ACIT 18(2), MUMBAI V. KAMINI ENTERPRISES, MUMBAI

ITA 4027/MUM/2017

• Counselvise Citation: [2019] 113 COUNSELVISE.COM (IT) 6425 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 02-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS LD
• Assessee Lawyers: REEPAL G TRALSHAWALA LD
• Keywords: Rule of consistency; Additional evidence; Onus to prove
• Section: 143(3); 10AA; 250; 148

Judgement Text

ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.4027/MUM/2017 ( / ASSESSMENT YEAR:2012-13) A CIT - 18(2) 302, 3 RD FLOOR EARNEST HOUSE, NCPA MARG MUMBAI-400 021. / VS. M/S. KAMINI ENTERPRISES (EARLIER KAMINI JEWELS) 70/70A, 1 ST FLOOR, LAKSHMI PREMISES SHEIKH MEMON STREET ZAVERI BAZAR, MUMBAI-400 002. ./ ./PAN/GIR NO.: AAKFK-4416-G ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : SHRI REEPAL G. TRALSHAWALA- LD. AR REVENUE BY : SHRI B. SRINIVAS - LD.CIT-DR / DATE OF HEARING : 19/09/2019 / DATE OF PRONOUNCEMENT : 21/11/2019 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2012-13 CONTEST THE ORDER OF LD. COMMIS SIONER OF INCOME- TAX (APPEALS)-29, MUMBAI [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-29/IT-76/ITO-18(2)(1)/2015-16 DATED 20/03/2017 ON FOLLOWING GROUNDS OF APPEAL: - ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE DISALLOWANCE MADE BY THE AO O N ACCOUNT OF EXEMPTION CLAIMED BY THE ASSESSEE U/S 10AA OF THE INCOME TAX ACT, 1961 OF RS .22,72,10,669/- IGNORING THE FACT THAT THE AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS , ESTABLISHED THAT THE ASSESSEE DID NOT CARRY OUT ANY MANUFACTURING ACTIVITY IN THE SEZ PREMISES. 2. THE LD. CIT(A) FAILED TO APPRECIATE THAT T HE ASSESSEE FIRM, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, COULD NOT PROVE IT HAD CARR IED OUT ANY MANUFACTURING ACTIVITY AT ITS PREMISES AT SEZ, SURAT IN THE F.Y. 2011-12 RELE VANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE ONUS TO PROVE THE SAME LIED O N THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD, CIT(A) HAS ERRED IN LAW IN DELETING THE DISALLOWANCE MADE BY T HE A.O., BY PLACING RELIANCE ON THE CASE LAWS WHICH ARE NOT RELEVANT TO THE INSTANT CASE, AS THE FACTS OF THE INSTANT CASE ARE ENTIRELY DIFFERENT FORM THE CASES RELIED UPON. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ARRIVING AT THE DECISION THAT THE A.O. HAS MADE ADDITION ON THE BASIS OF PRESUMPTION AND SUSPICION ONLY; IGNORING THE FACT T HAT IN THE ASSESSMENT ORDER, THE AO HAS FIRMLY ESTABLISHED THE FACT THAT NO MANUFACTURING A CTIVITY WAS BEING CARRIED OUT BY THE ASSESSEE AT THE SEZ PREMISES. 5. FOR THE ABOVE-MENTIONED REASON AND ANY OTH ER REASONS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS REQUESTED THAT THE ORDER OF THE CIT(A) BE QUASHED AND THAT OF THE A.O. BE RESTORED. AS EVIDENT FROM GROUNDS OF APPEAL, THE REVENUE IS A GGRIEVED BY GRANT OF DEDUCTION TO THE ASSESSEE U/S 10AA BY LEARNED FIRST APPELLATE AUTHORITY WHICH WAS DENIED BY LD. AO IN THE ASSESSMENT PROCEE DINGS IN VIEW OF THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS OF PROVING THAT IT CARRIED OUT ANY MANUFACTURING ACTIVITY AT ITS SEZ U NIT SITUATED AT SURAT. . 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT FIRM STATED TO BE ENGAGED IN TRADING OF GOLD ORNAMENTS A ND MANUFACTURING OF GOLD MEDALLIONS WAS ASSESSED FOR YEAR UNDER CONSIDE RATION U/S 143(3) ON 16/03/2015 WHEREIN THE INCOME OF THE ASSESSEE WA S DETERMINED AT RS.2272.10 LACS AS AGAINST RETURNED INCOME OF RS.18 .34 LACS E-FILED BY THE ASSESSEE IN 26/09/2012. THE ASSESSEE CLAIMED DE DUCTION U/S 10AA ON CONVERSION OF GOLD BARS INTO COINS / MEDALLIONS WHICH WAS DENIED TO THE ASSESSEE AND THE SAME FORM SUBJECT MATTER OF PR ESENT APPEAL BEFORE ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 3 US. THE CLAIM OF DEDUCTION ARISES OUT OF MANUFACTUR ING ACTIVITIES STATED TO BE CARRIED OUT BY THE ASSESSEE IN ITS SPECIAL ECONO MIC ZONE (SEZ) UNIT SITUATED AT SURAT. THE SAID ACTIVITY WAS STATED TO BE CONVERSION OF GOLD INTO COINS / MEDALLIONS. AS EVIDENT FROM IMPUGNED O RDER, THE ASSESSEE HAD CLAIMED AGGREGATE DEDUCTION OF RS.2272.10 LACS U/S 10AA OUT OF WHICH DEDUCTION OF RS.1216.35 LACS WAS CLAIMED FROM MANUFACTURING ACTIVITY WHEREAS THE BALANCE RS.1055.74 LACS WAS CL AIMED AGAINST TRADING ACTIVITY. 2.2 DURING ASSESSMENT PROCEEDINGS, THE PERUSAL OF I MPORT AND EXPORT DETAILS REVEALED THAT ALL THE IMPORT AND EXPORT TOO K PLACE IN MARCH, 2012. THE ASSESSEE WAS ABLE TO MANUFACTURE THE GOODS ON S AME DAY THE RAW MATERIAL ARRIVED IN THE SEZ UNIT AND ALSO PACKED TH E GOODS ON THE SAME DAY. NOT ONLY THAT ALL PAPER WORK WAS DONE AND STOC K WENT OUTSIDE THE SEZ ON THE SAME DAY, WHICH WAS EVIDENT FROM THE FOL LOWING TABLE AS EXTRACTED IN THE QUANTUM ASSESSMENT ORDER: - DATE OF IMPORT OF GOLD GOL D WEIGHT DATE OF EXPORT MEDALLION DATE OF STOCK OUTWARD FROM SEZ (REPLY DATED 10.11.2014) OUTPUT WEIGHT (GMS) INPUT OUTPUT RATIO (WORKED OUT) 09/03/2012 35 KG 10/03/2012 09/03/2012 34981.561 0.999473 09/03/2012 50 KG 10/02/2012 09/03/2012 49973.659 0.999473 12/03/2012 85 KG 13/03/2012 12/03/2012 84955.220 0.999473 14/03/2012 85 KG 15/03/2012 14/03/2012 84955.220 0.999473 15/03/2012 80 KG 16/03/2012 15/03/2012 79957.854 0.999473 19/03/2012 80 KG 20/03/2012 19/03/2012 79957.854 0.999473 24/03/2012 80 KG 25/03/2012 24/03/2012 79957.854 0.999473 2.3 IT WAS FURTHER OBSERVED THAT IMPORT PARCELS WER E RECEIVED AT AROUND 2.30 P.M. AND ALL THE ACTIVITIES WERE STATED TO BE COMPLETED WITHIN A SPAN OF 4 HOURS 30 MINUTES. FURTHER, THE EXPORT PROCEEDS WERE NEVER REALIZED BY THE ASSESSEE EVEN AFTER LAPSE OF 3 YEARS AND THE RATE OF PROFIT IN ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 4 EXPORT / SEZ BUSINESS WAS SHOWN TO BE SUBSTANTIALLY HIGHER THAN THE PROFIT IN DOMESTIC TRANSACTIONS. ANOTHER OBSERVATIO N WAS THE FACT THAT ALL IMPORTERS AS WELL AS EXPORTERS PERTAIN TO ALMOST SA ME AREA IN SAME COUNTRY I.E. DUBAI WHEREAS THE PAYMENTS WERE ROUTED THROUGH NEW YORK AND BAHAMAS AND NOT CREDITED TO THE ACCOUNTS OF THE EXPORTERS FROM WHOM ASSESSEE MADE IMPORTS. THE BANK ACCOUNT NUMBER S WERE FOUND TO BE THE SAME IN THE CASE OF SUPPLIERS NAMELY SOLI TAIRE GENERAL TRADING FZE AND SKY DIAMOND JEWELLERY FZE. ALL THESE FACTOR S LED LD. AO TO SHOW-CAUSE THE ASSESSEE TO FILE REQUISITE DETAILS O F THE TRANSACTIONS INCLUDING COPIES OF IMPORT / EXPORT ORDERS, PROCEDU RE REGARDING FINALIZATION OF PRICE, ELECTRICITY CONSUMPTION, BIL LS OF LABOR CHARGES ETC. HOWEVER, THE ASSESSEE, AS PER OBSERVATION IN THE QU ANTUM ASSESSMENT ORDER, FILED ONLY PART DETAILS. 2.4 AFTER CONSIDERING ASSESSEES SUBMISSIONS & EVID ENCES, IT WAS OBSERVED BY LD. AO THAT CRITICAL DOCUMENTS / INFORM ATION TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTIONS WAS NOT FILED B Y THE ASSESSEE. THE DETAILS OF DISCREPANCIES IN DOCUMENTS / INFORMATION HAVE BEEN TABULATED IN PARA-7.1 TO 7.13 OF THE QUANTUM ORDER. ANOTHER O BSERVATION MADE IN PARA-8 WAS THE FACT THAT JOB WORKER, WHO SUPPOSEDLY CARRIED OUT THE WORK FOR THE ASSESSEE, WERE ACTING AS OUTSOURCING AGENCY AND INPUT-OUTPUT RATIO OF ALL THE MANUFACTURING CYCLE WAS EXACTLY TH E SAME, WHICH WOULD BE VERY UNLIKELY. THEREFORE, IT WAS HELD THAT THE A SSESSEE HAD NOT DONE ANY MANUFACTURING AND THEREFORE, NOT ELIGIBLE TO CL AIM DEDUCTION U/S 10AA. ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 5 2.5 PROCEEDING FURTHER, WITHOUT PREJUDICE, A CONCLU SION WAS ALSO DRAWN THAT ANY MANUFACTURING, IF AT ALL DONE, WAS DONE OU TSIDE SEZ SINCE MANUFACTURING PROCESS WAS LENGTHY PROCESS AND ONE L OT OF RAW MATERIAL WOULD REQUIRE RE-PROCESSING AGAIN AND AGAIN AND IF THE SIZE OF THE MEDALLION WAS SLIGHTLY LESS OR DESIGN WAS SLIGHTLY FLAWED, THEN THE ENTIRE PROCESS WOULD HAVE TO BE REPEATED. IT WAS OBSERVED THAT THE PROCESS WOULD INVOLVE MULTIPLE STEPS LIKE MELTING, ROLLING PROCESS TO REDUCE WIDTH AND TO ACHIEVE DESIRED THICKNESS, CIRCULAR CUTTING, STAMPING, RECYCLING OF SCRAP ETC. AFTER EACH MELTING, THE GOLD WOULD BE RE QUIRED TO BE COOLED DOWN TO BECOME HARD FOR ROLLING AND CUTTING ETC. WH ICH WOULD BE A TIME TAKING PROCESS. TO WORK ON 80 KG OF GOLD, IT WOULD TAKE 11 CYCLES TO HAVE A WASTAGE OF AROUND 3 GRAMS. THE PROCESS WOULD REQUIRE MANUAL WORK AT EACH STAGE AND EACH CYCLE, AS PER EXPERIENC E OF OTHER SIMILAR TYPE OF CASES, WOULD TAKE MINIMUM OF 3-4 HOURS APPR OXIMATELY WHEN THE ENTIRE LOT OF RAW MATERIAL WOULD BE FED INTO THE MA CHINES AT ONE GO. THEREFORE, ONE LOT CONSISTING OF DIFFERENT CYCLES W OULD TAKE MINIMUM OF 33 TO 44 HOURS OF NON-STOP WORKING WHICH WOULD DOUB LE TO 44 TO 88 HOURS IF ONE LOT OF 40 KG WAS TO BE USED. HOWEVER, AS AGA INST THIS, THE ENTIRE MANUFACTURING WORK WAS SHOWN TO HAVE BEEN COMPLETED IN A SPAN OF 4.30 HOURS WHICH WOULD LEAD TO A CONCLUSION THAT NO MANUFACTURING WAS DONE BY THE ASSESSEE AT ITS SEZ UNIT. 2.6 REGARDING NATURE OF MACHINERIES REQUIRED TO CAR RY OUT SUCH OPERATIONS, IT WAS OBSERVED THAT AS A NORMAL PRACTI CE, THE SAID MANUFACTURING PROCESS WOULD REQUIRE DIFFERENT KIND OF MACHINERIES IN THE SHAPE OF INDUCTION MACHINE, ROLLING MACHINE, CUTTIN G MACHINE, WEIGHING ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 6 SCALE, POLISHING MACHINE, STAMPING PRESS, DESIGN DI E, PACKING MACHINES ETC. ALL THESE MACHINES WERE SENSITIVE AS WELL AS C OSTLY MACHINES, EACH COSTING MINIMUM OF RS.10-15 LACS. HOWEVER, AS AGAIN ST THE SAME, THE ASSESSEE HAD MACHINERY OF RS.7.86 LACS ONLY AS ON 0 1/04/2011 AT ITS SEZ UNIT WHICH WOULD BE INSUFFICIENT TO UNDERTAKE S UCH KIND OF MANUFACTURING VOLUME. 2.7 THE PERUSAL OF ELECTRICITY RECORDS REVEALED THA T THE BILL AMOUNT FOR DIFFERENT MONTHS INCLUDING MONTH OF MANUFACTURING, WAS FOR THE SAME FIGURES OF RS.2130 WHICH WAS ON THE BASIS OF MINIMU M CHARGES. SINCE THE MANUFACTURING WAS STATED TO BE DONE IN THE MONT H OF MARCH, THE BILL FOR THAT MONTH SHOULD HAVE BEEN SIGNIFICANTLY HIGHE R THAN BILL FOR OTHER MONTHS WHEN NO MANUFACTURING ACTIVITY WAS CARRIED O UT BY THE ASSESSEE. 2.8 UPON PERUSAL OF DETAILS OBTAINED FROM SEZ, IT C AME TO LIGHT THAT THERE WAS NO ENTRY OR EXIT OF LABOR IN SEZ AREA ON BEHALF OF THE ASSESSEE UNIT. NO GATE PASS WAS EVER ISSUED WHICH WOULD SHOW MOVEMENT OF LABOR DURING THE STATED PERIOD OF PRODUCTION. 2.9 IT WAS FURTHER NOTED THAT STAMPING DIE WOULD BE REQUIRED TO STAMP / CREATE THE DESIGN ON THE MEDALLIONS. SUCH UNIQUE DI E WOULD BE CREATED FOR EACH DESIGN SEPARATELY. CREATION OF DIE WOULD I NVOLVE CREATION OF DRAFT FIRST WHICH WOULD BE APPROVED BY THE CUSTOMER SITUA TED ABROAD. THEREAFTER, THE DIE WOULD BE CREATED BY SPECIFIC TO OLS. ALL THIS ACTIVITY WOULD TAKE MINIMUM OF 7-10 DAYS. THE ASSESSEE FAILE D TO SHOW THE DESIGNS AND ALSO COULD NOT FURNISH ANY EVIDENCE OF IMPORT OF STAMPING DIE. NO SUCH CHARGES WERE DEBITED BY THE ASSESSEE I N ITS BOOKS OF ACCOUNTS. ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 7 2.10 FINALLY, AN INFERENCE WAS DRAWN THAT THE STATE D TRANSACTIONS WERE COLORABLE DEVICE FOR EVADING TAXES AND ACCORDINGLY, THE BENEFIT OF DEDUCTION OF SEC. 10AA NOT AVAILABLE TO THE ASSESSE E. THE FINAL CONCLUSION DRAWN BY LD. AO WAS AS FOLLOWS: - COLOURABLE DEVICE 17.4 FROM THE RECORDS IT IS ALSO INFERRED THAT THE ASSESSEE HAS USED THE TAX BENEFITS ALLOWABLE TO SEZ UNITS AS A COLOURABLE DEVICE FOR E VADING TAXES. THE DOCUMENTS FILED ARE NOT FULLY RELIABLE. ASSESSEE HAS APPARENT LY DIVERTED THE EXPENSES TO TAXABLE UNITS/COMPANIES IN THE GROUP AS THE EXPENSES IN THE SEZ ARE EXTREMELY MINIMAL. FOR EXAMPLE THE SALARY AMOUNT FOR THE ENTIRE YEAR I S RS.1,90,000 (ROUNDLY) ONLY. 17.5 THE ASSESSEE HAS SHOWN LARGE G.P. FROM THE BUS INESS OF MEDALLION BUSINESS WHICH IS ABNORMAL. AS AN INDIRECT REFERENCE, AS PER NEWS ITEM ABOVE, THE GOVERNMENT HAD IN APRIL BANNED GOLD MEDALLION MANUF ACTURING WITHIN SEZS AND MADE 3-5% VALUE ADDITION MANDATORY ON ALL GOLD EXPO RTS IN JULY, IT IS INFERRED THAT THE VALUE ADDITION FROM GOLD TO MEDALLION ACTIVITY IS LESS THAN 3%. FROM THE OTHER CASES / ASSESSEES ALSO IT IS SEEN THAT THE VALUE AD DITION IN APPROX 2%. 17.6 PURCHASE ORDERS / IMPORT ORDERS: INITIALLY THE ASSESSEE WAS NOT FILING PURCHASE ORDE RS. AFTER REPEATED REQUESTS FROM THIS OFFICE, THE ASSESSEE HAS, FILED ONLY THREE PUR CHASE ORDERS (FOR MAKING IMPORTS). 17.7 VIREN JEWELLERY LLC DATED 03.03.2012. THE PR ICE INCLUDES THE SHIPPING COSTS UPTO THE SEZ UNIT. 17.8 SOLITAIRE GENERAL TRADING FZE 08.03.12 IT IS FOR DIAMONDS THERE IS NO PRICING REFERENCE THE PURCHASE ORDER ISSUED BY ASS ESSEE STATES TO BE SHIPPED BY US, (WHEREAS IN ACTUAL SHIPMENT WILL BE DONE BY SO LITAIRE GENERAL BECAUSE IT IS IMPORT), 17.9 SKY DIAMOND JEWELLERY FZE 12.03.12 IT IS F OR DIAMONDS THERE IS NO PRICING REFERENCE THE PURCHASE ORDER ISSUED BY AS SESSEE STATES TO BE SHIPPED BY US, (WHEREAS IN ACTUAL SHIPMENT WILL BE DONE BY SO LITAIRE GENERAL BECAUSE IT IS IMPORT). 17.10 ABOVE ANALYSIS CLEARLY INDICATE THAT THE ABOV E DOCUMENTS ARE NOT RELIABLE. 18 PAYMENT- MOST OF THE PAYMENTS TO BE DONE FOR IMP ORTS AND TO BE RECEIVED FOR EXPORTS ARE OUTSTANDING. 19 IN VIEW OF THE ABOVE, THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE ITS ONUS OF PROVING THE GENUINENESS OF THE TRANSACTION. THE ASS ESSEE HAS NOT DISCHARGED ITS ONUS TO PROVE THAT MANUFACTURE HAS BEEN DONE BY HIM IN THE SEZ UNIT. FROM THE ABOVE, THE MANUFACTURE (IF ANY) HAS BEEN DONE BY TH E JOB WORK PROVIDER AND HAS BEEN DONE OUTSIDE THE SEZ UNIT. 19.1 IN VIEW OF THE ABOVE, IT IS HELD THAT THE ASSE SSEE IS NOT ENTITLED TO THE DEDUCTION U/S 10AA OF THE ACT. 3. AGGRIEVED, THE ASSESSEE AGITATED THE DENIAL OF AFORESAID DEDUCTION WITH SUCCESS BEFORE LD. FIRST APPELLATE AUTHORITY V IDE IMPUGNED ORDER ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 8 DATED 20/03/2017. THE ASSESSEE DREW ATTENTION TO TH E FACT THAT LD. AO WHILE DOUBTING MANUFACTURING ACTIVITY, DENIED DEDUC TION ON TRADING ACTIVITIES ALSO WITHOUT EXAMINING THE SAME. THE ASS ESSEE ALSO EXPLAINED ITS ENTIRE PROCESS OF MANUFACTURING AND SOUGHT TO R EBUT THE ADVERSE OBSERVATIONS MADE BY LD. AO IN THE QUANTUM ASSESSME NT ORDER, WHICH HAS ALREADY BEEN EXTRACTED IN THE IMPUGNED ORDER. 4. THE LD. FIRST APPELLATE AUTHORITY, AFTER CONSIDE RING THE SAME, ALLOWED ASSESSEES CLAIM BY OBSERVING AS UNDER: - 3.2. THE SUBMISSIONS OF THE LEARNED COUNSEL HAVE BE EN CAREFULLY CONSIDERED. THE ASSESSING OFFICER MADE THE DISALLOWANCE ON THE FOLL OWING PRESUMPTIONS: 1. ALL THE IMPORTS HAVE TAKEN PLACE IN MARCH AND TH E ENTIRE ACTIVITY, FROM RECEIPT OF THE GOODS TO MANUFACTURING, TO DELIVERY AT THE EXPORT H OUSE HAVE OCCURRED IN A SPAN OF 4 HOURS AND 30 MINUTES. 2. ALL THE IMPORT ORDERS AND EXPORT ORDERS HAVE NOT BEEN PRODUCED BEFORE THE AO. 3. THE ARRANGEMENT IS LIKE A CATERING SERVICE WHERE THE COOKING TEAM GOES TO THE PLACE OF THE CUSTOMER AND USES GAS, UTENSILS, RAW MATERIA L ETC. AS PROVIDED BY THE CUSTOMER AND PREPARES FOOD. IN THIS CASE, IT IS THE CATERER WHO PREPARED THE FOOD AND NOT THE CUSTOMER. THEREFORE, IN THE ASSESSEE'S CASE IT IS T HE LABOUR CONTRACTOR WHO HAS MANUFACTURED THE ARTICLES AND NOT THE ASSESSEE. 4. THE ASSESSEE DOES NOT HAVE THE SUFFICIENT MACHIN ERY TO DO THE MANUFACTURING. 5. THE ELECTRICITY BILLS DO NOT SHOW THE CONSUMPTIO N IN MARCH. 6. THERE IS NO EVIDENCE OF ENTRY OF LABOUR IN SEZ. 7. IT IS QUITE POSSIBLE TO TAKE OUT THE GOLD BARS FROM THE SEZ WITHOUT GETTING DETECTED. SIMILARLY IT IS ALSO POSSIBLE TO BRING IN MEDALLION S FROM OUTSIDE SEZ WITHOUT GETTING DETECTED. 8 . MOST OF THE RECEIPTS FOR EXPORTS ARE YET TO BE RECEIVED. 3.2.1. THE ASSESSING OFFICER MADE OUT A CASE BASED ON ALL THESE PRESUMPTIONS HELD THE APPELLANT AS INELIGIBLE FOR DEDUCTION UNDER SECTION 10AA. IT IS ALSO TO BE MENTIONED THAT ALL ALONG THE ASSESSING OFFICER HA S DOUBTED THE MANUFACTURING ACTIVITY AND HE HAD NOT MADE ANY COMMENT NOR DISCUSSED THE ACTIV ITY. HOWEVER, WITHOUT GIVING ANY REASON HE HAD DISALLOWED THE PROFIT DERIVED FROM TH E TRADING ACTIVITY AS WELL. 3.2.2. THE APPELLANT HAS RECEIVED ORDERS IN MARCH, 2012 AND THEREFORE HIS IMPORTS ARE ALSO IN MARCH, 2012. THE LEARNED COUNSEL FOR THE AP PELLANT, HAD, DURING THE COURSE OF APPELLATE PROCEEDINGS SUBMITTED ALL THE IMPORT BILL S AND THE EXPORT BILLS. THESE WERE PRODUCED EVEN BEFORE THE ASSESSING OFFICER. HE HAD GIVEN A FLOWCHART OF THE ENTIRE MANUFACTURING PROCESS AND ALSO THE DATE OF IMPORT A ND THE DATE OF EXPORT, IT COULD BE SEEN FROM THE CHART AND THE BILLS SUBMITTED THAT TH E GOLD IS IMPORTED ON DAY ONE, IT IS CONVERTED INTO MEDALLIONS AND SENT TO CUSTOMS SEZ, SACHIN, SURAT ON THE NEXT DAY. THEY ARE EXPORTED ON DAY THREE. SO IT IS NOT FACTUA LLY CORRECT TO SAY THAT THE ENTIRE PROCESS IS COMPLETED IN 4 AND A HALF HOURS. MOREOVE R, THE ASSESSING OFFICER HAS NOT GIVEN ANY REASON FOR DISBELIEVING THE DOCUMENTS SUB MITTED BY THE APPELLANT WHICH INCLUDE THE AIRWAY BILLS AND CUSTOMS CLEARANCES. ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 9 3.2.3. THE ASSESSING OFFICER ON ONE HAND STATES THA T THE MANUFACTURING HAS BEEN DONE BY THE LABOUR CONTRACTOR AND NOT THE APPELLANT AND THEREFORE THE APPELLANT IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 10AA. ON THE OTHER HAND , HE SAYS THAT NO LABOURER EVER ENTERED THE SEZ AND THEREFORE, THERE IS NO MANUFACT URING; THESE TWO ARE CONTRADICTORY STANDS. HOWEVER, THE FACT REMAINS THAT THE APPELLAN T HAD IMPORTED GOLD AND HAD EXPORTED GOLD MEDALLIONS WHICH HAVE PASSED THROUGH THE SEZ. THE LABOUR CONTRACTOR HAD ISSUED BILLS FOR LABOUR CHARGES WHICH HAVE NOT BEEN PROVED TO BE FALSE BY THE ASSESSING OFFICER, REGARDING THE OBSERVATION ABOUT THE MANUFACTURING LOSS OF 245.69 GMS, THE LEARNED COUNSEL HAS CLARIFIED THAT THIS IS STOCK-IN-HAND AND NOT LOSS. THE 15.09 GMS GOLD HAS BEEN TAKEN BY THE LABOUR CONTRACTOR AN D THE COST OF THIS GOLD HAS BEEN REDUCED FROM HIS FINAL BILL. 3.2.4. ALSO, THE ASSESSING OFFICER MADE A SWEEPING STATEMENT THAT IT IS QUITE POSSIBLE TO TAKE OUT AND BRING IN GOLD BARS FROM SEZ WITHOUT GE TTING DETECTED WHICH IS CASTING A WILD ASPERSION ON THE SECURITY PROCEDURE OF SEZ. THIS, A GAIN, IS NOT SUBSTANTIATED BY ANY MATERIAL OR EVIDENCE. THE APPELLANT ALSO FURNISHED THE DETAILS OF THE MACHINERY OWNED BY HIM AND THE VALUE OF THE MACHINERY AFTER DEPRECI ATION WAS SHOWN AT RS.7,86,712/-. AGAIN, THE ASSESSING OFFICER MERELY PRESUMED THAT T HE MACHINERY IN POSSESSION OF THE ASSESSEE IS NOT SUFFICIENT FOR CARRYING ON THE MANU FACTURING ACTIVITY. 3.2.5. THE ANALOGY OF A CATERING CONTRACT IS ALSO N OT RELEVANT TO THE PRESENT CASE. THIS IS A CASE WHERE THE APPELLANT HAS IMPORTED THE GOLD AN D GOT THE MEDALLIONS MANUFACTURED IN HIS PREMISES IN SEZ AND HAS DONE THE EXPORTS. HE HAS ENGAGED THE LABOURERS TO DO THE MANUFACTURING WITH HIS MACHINERY UNDER HIS SUPE RVISION. THEREFORE, IT CANNOT BE SAID THAT THE LABOURER IS THE MANUFACTURER; IT IS THE AP PELLANT WHO IS THE MANUFACTURER. AS REGARDS THE ELECTRICITY BILLS, THE LEARNED COUNSEL HAS SUBMITTED THAT THERE WAS A FAULT IN THE MATER AND AS THE UNIT WAS CLOSED FOR MOST PART OF THE YEAR, THE ELECTRICITY DEPARTMENT HAD ISSUED THE ROUTINE BILLS WITHOUT CHECKING. IN F ACT, THE READING FOR THE CONSUMPTION HAS BEEN REFLECTED IN THE BILL FOR THE MONTH OF MAY , 2012 WHEN ACTUALLY THERE WAS NO CONSUMPTION. A LETTER HAS ALSO BEEN ADDRESSED BY TH E APPELLANT TO THE ELECTRICITY DEPARTMENT REGARDING THE FAULTY METER. 3.2.6. THE APPELLANT WAS ASKED ABOUT THE STATUS OF THE RECEIPTS FOR THE EXPORTS. THE APPELLANT SUBMITTED THAT PART OF THE RECEIPTS FROM SUPAMA INTERNATIONAL DMCC HAVE BEEN RECEIVED AND THE PARTY HAS REQUESTED FOR TIME TO MAKE THE BALANCE PAYMENT. THE APPELLANT HAS INITIATED LEGAL PROCEEDINGS AGAINST S ILVER STAR GENERAL TRADING FZE AND WHITE STAR INTERNATIONAL FZE. COPIES OF THE CORRESP ONDENCE AND THE LEGAL NOTICES HAVE BEEN SUBMITTED. ALSO, THE APPELLANT HAS WRITTEN TO THE RESERVE BANK OF INDIA REQUESTING TIME FOR REALISATION OF EXPORT PROCEEDS. 3.2.7. THEREFORE, FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, IT COULD BE SEEN THAT THE APPELLANT HAS IN FACT CARRIED OUT IMPORT OF GOLD AN D EXPORT OF GOLD MEDALLIONS. 3.2.8. IN THE CASE OF ACIT VS. GIA EXPORTS, ITA NOS . 8080 TO 8082/M/2011, AYS 2006-07 TO 2008-09, THE HON'BLE ITAT MUMBAI, VIDE ORDER DTD . 19/06/2013, ON SIMILAR FACTS, HELD AS UNDER: 'IT IS NOTICED THAT TO VERIFY THE CLAIM OF THE ASSESSES AND EXPLANATION, THE ASSESSES WAS ASKED TO SUBMIT THE COMPLETE DETAILS OF IMPORTS AND EXPORTS MADE THROUGH ITS UNIT AND APPROVAL FROM CUSTOM AND CENTR AL EXCISE DEPARTMENT. DOCUMENTS RELATING TO SHIPMENT IMPORT AND EXPORT CL EARANCE INVOICES OF IMPORT AND EXPORT .AND FOREIGN REMITTANCES IN THE BANK ACC OUNTS. THE CIT(A) FOUND THAT ALL THESE DOCUMENTS WERE SUBMITTED BEFORE THE AO DU RING THE ASSESSMENT PROCEEDINGS. THE CIT(A) HAS FURTHER OBSERVED THAT H E HAS EXAMINED ALL THESE DOCUMENTS AND NO DISCREPANCY WAS NOTICED IN THESE P APERS.,EVEN THE AO HAS NOT MENTIONED ANY DISCREPANCY IN THE IMPORT AND EXP ORT CLEARANCE PAPERS ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 10 SUBMITTED DURING THE COURSE OF ASSESSMENT, IT IS AN UNDISPUTED FACT THAT IN THE SEZ UNIT O IMPORT OR EXPORT CAN BE MADE WITHOUT THE APPROVAL OF THE 'CUSTOM AND CENTRAL EXCISE DEPARTMENT. ALL THE PAYMENTS AND RECEIPTS WERE MADE THROUGH BANKING CHANNELS AND NO DISCREPANCY WAS POI NTED OUT BY THE A.O. FROM THESE FACTS, IT IS CLEAR THAT THE ASSESSEE HAS A UNIT IN SEZ, SURAT, RAW MATERIAL WAS IMPORTED AND THE FINAL PRODUCT WAS EXPORTED WIT H DUE APPROVAL OF THE CUSTOM AND CENTRAL EXCISE DEPARTMENT, ALL THE PAPER S RELATING TO THE SHIPMENT AND FOREIGN REMITTANCES WERE IN ORDER. THE ASSESSEE HAS SUBMITTED THAT THERE WAS NO IMPORT AND EXPORT ACTIVITY TAKEN PLACE IN SU RVEY YEAR. ACCORDINGLY, THE CIT(A) FOUND THAT THERE WAS NO CASE OF THE AO TO DENY THE DEDUCTION TO THE ASSESSEE. WE FURTHER NOTICED THAT EVEN THERE IS NO FINDING IN THE ORDER OF THE AO THAT SURVEY PARTY HAS CONVEYED TO THE AO OR IN DETA ILED REPORT THAT THERE WAS NO EXPORT OR IMPORT OF ITEMS MANUFACTURED BY THE ASSESSEE AT THE PREMISES. THE SURVEY PARTY IN FACT NOTED THAT IRREGULARITIES OR D ISCREPANCIES AT THE TIME OF SURVEY AND NOT OF THE PAST. THE AO HAS ASSUMED THAT IN THE PAST AS THE UNIT WAS NOT FUNCTIONING, NEITHER THERE WAS ANY EMPLOYEE NOR THE RE WAS ANY SUFFICIENT POWER CONSUMPTION TO MANUFACTURE SUCH A HUGE QUANTITY. HO WEVER, THE AO HAS NOT TAKEN INTO CONSIDERATION THE FACT THAT THE ASSESSEE IS MANUFACTURING ONLY HEAVY KADAS, WHICH ARE PURCHASED BY THE VARIOUS PARTIES I N ABROAD. THE ITEMS MANUFACTURED BY THE ASSESSEE, WERE NOT JEWELLERY IT EMS BUT KADAS ONLY. IN OUR VIEW, IN MANUFACTURING KADAS, POWER CONSUMPTION IS LESS AND EMPLOYEES ARE ALSO REQUIRED LESS, MOREOVER, THE IMPORT OF GOLD MA DE BY THE ASSESSEE WAS SUBJECT TO CUSTOM CLEARANCE AND EXCISE DEPARTMENT, WHICH WERE CLEARED AFTER DUE VERIFICATION. APPROVAL WAS THERE, THEREAFTER MA TERIAL WAS SOLD TO ABROAD AND AGAIN SUBJECT TO CUSTOM AND EXCISE CLEARANCE WHICH WERE OBTAINED. COPIES OF ALL THESE DETAILS WERE FILED BEFORE THE AO AS WELL AS BEFORE THE CIT(A). 15. LEARNED DR HAS CONTENDED THAT LEARNED CIT(A) HA S ACCEPTED THE ADDITIONAL EVIDENCE, HOWEVER, NOWHERE WE FOUND THAT LEARNED CI T(A) HAS ACCEPTED ANY ADDITIONAL EVIDENCE. LEARNED CIT(A), WHICH IS SUPER IOR AUTHORITY TO THE AO HAS CATEGORICALLY MENTIONED IN HIS ORDER THAT ALL THE D ETAILS FILED BEFORE HIM WERE FILED BEFORE THE AO ALSO. THIS FACT COULD NOT BE DENIED B Y THE LEARNED DR EVEN, THEREFORE, WE SEE NO REASON TO DENY THE CLAIM OF TH E ASSESSEE FOR EXEMPTION UNDER SECTION 10A. 3.2.9. SIMILAR ISSUES HAVE COME UP IN THE APPELLANT 'S OWN CASE FOR THE EARLIER ASSESSMENT YEAR I.E. AY 2011-12, WHEREIN THE LEARNE D CIT(A) HAS ALLOWED THE ASSESSEE'S APPEAL WHICH HAS BEEN CONFIRMED BY THE H ON'BLE ITAT MUMBAI. RELIANCE IS ALSO PLACED ON THE DECISIONS OF HON'BLE JAIPUR BENC H OF ITAT IN THE CASE OF M/S. GOENKA DIAMOND AND JEWELLERS LTD. VS. DCIT, AND THE DECISION OF HON'BLE ITAT MUMBAI IN THE CASE OF M/S. GITANJALI EXPORTS CORPOR ATION LTD. VS. MUMBAL IN ITA NOS 6947 AND 6948/6949 AND 6950/6758 AND 6787/MUM/2011. 3.2.10. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF T HE CASE AS DISCUSSED ABOVE THE JUDICIAL PRONOUNCEMENTS ON IDENTICAL ISSUES CITED S UPRA, THE DEDUCTION UNDER SECTION 10AA CLAIMED BY THE APPELLANT FROM THE MANUFACTURIN G ACTIVITY TO THE TUNE OF RS.12,16,35,706/- IS ALLOWED. FURTHER, THE APPELLAN T HAD CLAIMED DEDUCTION UNDER SECTION 10AA TO THE TUNE OF RS. 10,55,74,963/- FROM THE TRADING ACTIVITY. THE ASSESSING OFFICER HAS WITHOUT ASSIGNING ANY REASON DISALLOWED THE ENTIRE DEDUCTION CLAIMED OF RS.22,72,10,669/- INSTEAD OF RESTRICTING THE DISALL OWANCE TO THE CLAIM MADE UNDER THE MANUFACTURING ACTIVITY WHICH IS RS.12,16,35,706/-, THERE IS NO ADVERSE FINDING OR OBSERVATION MADE BY THE AO ON ACCOUNT OF THE TRADIN G ACTIVITY OF THE APPELLANT. ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 11 THEREFORE, THE AO IS DIRECTED TO ALLOW THE CLAIM OF THE ENTIRE DEDUCTION WHICH IS RS.22,72,10,669/-, THESE GROUNDS OF APPEAL ORE ALLO WED. 4. IN THE RESULT, THE APPEAL IS ALLOWED . AGGRIEVED BY AFORESAID ADJUDICATION, THE REVENUE IS UNDER FURTHER APPEAL BEFORE US. 5. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS, P ERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLACED IN TH E PAPER-BOOK AND THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2011-12 ITA NO. 113/MUM/2015 ORDER DATED 09/12/2016 AND ALSO OTHER JUDICIAL PRONOUNCEMENTS AS CITED BEFORE US. 6. UPON DUE CONSIDERATION OF FACTUAL MATRIX AS ENUM ERATED IN PRECEDING PARAGRAPHS, WE FIND THAT THE MANUFACTURIN G ACTIVITY STATED TO BE CARRIED OUT BY THE ASSESSEE IN ITS SEZ UNIT WAS UNDER DOUBT AND SERIOUS ALLEGATIONS WERE LEVELLED BY LD. AO DOUBTIN G THE MANUFACTURING ACTIVITY. THE LD.AO BROUGHT ON RECORD SPECIFIC DISC REPANCIES IN ASSESSEES SUBMISSIONS / DOCUMENTARY EVIDENCES AS F ILED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. SOME PERTIN ENT OBSERVATIONS / ADVERSE INFERENCES WERE DRAWN ON THE BASIS OF SUB MISSIONS / EVIDENCES FILED BY THE ASSESSEE. THESE OBSERVATIONS / INFERENCES HAVE ALREADY BEEN SUMMARIZED BY US IN THE PRECEDING PARA GRAPHS. IT IS ALSO EVIDENT FROM VARIOUS OBSERVATIONS OF LD.AO THAT THE ASSESSEE FAILED TO ADDUCE SUFFICIENT DOCUMENTARY EVIDENCES TO SUBSTANT IATE HIS CLAIM FULLY AND ONLY PART DETAILS WERE FILED BY THE ASSESSEE DU RING ASSESSMENT PROCEEDINGS. WE ARE OF THE CONSIDERED OPINION THAT COMPLETE ONUS TO DEMONSTRATE FULFILMENT OF PRIMARY CONDITIONS OF SEC . 10AA WAS ON THE ASSESSEE AND IT WAS OBLIGATORY ON THE PART OF THE A SSESSEE TO ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 12 SUBSTANTIATE THE FACT THAT HIS CLAIM SQUARELY FALL WITHIN FOUR CORNERS OF SEC.10AA. HOWEVER, UPON PERUSAL OF FINDINGS OF LD. AO WITH RESPECT TO TIME TAKEN IN MANUFACTURING PROCESS, EXPLANATION FO R ABNORMAL PROFITS, DISCREPANCIES IN BANK ACCOUNTS, NON-REALIZATION OF EXPORT PROCEEDS EVEN BEYOND 3 YEARS, EVIDENCE OF LABOR OPERATIONS, MACHI NERIES USED BY THE ASSESSEE TO CARRY OUT MANUFACTURING OPERATIONS, ELE CTRICITY CONSUMPTION, STAMPING DIE ETC., WE FIND THAT THE ASSESSEE REMAIN ED UNSUCCESSFUL TO CONTROVERT THE SAME AND FAILED TO DISCHARGE THE PRI MARY ONUS CASTED UPON HIM, IN THIS REGARD. 7. THE LEARNED FIRST APPELLATE AUTHORITY, WHILE OBS ERVING THAT LD. AO DOUBTED THE GENUINENESS OF THE MANUFACTURING ACTIVI TY BUT MADE NO COMMENT OR MADE NO DISCUSSION ABOUT TRADING ACTIVIT Y, GRANTED RELIEF TO THE ASSESSEE AND THE SAME, UNDER THE CIRCUMSTANCES, COULD NOT BE STATED TO BE CORRECT APPROACH IN THE MATTER. WE ARE OF THE CONSIDERED OPINION THAT LD. CIT(A) HAD PLENARY POWERS IN DISPO SING OFF AN APPEAL AND THE POWERS OF FIRST APPELLATE AUTHORITY WERE CO TERMINOUS AND COEXTENSIVE WITH THAT OF LD. AO AND NOTHING PREVENT ED LD. CIT(A) TO CONDUCT FURTHER INQUIRY IN THIS DIRECTION. NO SUCH EXERCISE IS SHOWN TO HAVE BEEN CARRIED BY LEARNED FIRST APPELLATE AUTHOR ITY AND THEREFORE, WE ARE NOT CONVINCED WITH THE APPROACH OF LD. CIT(A) I N GRANTING RELIEF MERELY BECAUSE LD. AO FAILED TO CARRY OUT THE DESIR ED INVESTIGATIONS. THIS WOULD ASSUME ALL THE MORE IMPORTANCE IN VIEW O F THE FACT THAT THE ASSESSEE COULD NOT FILE SUFFICIENT DOCUMENTARY EVID ENCES BEFORE LD.AO DURING ASSESSMENT PROCEEDINGS. THE HONBLE DELHI HI GH COURT IN THE ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 13 CASE OF CIT V/S JANSAMPARK ADVERTISING & MARKETING PVT. LTD . [2015 56 TAXMANN.COM 286], APTLY OBSERVED AS UNDER: - 42. THE AO HERE MAY HAVE FAILED TO DISCHARGE HIS OB LIGATION TO CONDUCT A PROPER INQUIRY TO TAKE THE MATTER TO LOGICAL CONCLUSION. BUT CIT (APPEALS), HAVING NOTICED WANT OF PROPER INQUIRY, COULD NOT HAVE CLOSED THE C HAPTER SIMPLY BY ALLOWING THE APPEAL AND DELETING THE ADDITIONS MADE. IT WAS ALS O THE OBLIGATION OF THE FIRST APPELLATE AUTHORITY, AS INDEED OF ITAT, TO HAVE ENS URED THAT EFFECTIVE INQUIRY WAS CARRIED OUT, PARTICULARLY IN THE FACE OF THE ALLEGA TIONS OF THE REVENUE THAT THE ACCOUNT STATEMENTS REVEAL A UNIFORM PATTERN OF CASH DEPOSIT S OF EQUAL AMOUNTS IN THE RESPECTIVE ACCOUNTS PRECEDING THE TRANSACTIONS IN Q UESTION. THIS NECESSITATED A DETAILED SCRUTINY OF THE MATERIAL SUBMITTED BY THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 148 ISSUED BY THE AO, AS ALSO THE MAT ERIAL SUBMITTED AT THE STAGE OF APPEALS, IF DEEMED PROPER BY WAY OF MAKING OR CAUSI NG TO BE MADE A FURTHER INQUIRY IN EXERCISE OF THE POWER UNDER SECTION 250 (4). THIS APPROACH NOT HAVING BEEN ADOPTED, THE IMPUGNED ORDER OF ITAT, AND CONSE QUENTLY THAT OF CIT (APPEALS), CANNOT BE APPROVED OR UPHELD. 8. PROCEEDING FURTHER, UPON PERUSAL OF ASSESSMENT O RDER AS WELL AS ORDER OF LD. CIT(A) FOR AY 2011-12, AS PLACED ON RE CORD, WE FIND THAT THE FACTS WERE DIFFERENT IN THAT YEAR. THE FINDINGS GIV EN AS WELL AS FACTS BROUGHT ON RECORD BY LD. AO IN THE CURRENT YEAR IS NOT PARI-MATERIA WITH THE FINDINGS GIVEN IN EARLIER YEAR AND THE LEVEL OF INVESTIGATION ALSO DIFFERS. IN AY 2011-12, THE MAIN FOCUS OF LD. AO WA S ON ELECTRICITY CONSUMPTION AND LABOR CHARGES AS AGAINST THE FACTS OF THE PRESENT YEAR WHEREIN LD. AO HAS BROUGHT ON RECORD SPECIFIC FACTS OF TIME TAKEN IN MANUFACTURING PROCESS, FACT OF ABNORMAL PROFITS, DI SCREPANCIES IN BANK ACCOUNTS, NON-REALIZATION OF EXPORT PROCEEDS EVEN B EYOND 3 YEARS, EVIDENCE OF LABOR OPERATIONS, MACHINERIES USED BY T HE ASSESSEE TO CARRY OUT MANUFACTURING OPERATIONS, ELECTRICITY CONSUMPTI ON, STAMPING DIE ETC. WHICH REMAINED TO BE CONTROVERTED BY THE ASSESSEE. MORE SO, THE PRINCIPLE OF RES-JUDICATE IS NOT APPLICABLE TO INCOME TAX PROCEEDINGS AND EACH YEAR IS INDEPENDENT UNIT OF ASSESSMENT. THE AS SESSEE IS EXPECTED ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 14 TO SUBSTANTIATE ITS CLAIM IN EACH OF THE YEAR. THE RULE OF CONSISTENCY WOULD BE APPLICABLE ONLY IN CASES WHERE THE FACTUAL MATRIX IS DEMONSTRATED TO BE SUBSTANTIALLY THE SAME. HOWEVER, AS ALREADY OBSERVED, WE FIND THE FACTUAL MATRIX TO BE DIFFEREN T IN THIS YEAR AND THEREFORE, WE FIND THE DECISION OF TRIBUNAL FOR AY 2011-12, ITA NO.113/MUM/2015 DATED 09/12/2016 INAPPLICABLE TO TH E FACTS OF THIS YEAR. 9. KEEPING IN VIEW THE ENTIRETY OF FACTS AND CIRCUM STANCES, WE DEEM IT FIT TO SET-ASIDE THE ORDER OF LD. FIRST APPELLATE A UTHORITY ON THIS ISSUE AND RESTORE THE ISSUE OF DEDUCTION U/S 10AA TO THE FILE OF LD. AO FOR RE- ADJUDICATION DE-NOVO WITH A DIRECTION TO THE ASSESS EE TO SUBSTANTIATE HIS CLAIM OF DEDUCTION U/S 10AA. 10. RESULTANTLY, THE APPEAL STANDS ALLOWED FOR STAT ISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER, 2019 SD/- SD/- (PAWAN SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 21/11/2019 SR.PS, JAISY VARGHESE #$&'(' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. 6 ( ) / THE CIT(A) 4. 6 / CIT CONCERNED 5. 7 8!9: , : , / DR, ITAT, MUMBAI 6. 8 <=> / GUARD FILE ITA NO.4027/MUM/2017 M/S. KAMINI ENTERPRISES ASSESSMENT YEAR: 2012-13 15 / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI. SR. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATION SHEETS ARE ATTACHED DIRECTLY TYPE D ON COMPUTER / LAPTOP/ SR.PS/PS 2 DRAFT DICTATED ON SR.PS/PS 3 DRAFT PLACED BEFORE AUTHOR SR.PS/PS 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 5 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 6 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 7 ORDER PRONOUNCEMENT ON SR.PS/PS 8 FILE SENT TO THE BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE AR 11 DATE OF DISPATCH OF ORDER