Sh. Sanjay Jain Prop., Jammu V. The Income tax Officer, Jammu

ITA 619/ASR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95020 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 22-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GHANSHM SHARMA
• Assessee Lawyers: RK GUPTA
• Section: 6; 80IB; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH ; AMRITSAR (SMC). BEFORE SH. A.D. JAIN, JUDICIAL MEMEBR I.T.A. NO. 619(ASR)/2013 ASSESSMENT YEAR:2007-08 PAN :ABMPJ7434J SH. SANJAY JAIN, VS. THE INCOME TAX OFFICER, PROP. JAINCO STEELS IND. & WARD I(3), JAINCO WOOD WORKS, JAMMU. 198/5, TRIKUTA NAGAR, JAMMU. (APPELLANT) (RESPONDENT) ASSESSEE BY:SH. R.K.GUPTA, CA DEPARTMENT BY:SH.GHANSHM SHARMA, DR DATE OF HEARING : 22/09/2015 DATE OF PRONOUNCEMENT: 24/09/2015 ORDER THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2007-08 AGAINST THE ORDER DATED 20.08.2013 PASSED BY THE LEARNED CIT(A) , JAMMU. THE SOLE GROUND TAKEN IS AS FOLLOWS: 1. THAT THE WORTHY CIT(A) IS NOT JUSTIFIED IN NOT GRANTING RELIEF IN RESPECT OF DEDUCTION CLAIMED U/S 80-IB(4) OF THE I. T.ACT AMOUNTING TO RS.2,76,790/-. THIS DEDUCTION HAD BEEN DENIED BY THE AO FOR FAILURE TO PRODUCE BILL IN SUPPORT OF PU RCHASE OF NEW MACHINERY. THE BILL IN RESPECT OF PURCHASE OF MACHI NERY FURNISHED DURING THE COURSE OF APPELLANT PROCEEDING S IS GENUINE AND THERE IS NO FAULT OF THE APPELLANT IF THE SUPPL IER OF ITA NO.619(ASR)/2013 2 MACHINERY REFUSED TO VERIFY ITS GENUINENESS. THE WO RTHY CIT(A) IS NOT JUSTIFIED IN REJECTING THE REQUEST OF THE APPELLANT TO VERIFY THE MACHINERY PERSONALLY FROM THE SITE AN D FROM BOOKS OF ACCOUNTS. 2. THE FACTS AS PER RECORD ARE THAT THE ASSESSEE I S ENGAGED IN MANUFACTURING OF STEEL FURNITURE AND IS ALSO DOING TRADING OF WOODEN FURNITURE. HE CLAIMED DEDUCTION OF RS.2,96,780/- U /S 80IB(4) OF THE INCOME TAX ACT, 1961 IN RESPECT OF MANUFACTURING OF STEEL FURNITURE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE COUL D NOT PRODUCE THE PURCHASE BILL OF MACHINERY. EVEN IN RESPONSE TO LET TER OF A.O., ISSUED U/S 133(6) OF THE ACT, THE SUPPLIER FROM WHOM THE ASSES SEE HAD STATED THAT MACHINERY HAD BEEN PURCHASED , STATED THAT NO SALE BILL HAD EVER BEEN ISSUED IN FAVOUR OF THIS UNIT. ACCORDINGLY, THE A.O. DENIE D THE DEDUCTION CLAIMED U/S 80-IB(4) OF THE ACT, AS ONE OF THE CONDITIONS P RECEDENT FOR CLAIMING DEDUCTION HAD NOT BEEN FULFILLED, THAT IS, THAT NO NEW PLANT AND MACHINERY HAD BEEN INSTALLED. 3. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOW ANCE. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT GRANTING RELIEF IN RESPECT OF DEDUCTION CLAIMED U/S 80- IB(4) OF THE I.T. ACT. THIS DEDUCTION HAD BEEN DENI ED BY THE AO FOR FAILURE TO PRODUCE BILL IN SUPPORT OF PURCHASE OF NEW MACHI NERY. THE BILL IN RESPECT OF PURCHASE OF MACHINERY FURNISHED DURING THE COURS E OF THE APPELLATE ITA NO.619(ASR)/2013 3 PROCEEDINGS WAS GENUINE AND THERE WAS NO FAULT OF THE APPELLANT IF THE SUPPLIER OF MACHINERY REFUSED TO VERIFY ITS GENUIN ENESS. THE LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING THE REQUEST OF THE A PPELLANT TO VERIFY THE MACHINERY PERSONALLY FROM THE SITE AND FROM BOOKS O F ACCOUNTS. THE ENDS OF JUSTICE WOULD BE MET IF THE MATTER IS R EMITTED TO THE AO TO NOW CARRY OUT THE INSPECTION AND TO VERIFY THE MACHIN ERY PERSONALLY FROM THE SITE, AS ALSO FROM THE BOOKS OF THE ASSESSEE. 5. THE LD. DR, ON THE OTHER HAND, PLACING RELIANCE ON THE IMPUGNED ORDER, HAS CONTENDED THAT SINCE THE GENUINENESS OF THE BILL OF THE MACHINERY PURCHASED, AS PRODUCED BY THE ASSESSEE, WAS NEVER PROVED, THERE WAS NOTHING FURTHER TO BE DONE IN THE MATTER AND THE LD . CIT(A) HAS CORRECTLY CONFIRMED THE DISALLOWANCE. IT HAS BEEN SUBMITTED T HAT THE INSPECTION, AS SOUGHT, AT THIS STAGE, WILL NOT SERVE ANY PURPOSE, SINCE, FIRST OF ALL, THE MACHINERY ITSELF, IF AT ALL IT WAS THERE IN THE FIR ST INSTANCE, MIGHT NOT BE EXISTING AFTER THE PASSAGE OF SUCH A LONG TIME. IT HAS FURTHER BEEN CONTENDED THAT, MOREOVER, AT THIS BELATED STAGE, THE DATE OF PURCHASE OF THE MACHINERY MIGHT NOT BE ASCERTAINABLE AT THIS BELATED POINT OF TIME. 6. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGH T OF THE MATERIAL PLACED ON RECORD, I AM OF THE VIEW THAT THE LD. CIT(A) HAS GONE WRONG IN CONFIRMING THE DISALLOWANCE BY REJECTING THE ASSESS EES REQUEST FOR ASKING ITA NO.619(ASR)/2013 4 THE AO TO INSPECT THE MACHINERY PHYSICALLY AT SITE AND HAVE IT VERIFIED FROM THE BOOKS OF ACCOUNT. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) IN THIS REGARD ARE AS FOLLOWS: NOW IN THE APPELLATE PROCEEDINGS BEFORE ME THE APPE LLANT SOUGHT THAT SUPPLIER HIDING VAT MAY NOT HAVE ACCOUNTED FOR THE BILL IN HIS BOOKS THAT IS WHY HE HAS REFUSED AND HAS DESIRED FR OM ME THAT AO SHOULD HAVE PHYSICALLY INSPECTED THE MACHINERY AT SITE AND HAVE VERIFIED THE SAME FROM THE BOOKS OF ACCOUNTS. I REFRAINED TO ENTERTAIN SUCH REQUEST OF APPELLANT MORE PARTICULARLY THAT ON CE THE BILL OF MACHINERY IS NOT PROVED GENUINE THERE IS NO NEED TO PROCEED FURTHER IN THE MATTER. 7. THE ISSUE UNDER CONSIDERATION IS AS TO WHETHER T HE ASSESSEE HAS COMPLIED WITH ALL THE CONDITIONS PRECEDENT FOR CLAI MING DEDUCTION U/S 80IB(4) OF THE INCOME TAX ACT, 1961. THE FINDING OF THE AO, AS CONFIRMED BY THE LD. CIT(A) IS THAT THE ASSESSEE WAS NOT ABLE TO PROVE THAT NEW PLANT AND MACHINERY HAD BEEN INSTALLED. IN THIS REGARD, T HE ASSESSEE HAD PRODUCED EVIDENCE BEFORE THE LD. CIT(A), IN THE SHAPE OF COP Y OF BILL NO. 1516 BOOK NO. 31 DATED 14.03.2008, STATED TO HAVE BEEN ISSUE D BY M/S. KIRPAL ENGINEERING WORKS WITH REGARD TO PURCHASE OF PLANT AND MACHINERY. THIS OUGHT TO HAVE PROVED THAT THE NEW PLANT AND MACHINE RY HAD BEEN USED BY THE INDUSTRIAL UNDERTAKING, IN TERMS OF THE PROVISIONS OF SECTION 80IB OF THE ACT. THE LD. CIT(A) REMANDED THE MATTER TO THE AO. ON QU ERY BY THE AO, THE ALLEGED SUPPLIER OF THE MACHINERY, I.E., M/S. KIRPA L ENGINEERING WORKS DENIED HAVING ISSUED THE SAID BILL IN FAVOUR OF THE ASSESSEE. FROM THIS, THE ITA NO.619(ASR)/2013 5 INFERENCE ARRIVED AT BY BOTH THE TAXING AUTHORITIES WAS THAT THE BILL OF THE MACHINERY WAS NOT PROVED TO BE GENUINE. 8. I AM OF THE CONSIDERED OPINION THAT IN THE ABOVE FACTS OF THE CASE, WHERE THE ASSESSEE ALLEGED THAT THE SUPPLIER OF THE MACHINERY DECLINED HAVING ISSUED THE BILL IN QUESTION TO THE ASSESSEE, SINCE IT MIGHT NOT HAVE ACCOUNTED FOR THIS BILL IN ITS BOOKS OF ACCOUNT, IN ORDER TO HIDE VAT, FOR A JUST AND PROPER DECISION ON THE ISSUE, AS TO WHETHE R THE CONDITIONS PRESCRIBED U/S 80IB OF THE ACT STOOD FULFILLED BY THE ASSESSEE OR NOT, THE MACHINERY AT SITE OUGHT TO HAVE BEEN GOT INSPECTED AND VERIFIED FROM THE ASSESSEES BOOKS OF ACCOUNT. MERELY BECAUSE THE ALLEGED SUPPLIER, M/ S. KIRPAL ENGINEERING WORKS DENIED HAVING ISSUED THE BILL, IT CANNOT LEAD TO AN INEXORABLE CONCLUSION THAT THE BILL WAS NOT PROVED TO BE GENUI NE. EVIDENCE IS TO BE WEIGHED AND NOT COUNTED. THE ENDS OF SUBSTANTIAL J USTICE WILL BE MET FROM SUCH AN INSPECTION AND VERIFICATION. 9. SO FAR AS REGARDS THE OBJECTION TAKEN BY THE DEP ARTMENT, THE SAME CAN ALSO BE ONLY DECIDED ON THE ACTUAL INSPECTION OF TH E MACHINERY AT SITE AND VERIFICATION THEREOF FROM THE ASSESSEES BOOKS OF A CCOUNT. 10. THEREFORE, I DEEM IT APPROPRIATE TO REMIT THIS MATTER TO THE FILE OF THE AO TO INSPECT THE MACHINERY AT SITE AND TO VERIFY IT FROM THE ASSESSEES BOOKS OF ACCOUNT. THE QUESTION OF THE ASSESSEES E NTITLEMENT TO DEDUCTION ITA NO.619(ASR)/2013 6 U/S 80IB(4) OF THE ACT, AS CLAIMED, WILL BE DECIDED IN THE LIGHT OF THE RESULT OF SUCH INSPECTION AND VERIFICATION. ORDERED ACCOR DINGLY. THE ASSESSEE, NO DOUBT, SHALL CO-OPERATE IN THE FRESH PROCEEDINGS BEFORE THE AO. 11. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH SE PT., 2015 SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 24/09/2015 COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE: SH.SANJAY JAIN PROP. JAINCO STEEL , J AMMU 2. ITO WAD 1(3), JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) ITAT, AMRITSAR.