M/s Heeramoti Industrial Corporation, Baddi V. ITO, Solan

ITA 462/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80811 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2000-2001
• Appeal Filed On: 26-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGARDR
• Keywords: Principle of natural justice
• Section: 143(3); 234B; 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 462/CHD/2013 ASSESSMENT YEAR : 2000-01 M/S HEERAMOTI INDUSTRIAL CORPORATION, VS T HE INCOME TAX OFFICER, PLOT NO. 198, WARD 1, INDUSTRIAL AREA, SOLAN. PHASE-I, BADDI (HP). PAN : AACFH8097E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI J.S.NAGAR,DR DATE OF HEARING : 24.07.2014 DATE OF PRONOUNCEMENT : 08.08.2014 O R D E R PER SUSHMA CHOWLA, JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) SHIMLA DATED 11.02.2013 RELATING TO ASSESSMENT YEAR 2000-01 AGAI NST THE ORDER PASSED UNDER SECTION 144/263 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS ERRED IN LAW IN DECIDING THE APPEAL EX-PARTE WITHOUT AFFORDI NG PROPER OPPORTUNITY OF HEARING WHICH IS AGAINST THE PRINCIP LES OF NATURAL JUSTICE AND AS SUCH THE ORDER PASSED IS ILLEGAL, AR BITRARY AND UNJUSTIFIED. 2. WITHOUT PREJUDICE TO THE ABOVE, THE LD. COMMISSIONE R OF INCOME TAX(APPEALS) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 2,55,820/- CONSIDERING 25 % OF NET PROFIT DECLARED AT RS. 10,2 1,127/-ON AD-HOC BASIS TO BE NOT ELIGIBLE FOR DEDUCTION U/S 80IB WHI CH IS ARBITRARY AND 2 UNJUSTIFIED. 3. THAT MAKING OF MASALAS TANTAMOUNTS TO MANUFACTURE A ND DENIAL OF DEDUCTION U/S 80 IB IS ILLEGAL, ARBITRARY AND UNJUS TIFIED. 4. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HA S FURTHER ERRED IN UPHOLDING THE ADDITION OF RS.87,951/- AS MADE IN THE EARLIER ORDER PASSED U/S 143(3) WITHOUT APPRECIATING THE MERITS O F THE ADDITION WHICH IS ARBITRARY AND UNJUSTIFIED. 5. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HA S FURTHER ERRED IN UPHOLDING THE ADDITION OF RS. 10,800/- AS MADE IN THE EARLIER ORDER PASSED U/S 143(3) WITHOUT APPRECIATIN G THE MERITS OF/ THE ADDITION WHICH IS ARBITRARY AND UNJUSTIFIED. 6. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS FURTHER ERRED IN UPHOLDING THE CHARGING OF THE INTEREST UND ER SECTIONS 234B OF THE ACT WHICH IS NOT CHARGEABLE IN THE INSTANT C ASE. 7. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TA X (APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF T HE CASE AND IS, THUS, UNTENABLE. 3. THE GROUND OF APPEAL NOS. 1, 4 AND 5 ARE NOT PRE SSED HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 4. THE ISSUE IN GROUND NOS. 2 AND 3 RAISED BY THE A SSESSEE IS AGAINST THE RESTRICTED DEDUCTION ALLOWED UNDER SECT ION 80IB OF THE ACT. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF VARIOUS KINDS OF SPICES. THE ASSESSEE, DURING THE YEAR UNDER CONSID ERATION HAD DECLARED TAXABLE INCOME OF RS. 769,529/- AFTER CLAI MING DEDUCTION UNDER SECTION 80IB OF THE ACT BEING 25% OF THE PROF ITS DERIVED. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED IN WHICH THE PROFITS OF THE BUSINESS WERE COMPUTED AT RS. 10 ,98,278/- AND DEDUCTION UNDER SECTION 80IB OF THE ACT WAS ALLOWED AT RS. 274,570/- BEING 25% OF SUCH PROFITS. THEREAFTER, PR OCEEDINGS WERE INITIATED UNDER SECTION 263 OF THE ACT AND ORDER WA S PASSED BY THE COMMISSIONER OF INCOME TAX, SHIMLA ON 27.03.2009. THEREAFTER, THE NOTICES WERE ISSUED TO THE ASSESSEE UNDER SECTI ON 143(3)/142(1) OF THE ACT BUT THE ASSESSEE FAILED TO FURNISH ANY I NFORMATION NOR ANY 3 BOOKS OF ACCOUNT WERE PRODUCED AND THE ASSESSMENT W AS COMPLETED ON THE BASIS OF FACTS AND MATERIAL AVAILABLE ON REC ORD AND ALSO THE ORDER PASSED UNDER SECTION 263 OF THE ACT. THE ASS ESSING OFFICER NOTED THAT THE ASSESSEE WAS NOT CORRECT IN STATING THAT IT WAS ENGAGED IN THE MANUFACTURE OF COMPLEX MASALAS ONLY LIKE GARAM MASALA, CHAAT MASALA ETC. APART FROM THE SAID MASAL AS, THE ASSESSEE ALSO DERIVED PROFIT FROM SALE OF HALDI POWDER, DHAN IA POWDER AND MIRCHI POWDER, WHICH AS PER THE ASSESSING OFFICER W ERE NOT IN THE NATURE OF COMPLEX MASALAS. THE ASSESSING OFFICER N OTED THAT THE ASSESSEE IN ITS LETTER DATED 15.12.2006 FILED DURIN G THE COURSE OF ORIGINAL ASSESSMENT HAD ADMITTED THE SAME. THE ASS ESSEE WAS MERELY CLEANING RAW HALDI, MIRCHI AND DHANIA AND SU BJECTING IT TO GRINDING PROCESS TO OBTAIN POWDER WHICH WAS PACKED AND SOLD. AS THE RAW MATERIAL AND PRODUCT SOLD WERE ACTUALLY THE SAME COMMODITY, THE ASSESSING OFFICER HELD THAT THE ASSE SSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80 IB OF THE ACT AS NO NEW PRODUCT HAVING ANY DIFFERENT COMMERCIAL IDEN TITY WAS BROUGHT INTO EXISTENCE AND EVEN THE NAME OF THE PRO DUCT REMAINED THE SAME. CONSEQUENTLY, THE ASSESSING OFFICER HELD PRODUCTION OF DHANIA, HALDI AND MIRCHI POWDER WAS TO BE TAKEN AT 25% OF THE NET PROFIT, AGAINST WHICH THE ASSESSEE WAS NOT ENTITLED TO CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT. 5. AS THE ASSESSEE FAILED TO APPEAR BEFORE THE COMM ISSIONER OF INCOME TAX (APPEALS) ALSO, THE APPEAL WAS DECIDED E X-PARTE AND THE ORDER OF THE ASSESSING OFFICER WAS UPHELD. 6. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE SAID PARTIAL DISALLOWANCE OF THE DEDUCTION CLAIMED UNDER SECTION 80IB OF THE ACT. 4 7. SHRI TEJ MOHAN SINGH APPEARED FOR THE ASSESSEE A ND SHRI AKHILESH GUPTA APPEARED FOR THE REVENUE AND PUT FOR WARD THEIR RIVAL CONTENTIONS. 8. THE LD. AR FOR THE ASSESSEE VEHEMENTLY ARGUED TH AT IT WAS ENTITLED TO THE FULL CLAIM OF DEDUCTION UNDER SECTI ON 80IB OF THE ACT WHICH WAS 25% OF THE TOTAL PROFIT EARNED DURING THE YEAR. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE ADMITTEDLY HAD CLAIMED DEDUCTION UNDER SEC TION 80IB OF THE ACT ON THE PREMISE THAT IT WAS ENGAGED IN THE MANUF ACTURE OF COMPLEX MASALAS. INITIALLY THE ASSESSING OFFICER HAD ALLOW ED THE CLAIM OF THE ASSESSEE IN ENTIRETY. HOWEVER, THEREAFTER ORDER WA S PASSED BY THE COMMISSIONER OF INCOME TAX, SHIMLA UNDER SECTION 26 3 OF THE ACT ON THE PREMISE THAT IN ADDITION TO THE CLAIM OF THE AS SESSEE OF HAVING MANUFACTURED COMPLEX MASALA, ASSESSEE WAS ALSO ENGA GED IN POWDERING OF HALDI, MIRCHI AND DHANIA. THE RAW FOR M OF THE SAID ITEMS WERE TAKEN AND THE SAME WERE GRINDED INTO POWDER FO RM AND AFTER PACKING, WERE SOLD IN THE MARKET UNDER THE SAME BRA ND NAME UNDER WHICH THE RAW MATERIAL WAS PURCHASED BY THE ASSESSE E. THE PROPERTIES OF THE SAID THREE ITEMS DID NOT CHANGE ON GRINDING AND THE ASSESSEE COULD NOT BE HELD TO HAVE BEEN ENGAGED IN THE MANUF ACTURING PROCESS FOR PRODUCING THE POWDER FORM OF HALDI, MIRCHI AND DHANIA. WE ARE IN CONFORMITY WITH THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD. THE ASSESSEE IN ADDITION WAS ALSO MANUFACTURING GAR AM MASALA, CHAAT MASALA AND WAS HELD ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT IN RESPECT OF THE SAME. HOWEVER, T HE ASSESSEE IS NOT ENTITLED TO CLAIM OF DEDUCTION UNDER SECTION 80IB O F THE ACT FOR THE POWDERING OF HALDI, MIRCHI AND DHANIA. UPHOLDING T HE ORDER OF 5 COMMISSIONER OF INCOME TAX (APPEALS), WE DISMISS GR OUND OF APPEAL NOS. 2 & 3 RAISED BY THE ASSESSEE. 10. THE ISSUE RAISED IN GROUND OF APPEAL NO. 6 IS A GAINST CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT WHICH IS CON SEQUENTIAL IN NATURE AND HENCE, THE SAME IS DISMISSED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED: 8 TH AUGUST,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR ITAT/CHD