise Citation: 33120914 RSA 2011
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: J S BHASIN
• Keywords: Opportunity of being heard; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.328 TO 331(ASR)/2011 ASSESSMENT YEARS:2004-05 TO 2007-08 PAN :ABBPM8537E INCOME TAX OFFICER, VS. SHRI RAMAN MOHINDRU, WARD-2, S/O SH. MADAN LAL, PATHANKOT. MISSION ROAD, PATHANKOT. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. AMRIK CHAND, DR RESPONDENT BY:SH. J.S.BHASIN, ADVOCATE DATE OF HEARING: 10/02/2014 DATE OF PRONOUNCEMENT:28/02/2014 ORDER PER BENCH ; THESE FOUR APPEALS OF THE REVENUE ARISE FROM THE COMMON ORDER OF CIT(A), AMRITSAR, DATED 17.03.2011 FOR THE ASSESSMENT YEARS 2004- 05 TO 2007-08. SINCE THE ISSUES INVOLVED IN ALL TH E APPEALS ARE IDENTICAL, THEREFORE, FIRST OF ALL, WE PROCEED TO DECIDE THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2004-05 AND OUR DECISION HEREINBELO W SHALL BE APPLICABLE IDENTICALLY IN ALL THE APPEALS MENTIONED HEREINABOV E. THE REVENUE HAS RAISED ITA NOS.328 TO 331(ASR)/2011 2 IDENTICAL GROUNDS IN ALL THE APPEALS. THE GROUNDS RAISED IN ITA NO.328(ASR)2011 ARE REPRODUCED HEREUNDER WHICH ARE SIMILAR IN OTHER APPEALS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THE REOPENING OF THE CASE IRREGULA R AND ILLEGAL BEING VOID AB INITIO, SINCE THE ITO AS AO HAS RIGHT LY REOPENED THE CASE WITH PRIOR APPROVAL OF JOINT COMMISSIONER OF INCOME TAX AS SPECIFICALLY PROVIDED U/S 151(1) OF THE INCO ME TAX ACT, 1961. 2. THE LD. CIT(A) HAS ERRED IN HOLDING THAT ASSESSE ES ACTIVITIES CONSTITUTES MANUFACTURING ACTIVITIES ENTITLING ITS TO DEDUCTION U/S 80IC OF THE INCOME TAX ACT, 1961, AS PREPARING INST ANT RASNA DRINKS FROM MOTHER MIX CONCENTRATE DOES NOT INVOLV E ANY MANUFACTURING ACTIVITIES. 3. THE APPELLANT CRAVES TO AMEND OR ADD ANY ONE OR MORE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE FOR THE ASSESSMENT Y EAR 2004-05 IN ITA NO.328(ASR)/2011, AS PER AOS ORDER ARE REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: THE ASSESSEE IS RUNNING THE BUSINESS OF MIXING, BLE NDING AND PREPARING SOFT DRINKS FROM FLAVOURED FRUIT ESSENCE WHICH IS SUPPLIED BY M/S. WAVES FOOD PVT. LTD. AHMEDABAD AND NO DIREC T FRUIT IS PURCHASED EITHER FROM OUTSIDE OR WITHIN THE STATE O F HIMACHAL PRADESH, THEREFORE THE ACTIVITY OF THE ASSESSEE CAN BE CONSIDERED AS BRANDED SOFT DRINK AND THE SAME FALLS UNDER ITEM NO.18 OF PART B OF THE THIRTEENTH SCHEDULE OF THE INCOME TAX ACT (N EGATIVE LIST). THE ASSESSEE IS NOT MANUFACTURING ANY FRUIT JUICE AND HIS PRODUCT DOES NOT FALL UNDER CLAUSE 4(B) OR CLAUSE 5 OF PART C OF THE FOURTEENTH SCHEDULE OF THE INCOME TAX ACT AS CLAIMED BY THE AS SESSEE IN HIS LETTER DATED 12.10.2009. THE ASSESSEE IS PREPARED POWDER DRINK FORM MOTHER MIX. BESIDES RASNA IS PREPARED FROM FLAVORED ARTIFICIAL ITA NOS.328 TO 331(ASR)/2011 3 ESSENCE A NON-FRUIT BASED SOFT DRINK. THE ASSESSEE IS DOING ALL WORK ON THE BEHALF OF HIS PRINCIPAL M/S. WAVES FOOD PVT. LTD. FURTHER AS PER THE CERTIFICATES ISSUED BY THE SMALL SCALE INDU STRIES, THE ASSESSEE USES THE FOLLOWING RAW MATERIAL: 1. SUGAR 2. FOOD CONCENTRATE FOR SOFT DRINKS 3. POWDER CONCENTRATE FOR SOFT DRINKS. FURTHER AS PER THE SAID CERTIFICATE OF THE SMALL SC ALE INDUSTRIES, THE ASSESSEE IS MAKING THE FOLLOWING FINISHED PRODU CT 1. INSTANT FRUIT DRINK 2. SOFT DRINK CONCENTRATE FURTHER AS PER ASSESSEES REPLY THE PLANT IS REGIST ERED AS FRUIT DRINK MIX UNIT & WAS MANUFACTURING THE SAME FOR RASNA. IT CLEARLY INDICATES THAT THERE IS MOTHER MIX POWDER OF RASNA AND HIS PL ANT IS THERETO MIX THE SAME. FURTHER, THE PLANT & MACHINERY USED IN TH E PROCESS ARE: 1. STAINLESS STEEL BLENDER FOR MIXING OF VARIOUS PO WDER IN DRY FORM. 2. SHIFTED FOR GRADING 3. AIR CONDITION & DEHUMIDIFIERS FOR CONTROL ENVIRO NMENT. 4. FORM FILL & SEAL MACHINES (PUNCHING MACHINES) 5. PACKING MACHINERY 6. WEIGHING SCALES. 7. PACKING TABLES. 8. LABORATORY EQUIPMENT 9. MAINTENANCE TOOL & EQUIPMENT 10. STORING RACKS. 11. OFFICE FURNITURE & FIXTURES THE ASSESSEE IS CARRYING THE ACTIVITY OF MIXING THE POWDER AS PER THE REGISTRATION CERTIFICATE ISSUED BY THE INDUSTRIES D EPARTMENT. THE ASSESSEE IN HIS REPLY DATED 12.10.2009 HAS STAT ED THAT IT COVERS 14 TH SCHEDULE BECAUSE THE MINISTRY OF FOOD PROCESSING I NDUSTRIES GAVE SUBSIDY OF 33% ON ITS PLANT & MACHINERY & BUIL DING OWN FOR FOOD PROCESSING UNIT IN LIQUID OR POWDER FORM AND A S FOOD INDUSTRIES AND AFTER MAKING ALL THE NORMS THEY HAVE GIVEN SUBS IDY OF RS.38.50 ITA NOS.328 TO 331(ASR)/2011 4 LACS. HE FURTHER STATED THAT HE IS COVERED IN PART C OF 14 TH SCHEDULE SUB CLAUSE 4(B) AND ALSO SUB CLAUSE 5 OF 14 TH SCHEDULE AS FOOD PROCESSING INDUSTRIES. SECTION 80IC OF THE INCOME TAX PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF THE ASSESSEE INCLUDES ANY PROFITS AND GAI NS DERIVED FROM ANY BUSINESS REFER TO IN SUB-SECTION (2) DEDUCTION FROM SUCH PROFIT SHALL BE ALLOWED PROVIDED IT HAS BEGUN TO MANUFACTU RE OR PRODUCE ANY ARTICLE SPECIFIED IN THE FOURTEENTH SCHEDULE. THE D EDUCTION WAS TO BE ALLOWED AT 100% OF PROFITS TO THE INDUSTRIAL UNIT. (I) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ANY ARTICLE OR THING NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEEN SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THAT PERIOD. (II) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTERPRI SES WHICH HAS BEGUN TO MANUFACTURE OR PRODUCE ANY ARTIC LE OR THING ON THE 7 TH DAY OF JAN. 2003 AND ENDING BEFORE THE IST DAY OF APRIL, 2012, IN ANY EXPORT PROCESSING ZO NE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TECHNOLOGIES PACK OR INDUSTRIAL AREA OR THEME PARK AS NOTIFIED BY THE CENTRAL GOVT. IN THIS REGARD IN THE STATE OF HIMACHAL PRADESH. THE ASSESSEE S ACTIVITIES CANNOT BE CONSIDERED AS MANUFACTURING BECAUSE THE PLANT & MACHINERY USED IN IT IS STAINLE SS STEEL BLENDER FOR MIXING UP VARIOUS POWDERS IN DRY FORMS. SECONDLY, IT DOES NOT COVER SUB CLAUSE 4(B) OF PART C OF THE 14 TH SCHEDULE BECAUSE RASNA IS A NON FRUIT BASED SOFT DRINK PREPARED FROM ARTIFICAL ESSE NCE. THIRDLY IT DOES NOT COVER SUB CLAUSE 5 OF PART C THE 14 TH SCHEDULE AS FOOD PROCESSING INDUSTRY BECAUSE THE APPLICATION OF REGISTRATION AS SMALL SCALE INDUSTRY PERTAINS TO INSTANT FRUIT DRINKS, SOFT DRI NKS CONCENTRATE) BECAUSE IT CLEARLY STATES THAT THE UNIT SITUATED IN INDUSTRIAL ZONE-AREA, WILL QUALIFY FOR DEDUCTION ONLY IF IT IS NOT MANUFA CTURING ANY ARTICLE SPECIFIED IN THIRTEENTH SCHEDULE. THOUGH IT FALLS I N INDUSTRIAL AREA BUT IT IS LISTED UNDER THE ITEM NO.18 OF PART B OF THE THIRTEENTH SCHEDULE BEING THE NEGATIVE LIST. ITA NOS.328 TO 331(ASR)/2011 5 THE HONBLE SUPREME COURT HAS HELD IN SACS EAGLE CH ICORY 255 ITR 178 (SC), STATES THAT CLEANING DRYING ROASTING GRIN DING RAW SPICES INTO POWDERS AND SELLING AS SUCH IS NOT A MANUFACTU RING. THE ASSESSEES OBJECTION ON ISSUANCE OF NOTICE U/S 148 IN HIS CASE VIDE HIS LETTER DATED 12.10.2009. IN THIS CONTEXT A SPEA KING ORDER HAS BEEN PASSED MEETING THE OBJECTION RAISED BY THE ASSESSEE VIDE THIS OFFICE ORDER DATED 30.10.2009 WHICH WAS SERVED UPON THE AS SESSEE ON 5.11.2009 IN VIEW OF THE RATIO LAID DOWN BY HONBLE SUPREME COURTS JUDGMENT IN THE CASE OF M/S. GKN DRIVE SHAFT INDIA VS. ITO (2003) 259 ITR 29. IN RESPONSE TO SPEAKING ORDER DATED 30.10.2009 SERV ED UPON THE ASSESSEE ON 5.11.2009 THE ASSESSEE HAS FILED HIS RE PLY DATED 18.11.09 IN WHICH THE CHANGES HIS STAND AND HIMSELF ADMITS THAT SCHEDULE FOURTEENTH OF INCOME TAX DOES NOT APPLY TO HIS UNIT /INDUSTRY WHEREAS THE ASSESSEE HAS CLAIMED IN HIS LETTER DATED 12.10. 2009 THAT HIS CASE FALLS UNDER CLAUSE 4B AND CLAUSE 5 OF PART C OF FOU RTEENTH SCHEDULE. THE ASSESSEE FURTHER DENIED THAT HIS CASE DOES NOT FALL UNDER ITEM NO.18 OF THE THIRTEENTH SCHEDULE. THE ASSESSEE NOW CLAIMED THAT HE IS JUST A MANUFACTURER. I HAVE CONSIDERED THE REPLY OF THE ASSESSEE AND FIN D THAT THE ASSESSEES REPLY DATED 12.10.2009 AND 18.11.2009 AR E SELF CONTRADICTORY. THE ASSESSEE FURTHER WITHDRAWS HIS C LAIM OF FOOD PROCESSING UNIT AS HE SAYS IN HIS LETTER DATED 18.1 1.2009 THAT HIS CASE DOES NOT FALL UNDER FOURTEENTH SCHEDULE. THUS, THE ASSESSEE HIMSELF DOES NOT KNOW UNDER WHICH SECTION/SCHEDULE OF INCO ME TAX, HE WANTS TO CLAIM DEDUCTION. IN VIEW OF THE FACTS DISCUSSED ABOVE, I REJECT THE CLAIM OF THE ASSESSEE U/S 80IC. THUS, INCOME IS COMPUTED AS UNDER: RETURNED INCOME RS.149823/- ADD DEDUCTION U/S 80IC NOT ADMISSIBLE AS DISCUSSED RS. 797582/- TOTAL INCOME ASSESSED RS.947405/- ITA NOS.328 TO 331(ASR)/2011 6 3. THE LD. CIT(A) DELETED THE ADDITION VIDE PARA 8, WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: 8. NOW COMING TO THE MERITS O THE CASE, IT IS UNDE NYING FACT THAT THE APPELLANT HAS STARTED ITS INDUSTRIAL UNIT IN T HE NOTIFIED BACKWARD AREA AT BAI ATTARIAN, KANDROI, TEHSIL INDORA, IN DI STRICT KANGRA. HIMACHAL PRADESH UNDER THE NAME & STYLE OF M/S. R.K . M. FOOD PRODUCTS WITH REGD. OFFICE AT DHANGU CHOWK, PATHANK OT AND THE SAME STAND REGISTERED WITH THE DEPTT. OF INDUSTRY AND IT S UNIT WAS REGISTERED AS A FOOD PROCESSING UNIT BY THE MINIST RY OF FOOD PROCESSING INDUSTRIES, NEW DELHI FOR MANUFACTURING OF FRUIT DRINK MIX POWDER AND FRUIT DRINK MIX CONCENTRATE (RASNA T YPE). ITS MANUFACTURING UNIT WAS SET UP DURING THE PREVIOUS Y EAR RELEVANT TO THE AY 2004-05 WITH FRESH MACHINERY. SECONDLY, THE APPE LLANT IS ADMITTEDLY CLAIMING THAT ITS CASE IS COVERED BY A B LANKED EXEMPTION IN VIEW OF THE NOTIFICATION NO.1(10/2001-NFR, DATED 7.1.2003 GOVT. OF INDIA, MINISTRY OF COMMERCE & INDUSTRY, DEPTT. O F INDUSTRIAL POLICY & PROMOTION, NEW DELHI. THIRDLY THE APPELLAN T HAS BEEN GRANTED FINANCIAL SUBSIDY OF RS.38,58,000/- VIDE SANCTION LETTER DATED 31.07.2006 FROM THE CENTRAL GOVT. MINISTRY OF FOOD PROCESSING INDUSTRIES, AUGUST KRANTI MARG, NEW DELHI TO THE AP PELLANTS MANUFACTURING UNIT AT BAI ATTARIAN (HP) UNDER THE N AME & STYLE OF M/S. RKM FOOD PRODUCTS FOR SETTING UP OF FRUIT DRIN K MIX POWDER AND FRUIT DRINK MIX CONCENTRATE (RASNA TYPE). IT IS AL SO UNDENYING THE FACT THAT THE APPELLANT IS NOT MANUFACTURING ANY LIQUID DRINK. FURTHER THE AO HAS HIMSELF/HERSELF EARLIER HELD THAT THE APPELL ANT IS ENGAGED IN PRODUCTION OF SOFT DRINK POWDER IN SACHET PACKING. FOURTHLY, BY ANY STRETCH OF IMAGINATION, THE APPELLANTS INDUSTRIAL UNIT CANNOT BE TERMED AS MANUFACTURING ANY AERATED WATER SOFT DRINK WHICH MEANS THAT WATER IS EXPOSED TO CHEMICAL OR MECHANICAL ACTION OF AIR CHARGED WITH CARBON DIOXIDE AND THE DOT OF SUCH SOFT DRINK PACK OPENS WITH A GREAT PRESSURE WITH WATER/DRINK GUSHING OUT OF ITS OWN MO TION, WHEREAS THE ASSESSEES BUSINESS IS TO MANUFACTURE FRUIT DRINK M IX POWDER AND FRUIT DRINK MIX CONCENTRATE (RASNA) BRAND AND WORKING AS A FRANCHISE FOR HIS PRINCIPALS, M/S. WAVES FOOD PVT. LTD. AHMEDABAD BECAUSE AFTER PREPARING THE FINISHED GOODS FROM THE RAW MATERIAL PURCHASED FROM THE PRINCIPALS, THE SAME ARE SOLD BACK MAINLY TO IT S PRINCIPALS AND THAT DOES NOT MEAN THAT THE APPELLANT IS NOT ENGAGED IN THE MANUFACTURING ACTIVITIES IN HIMACHAL PRADESH AND THAT ALSO DEBAR THE APPELLANT IN ITA NOS.328 TO 331(ASR)/2011 7 BEING CONSIDERED AS AN INDUSTRIAL UNIT BEING RUN IN THE SPECIFIED AREA IN HIMACHAL PRADESH AND FOR CLAIMING DEDUCTION AS S UCH UNDER THE PROVISIONS OF SECTION 80-IC OF THE I.T.ACT.1961. T HUS, THE APPELLANT CASE IS NOT COVERED BY ITEM 18 OF PART C OF 13 TH SCHEDULE OF THE I.T. ACT, 1961. THE ASSESSEE HAS RIGHTLY CLAIMED THAT IT S CASE IS COVERED BY CLAUSE 5 OF PART C OF 14 TH SCHEDULE, AS FOOD PROCESSING INDUSTRY ( OTHER THAN THOSE INCLUDED IN THE 13 TH SCHEDULE) BECAUSE THE CONCERNED MINISTRY OF CENTRAL GOVT. HAS APPROVED THE APPELLAN TS PRODUCTS UNDER THE FOOD PROCESSING INDUSTRY AFTER CONSCIOUS CONSID ERATION OF ALL THE FACTS OF THE MATTER. RATHER, THE AO HAS FAIELD TO B RING ON RECORD ANY MATERIAL CONTRARY TO THE APPELLANTS FURNISHING OF RELEVANT ELIGIBILITY CERTIFICATES FROM THE INDUSTRY DEPTT. AS WELL AS FR OM MINISTRY OF FOOD PROCESSING INDUSTRIES, NEW DELHI ON 31.07.2006. THE KANGRA DISTRICT HAS BEEN SELECTED AS ELIGIBLE FOR CONCESSIONS UNDER THE NEW INDUSTRIAL POLICY, DECLARED BY THE MINISTRY OF COMMERECE & IND USTRY, NEW DELHI VIDE THEIR O.M. DATED 7.1.2003. FURTHER, IN T HE LAST LINES OF 2 ND PARA AT 2 ND PAGE OF HER ASSESSMENT ORDER FOR THE AY 2004-05, I T HAS BEEN AFFIRMEDLY STATED BY THE AO HERSELF THAT AS PE R CERTIFICATES ISSUED BY THE SMALL SCALE INDUSTRIES, THE ASSESSEE USES TH E FOLLOWING RAW MATERIAL (1) SUGAR (2) FOOD ACTIVITIES & FLAVOURS A ND (3) POWDER CONCENTRATE FOR SOFT DRINKS WHICH ARE UNLIKE THE BR ANDED AERATED WATER/SOFT DRINKS (NON-FRUIT BASED). HENCE, THE APP ELLANT SEEMS TO BE QUITE JUSTIFIED IN PLACING HEAVY RELIANCE ON THE FO LLOWING CASE LAWS: (A) HONBLE APEX COURT IN ASPIN WALL & CO. LTD. VS. CIT (20010 125 ITR 323 (SC);\ (B) CIT V. EMPTEE POLY YARN P. LTD. (2010) 34 DTR (SC) 21 WHEREIN THE DEFINITION OF MANUFACTURE AS MADE EXP LICIT BY FINANCE (NO.2) ACT, 2009 HAS BEEN EMPHASIZED. THESE BEING RELEVANT TO THE FACTS OF THE CASES HAVE ALSO BEEN TAKEN INTO CONSIDERATION. 8.2. IN VIEW OF THE FACTS & CIRCUMSTANCES OF THE CA SE DISCUSSED SUPRA, AND IN THE INTEREST OF JUSTICE, IT WOULD BE PROPER TO HOLD THAT THE AO IS NOT JUSTIFIED IN MAKING ADDITIONS OF RS.7,97, 582/-, RS.16,51,420/-, RS.9,87,060/- AND RS.4,23,860/- BY NOT ALLOWING THE DEDUCTION CLAIMED U/S 80IC OF THE ACT FOR THE A.YS 2004-05, 05-06, 06-07 & 07-08 RESPECTIVELY. ITA NOS.328 TO 331(ASR)/2011 8 4. THE LD. DR, MR. AMRIK CHAND MADE THE WRITTEN SU BMISSIONS AND ARGUED WITH REGARD TO FINDING OF THE LEARNED CIT( A) THAT THE RE-ASSESSMENT PROCEEDINGS OUGHT TO HAVE BEEN INITIATED NOT BELOW THE RANK OF ASSTT/DCIT AND THAT TOO WITH THE PRIOR APPROVAL OF THE COMMISS IONER OF INCOME TAX OR THE CHIEF COMMISSIONER OF INCOME-TAX, IT IS SUBMIT TED THAT NO SUCH GROUND WAS RAISED BY THE ASSESSEE BEFORE THE HONBLE CIT(A ) AS WELL AS BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS . M OREOVER, THE ASSESSEE DULY PARTICIPATED THE ASSESSMENT PROCEEDINGS AND RA ISED NO OBJECTION REGARDING PROCEDURE ADOPTED BY THE AO TO START AND TO COMPLETE THE ASSESSMENT UNDER SECTION 143(3)/147BEFORE THE COMPL ETION OF ASSESSMENT. FURTHER, THE AO FOLLOWED THE PROVISIONS OF SECTION 151(2) AND THE NOTICE UNDER SECTION 148 WAS ISSUED WITH THE PRIOR APPROVA L OF THE ADDL. CIT. ONLY FOR THE REASON THAT THE REASSESSMENT PROCEEDINGS OU GHT TO HAVE BEEN INITIATED NOT BELOW THE RANK OF ASSTT/DCIT, ASSESSMENT CANNOT BE A IRREGULAR AND ILLEGAL. IN THE CASE OF ISHA BEEEVI & ORS. VS. TRO(SC), 101 ITR 449 , AND CIT VS. HARGOPAL BHALLA & SONS(P&H) 82 ITR 243 THE HONBLE COURTS ,,HELD A WRONG REFERENCE TO THE POWER UNDE R WHICH AN ORDER IS MADE DOES NOT PER SEE VITIATE THE ORDER IF THERE IS SOME OTHER POWER UNDER WHICH THE ORDER COULD LAWFULLY BE MADE. THE VALIDITY OF THE IMPUGNED ORDER HAS TO BE TESTED BY REFERENCE TO THE QUESTION WHETHER THE ITO HAD ANY POWER AT ALL TO MAKE AN ORD ER OF THIS NATURE. IF THE POWER IS OTHERWISE ESTABLISHED, THE FACT THAT THE ITA NOS.328 TO 331(ASR)/2011 9 SOURCE OF POWER HAS BEEN INCORRECTLY DESCRIBED WOU LD NOT MAKE THE ORDER INVALID. IN THE CASES OF V RAJU VS. CIT(MAD) 147 ITR 212 AND SARABJIT SINGH VS. CIT(DEL) 234 ITR 641, IT SQUARELY HELD BY THE HONBLE HIGH COURTS THAT ASSESSMENT COMPLETED WITHOUT FOL LOWING PRESCRIBED PROCEDURE- NON-COMPLIANCE IS ONLY A PROC EDURAL IRREGULARITY AND WILL NOT RENDER THE ASSESSMENT AB INITIO VOID. IT IS HELD BY THE HONBLE HIGH COURT. 4.1. THE LD. DR FURTHER STATED THAT THE WORD MANUFACTURE HAS BEEN DEFINED IN SECTION 2(29BA) WHICH EMPHASIZED TH AT THE CHANGE SHOULD BE RESULTING IN TRANSFORMATION OF OBJECT INTO NEW A ND DISTINCT OBJECT HAVING DIFFERENT NAME, CHARACTER AND USE OR THIS NEW OBJEC T SHOULD HAVE DIFFERENT CHEMICAL COMPOSITION OR INTEGRAL STRUCTURE WHICH IS NOT IN THE CASE OF THE ASSESSEE. THIS VIEW ALSO FIND SUPPORT FROM THE JUD GMENTS QUOTED HEREUNDER: 1. ROASTING AND GRINDING OF CHICORY ROOTS INTO CHICORY POWDER NO MANUFACTURING ACTIVITY INVOLVED, HELD BY THE HONBL E SUPREME COURT IN THE CASE OF M/S SACS EAGLES CHICORY VS. CIT(SC) 255 ITR 178. 2. MINING OF LIMESTONE AND MARBLE BLOCKS AND CUTTING A ND SIZING THEM, NO MANUFACTURING INVOLVED, HELD BY THE HONBLE SUPR EME COURT IN THE CASE OF M/S LUCKY MINMAT PVT. LTD. VS. CIT(SC) 245, ITR 830. 3. BREAKING OF BIG BOULDERS INTO SMALL STONES OR BAJRI NO MANUFACTURING ACTIVITY SINCE NO NEW AND DISTINCT CO MMODITY CAME INTO EXISTENCE, HELD BY THE HONBLE ITAT, CHANDIGAR H BENCH. 105 ITD 52 4. EXCAVATING AND BREAKING BOULDER STONES FROM STONE Q UARRIES AND SUPPLYING SAME FOR CONSTRUCTION WORK. THE WORD EXC AVATION MEANS TO MAKE HOLLOW BY REMOVING THE INSIDE TO TAKE OUT LEAV ING HOLLOW ITA NOS.328 TO 331(ASR)/2011 10 ACTIVITY OF DIGGING AND REMOVING EARTH FOR EXCAVATI ON OF BOULDER IN ORDER TO FACILITATE COLLECTION AND TRANSPORTATION OF BOUL DER CANNOT BE TERMED AS MANUFACTURING ACTIVITY TERMED AS MANUFACTURING ACT IVITY BECAUSE NO NEW COMMODITY HAS BEEN FORMED WHICH HAS A DIFFERENT IDE NTITY SINCE BOULDER REMAINS BOULDER- EXCAVATION OF GYPSUM IS ALSO NOT M ANUFACTURING ACTIVITY. HELD BY THE HONBLE ITAT BENCH, DELHI IN CASE OF M/S ACIT VS. SAKET INDIA (P) LTD.(ITAT), DELHI 68 ITD 270. 5. BUYING AND PROCESSING OF SHRIMPS DID NOT INVOLVE PR ODUCTION. THERE IS NO ESSENTIAL DIFFERENCE BETWEEN RAW SHRIMPS AND PRA WNS AND PROCESSED OR FROZEN SHRIMPS AND PRAWNS. HELD BY HONBLE SU PREME COURT IN THE CASE OF CIT VS. RELISH FOODS 237 ITR 59(SC). 6. PROCESS INVOLVED IN CONVERTING RAW FISH INTO TINNED FISH DID NOT AMOUNT TO MANUFACTURING , HELD BY THE HONBLE HIGH COURT OF D ELHI IN THE CASE OF CIT VS, GITWAKO FARMA(1) PVT. LTD. REGARDING FINAN CIAL SUBSIDY GRANTED TO THE ASSESSEE AT RS.38,58,000/- IT IS SUB MITTED THAT THIS IS PAID FOR ESTABLISHMENT OF INDUSTRIAL UNITS IN BACKWARD AREA OF HP, FOR THE PURPOSE OF INCREASING EMPLOYMENT AND DEVELOPMENT T HEREOF AND AS PER CONDITIONS LAID DOWN IN LETTER NO.3542 DATED 14/05/ 2004 OF INDUSTRIAL CENTRE, DHARAMSHALA ( KINDLY REFER PAGE -44 OF MY P APER BOOK). IT IS, THEREFORE, AGAIN PRAYED THAT THE ORDER OF THE LEARN ED CIT(A) MAY BE SET- ASIDE IN VIEW OF EARLIER SUBMISSIONS AND VARIOUS CA SE LAWS QUOTED ABOVE. 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. J.S.BHASIN , ADVOCATE RELIED UPON THE ORDER OF THE LD. CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE HIM. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE ARE CONVINCED WITH THE SUBMISSIONS OF THE LD. DR AND THE ARGUMENTS MADE THAT NO LEGAL GROUND HAS BEEN TAKEN BEFORE THE LD. CIT(A) AND THE LD. CIT(A) IS NOT JUSTIFIED IN DECIDING THE LEGAL ISSUE . MOREOVER, THE RELEVANT ITA NOS.328 TO 331(ASR)/2011 11 FINDINGS OF THE LD. CIT(A) IN THIS REGARD ARE CONTA INED AT PAGE 14 OF HIS ORDER WHICH ARE REPRODUCED AS UNDER: SECONDLY, KEEPING IN VIEW HE PROVISIONS OF SECTION 151(1) OF THE INCOME TAX ACT, 1961, ONCE THE REGULAR ASSESSMENTS ORDERS HAVING ALREADY BEEN PASSED U/S 143(3) AND THE INCOME ESCAP ED EXCEEDS RS. ONE LAC, AS IS THE CASE EXISTING IN THE INSTANT ABO VE MENTIONED THREE ASTT YEARS, THE RE-ASSESSMENT PROCEEDINGS OUGHT TO HAVE BEEN INITIATED BY THE AO NOT BELOW THE RANK OF ASSTT./DEPUTY COMMI SSIONER OF INCOME TAX AND THAT TOO WITH THE PRIOR APPROVAL OF THE CIT OR CCIT. BUT IN THE INSTANT CASES, THE REASSESSMENTS HAVE BE EN DONE BY THE ITO (BELONG THE RANK OF ACI/DCIT) AND THAT TOO WITH THE APPROVAL OF JT. CIT, RANGE VI, PATHANKOT AND NOT THAT OF THE COMMIS SIONER OR THE CHIEF COMMISSIONER. ON THIS SCORE, THE RE-ASSESSMEN TS FRAMED U/S 147 FOR THE ASSTT. YEARS 2004-05 TO 2006-07 BEING IRREG ULAR AND ILLEGAL, CANNOT BE SUSTAINED, BEING VOID AB INITIO. 6.1. THE FINDINGS OF THE LD. CIT(A) CANNOT BE SUSTA INED AND HE IS NOT JUSTIFIED IN DECLARING REASSESSMENTS AS VOID AB INI TIO FOR THE REASONS MENTIONED HEREINABOVE AND ALSO THE ASSESSEE HAS PAR TICIPATED IN THE ASSESSMENT PROCEEDINGS AND IN VIEW OF THE DECISIONS RELIED UPON BY THE LD. DR. THUS, GROUND NO.1 OF THE REVENUE IS DISMISSED. 7. AS REGARDS GROUND NO.2 OF THE REVENUE, IT WAS P OINTED OUT BY THE LD. DR THAT AS PER REVENUE THE ITEM IS PLACED IN THE TH IRTEENTH SCHEDULE PART-B IN ITEM NO.18 WHERE AS PER THE ASSESSEE IT LIES IN THE FOURTEENTH SCHEDULE PAT-B ITEM NO.5. THE WHOLE DISPUTE REVOLVES AROUND THE PRODUCT BEING MANUFACTURED AND WHETHER THE SAME FALLS AS MENTION ED HEREINABOVE. NONE OF THE AUTHORITIES BELOW HAS BROUGHT ON RECORD WITH REGARD TO THE SCHEDULE- ITA NOS.328 TO 331(ASR)/2011 12 THIRTEENTH WHETHER EXCISE CLASSIFICATION OR SUB CL AUSE UNDER NATIONAL INDUSTRIAL CLASSIFICATION (NIC),1998 BRANDED AERA TED WATER/SOFT DRINKS 2201.20, 2202.20, 15541 OR 15542 AS MENTIONED IN TH E SCHEDULE -13 PART-B OR ALTERNATIVELY IN SCHEDULE -14 PART B IS 19.01 TO 19.04. WITHOUT EXAMINATION OF THIS ISSUE, IT CANNOT BE ASCERTAINED WHETHER THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IC OR NOT. NOTHING HAS BEEN BROUGHT ON RECORD BY EITHER OF THE PARTIES BEFORE ANY OF THE AUTHORIT IES BELOW OR EVEN BEFORE US. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN T HE INTEREST OF JUSTICE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO, WHO WILL EXAMINE THE SAME , AS MENTIONED HEREINABOVE AND DECIDE THE SAME ACCORDING LY DENOVO BUT AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THUS, GROUND NO.2 OF THE REVENUE IS ALLOWED FOR STATISTICAL PURP OSES. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.328(ASR)/2011 IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. 8. SINCE THE FACTS IN THE APPEALS OF THE REVENUE IN ITA NOS. 329 TO 331(ASR)/2011 ARE IDENTICAL TO THE FACTS IN ITA NO. 328(ASR)/2011 (SUPRA), AS MENTIONED HEREINABOVE, OUR DECISION IN ITA NO.328(A SR)/2011 IS APPLICABLE IDENTICALLY TO THE FACTS OF THE APPEALS OF THE REV ENUE IN ITA NO.329 TO 331(ASR)/2011 FOR THE ASSESSMENT YEARS 2005-06 TO 2 007-08 AND ACCORDINGLY ALL THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED F OR STATISTICAL PURPOSES. ITA NOS.328 TO 331(ASR)/2011 13 9. IN THE RESULT, ALL THE FOUR APPEALS OF THE RE VENUE IN ITA NO.328 TO 331(ASR)/2011 ARE PARTLY ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH FEBRUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28TH FEBRUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.RAMAN MOHINDRU, PATHANKOT. 2. THE ITO WARD 2(3), PATHANKOT. 3. THE CIT(A), ASR. 4. THE CIT, ASR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR