M/s. Modern Beverages, Jammu V. The Dy.Commissioner of Income-tax, Jammu

ITA 655/ASR/2013

• Counselvise Citation: 65520914 RSA 2013
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 06-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Reopening of assessment; Charitable institution; Audit objection; Difference of opinion; Assessment record; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 80IB; 10B; 147; 148; 139

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.654 & 655(ASR)/2013 ASSESSMENT YEARS: 2003-04 & 2004-05 PAN :AAHFM6708L M/S. MODERN BEVERAGES, VS. DY.COMMR. OF INCOME TAX , 71-EAST EXTENSION, CIRCLE-1, JAMMU. JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.P.N.ARORA, ADVOCATE RESPONDENT BY:SH.MAHAVIR SINGH, DR DATE OF HEARING:13/02/2014 DATE OF PRONOUNCEMENT:24/02/2014 ORDER PER BENCH ; THESE TWO APPEALS OF THE ASSESSEE ARISE FROM TWO DIFFERENT ORDERS OF THE CIT(A), JAMMU, EACH DATED 03.09.2013 FOR THE A SSESSMENT YEARS 2003- 04 & 20004.THE ISSUES IN BOTH THE APPEALS ARE IDEN TICAL AND THEREFORE, BOTH THE APPEALS ARE BEING TAKEN UP TOGETHER BY THIS CON SOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NOS. 654 & 655(ASR)/2013 2 2. THE GROUNDS RAISED IN ITA NO.654(ASR)/2013 FOR T HE ASSESSMENT 2003-04 ARE AS UNDER 1. THAT THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE LD. CIT(A) ARE BOTH AGAINST THE FACTS OF THE CASE AND UNTENABLE IN LAW. 2. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT THE REOPENING OF ASSESSMENT UNDER SECTION 148 OF THE AC T, IS ILLEGAL, INVALID AND VOID AB INITIO AND AS SUCH THE ASSESSMENT ORDER IS LIABLE TO BE CANCELLED INASMUCH AS, THIS CASE DOES NOT FALL WITHIN THE MEANING OF SECTI ON 148 OF THE ACT. AS SUCH THE ASSESSMENT ORDER IS BAD IN LAW AND THE SAME MAY BE CANCELLED. 3. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRM ING THE DISALLOWANCE U/S 80IB OF THE ACT AT RS.1249100/- WH ICH IS NOT IN ACCORDANCE WITH THE LAW. THE LD. CIT(APPE ALS) DID NOT APPRECIATE THAT THE ASSESSEE WAS CLEARLY EN TITLED FOR THE DEDUCTION CLAIMED UNDER SECTION 80IB OF THE ACT, INASMUCH AS ALL THE CONDITIONS LAID DOWN U/S 80IB OF THE ACT WERE FULFILLED. THE ASSESSEE FIRM WAS CARRYING ON MANUFACTURING OF PORTABLE PLASTIC BOTTLES, MANUFACT URING OF MINERAL AND SODA WATER AND THE NECESSARY DETAILS OF MANUFACTURING ACTIVITIES OF THE FIRM WERE DULY SUBM ITTED TO THE AUTHORITIES BELOW. THUS, IT IS REQUESTED THA T THE DEDUCTION U/S 80IB OF THE ACT AS CLAIMED MAY BE ALL OWED AND THE LD. CIT(A) WERE NOT AT ALL JUSTIFIED IN CON FIRMING THE ORDER OF THE AO WITHOUT ANY RHYME & REASON. 4. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT THE ASSESSEE WAS REGISTERED WITH THE JAMMU & KASHMIR ST ATE INDUSTRIES DEPARTMENT AND WAS CLEARLY ENTITLED FOR THE DEDUCTION AS CLAIMED U/S 80IB OF THE ACT. THUS, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE AO IN WHICH THE AO HAS DISALLOWED DEDUCTION UNDER SECTION 80IB OF THE ACT AT RS.1249100/-. IT IS PRAY ED THAT DEDUCTION AS CLAIMED U/S 80IB OF THE ACT AT RS.1249 100/- ITA NOS. 654 & 655(ASR)/2013 3 MAY BE ALLOWED AS ALL THE CONDITIONS LAID DOWN U/S 80IB OF THE ACT, WERE DULY FULFILLED. 5. ANY OTHER GROUND OF APPEAL THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 2. THE GROUNDS RAISED IN ITA NO.655(ASR)/2013 FOR T HE ASSESSMENT 2004-05 ARE AS UNDER 1. THAT THE ASSESSMENT ORDER AS WELL AS THE ORDER OF THE LD. CIT(A) ARE BOTH AGAINST THE FACTS OF THE CASE AND UNTENABLE IN LAW. 2. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT THE REOPENING OF ASSESSMENT UNDER SECTION 148 OF THE AC T, IS ILLEGAL, INVALID AND VOID AB INITIO AND AS SUCH THE ASSESSMENT ORDER IS LIABLE TO BE CANCELLED INASMUCH AS, THIS CASE DOES NOT FALL WITHIN THE MEANING OF SECTI ON 148 OF THE ACT. AS SUCH THE ASSESSMENT ORDER IS BAD IN LAW AND THE SAME MAY BE CANCELLED. 3. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRM ING THE DISALLOWANCE U/S 80IB OF THE ACT AT RS.12,71,910/- WHICH IS NOT IN ACCORDANCE WITH THE LAW. THE LD. CIT(APPE ALS) DID NOT APPRECIATE THAT THE ASSESSEE WAS CLEARLY EN TITLED FOR THE DEDUCTION CLAIMED UNDER SECTION 80IB OF THE ACT, INASMUCH AS ALL THE CONDITIONS LAID DOWN U/S 80IB OF THE ACT WERE FULFILLED. THE ASSESSEE FIRM WAS CARRYING ON MANUFACTURING OF PORTABLE PLASTIC BOTTLES, MANUFACT URING OF MINERAL AND SODA WATER AND THE NECESSARY DETAILS OF MANUFACTURING ACTIVITIES OF THE FIRM WERE DULY SUBM ITTED TO THE AUTHORITIES BELOW. THUS, IT IS REQUESTED THA T THE DEDUCTION U/S 80IB OF THE ACT AS CLAIMED MAY BE ALL OWED AND THE LD. CIT(A) WERE NOT AT ALL JUSTIFIED IN CON FIRMING THE ORDER OF THE AO WITHOUT ANY RHYME & REASON. ITA NOS. 654 & 655(ASR)/2013 4 4. THAT THE AUTHORITIES BELOW DID NOT APPRECIATE TH AT THE ASSESSEE WAS REGISTERED WITH THE JAMMU & KASHMIR ST ATE INDUSTRIES DEPARTMENT AND WAS CLEARLY ENTITLED FOR THE DEDUCTION AS CLAIMED U/S 80IB OF THE ACT. THUS, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE AO IN WHICH THE AO HAS DISALLOWED DEDUCTION UNDER SECTION 80IB OF THE ACT AT RS.12,71,910/-. IT IS PR AYED THAT DEDUCTION AS CLAIMED U/S 80IB OF THE ACT AT RS.12,71,910/- MAY BE ALLOWED AS ALL THE CONDITIONS LAID DOWN U/S 80IB OF THE ACT, WERE DULY FULFILLED. 5. ANY OTHER GROUND OF APPEAL THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 4. FIRST OF ALL, WE TAKE UP APPEAL IN ITA NO.654(ASR)/ 2013 FOR THE ASSESSMENT YEAR 2003-04 AND OUR DECISION HEREINABEL OW SHALL BE IDENTICALLY APPLICABLE IN ITA NO.655(ASR)/2013 FOR THE ASSESSME NT YEAR 2004-05 SINCE THE FACTS IN THE CASE ARE IDENTICAL IN ASSESSEES A PPEAL IN ITA NO.654(ASR)/2013. THE BRIEF FACTS OF THE CASE AS PE R AOS ORDER, WHICH FOR THE SAKE OF CONVENIENCE, ARE REPRODUCED HEREUNDER: THEREAFTER IT WAS OBSERVED THAT THE CLAIM OF THE A SSESSEE IN RESPECT OF DEDUCTION U/S 80IB OF THE ACT IS NOT ALLOWABLE I N VIEW OF THE JUDGMENT OF ITAT, AHMEDABAD (A.BENCH) IN THE CASE O F AQUA MINERAL PVT. LTD. VS. DCIT VIDE NO.(2005) 97-TTJ-(AHD.) 658 DATED 31.05.2005 HOLDING THE ACTIVITY INVOLVED IN THIS CA SE IN PRODUCTION OF DEMINERALIZED WATER BY REMOVING MINERAL DOES NOT AM OUNT TO MANUFACTURE SO AS TO QUALIFY FOR DEDUCTION U/S 80IB OF THE ACT. 2.1. THEREAFTER, THE THEN AO AFTER RECORDING THE RE ASONS FOR THE BELIEF THAT INCOME HAD ESCAPED ASSESSMENT WHICH ARE REPROD UCED HERE AS UNDER AND ISSUED NOTICE TO THE PARTY U/S 148 OF THE ACT AFTER GETTING ITA NOS. 654 & 655(ASR)/2013 5 APPROVAL FROM CIT, WHICH WAS ACCORDED U/S 151(1) OF THE ACT AND WAS CONVEYED TO THE RANGE HEAD VIDE LETTER DATED 16.07 .2009 WHICH WAS FURTHER CONVEYED TO THE CONCERNED AO BY THE ADDL. C IT, RANGE-1, JAMMU AS PER HIS OFFICE LETTER BEARING NO. ADDL. CI T/R-1/JMU/2009- 10/447 DATED 17.07.2009 ON 20.07.2009 WHICH WAS DUL Y SERVED UPON THE ASSESSEE: IN CASE OF AQUA MINERAL PVT. LTD. VS. DY.CIT NO.2 288 TO 2290/AHD./1997 DATED 31.05.2005 WHEREIN HONBLE ITA T HELD THAT ACTIVITY INVOLVED IN THE PRODUCTION OF DEMINERALIZE D WATER BY REMOVING MINERAL DOES NOT AMOUNT TO MANUFACTURE SO AS TO QUALIFY FOR DEDUCTION U/S 80I AS SUCH WATER, THOUGH MOVE HYGIEN IC AND SUITABLE FOR HUMAN CONSUMPTION REMAINS ONLY DRINKING WATER WITHOUT SUFFICIENT DIFFERENCE IN NAME, CHARACTER AND USE. P HOTOCOPY OF ORDER OF HONBLE ITAT, AHMEDABAD A BENCH IS ENCLOSED. SINCE DEDUCTION U/S 80IB WRONGLY ALLOWED BY MY PREDECESSOR IS TO B E ADDED BACK IN THE INCOME OF THE FIRM, INCOME OF RS.12,71,910/- HA S ESCAPED ASSESSMENT FOR WHICH NOTICE U/S 148 OF THE ACT IS T O BE ISSUED. 2.2. CASE OF ASSESSEE WAS TRANSFERRED TO TO THIS OF FICE BY THE ITO WARD 1(2), JAMMU AS PER HIS OFFICE LETTER DATED 10. 11.2009 MENTIONING THEREIN THAT THE PRESENT JURISDICTION OV ER THE CASE VEST WITH THE UNDERSIGNED THEREFORE THE RELEVANT FOLDER WAS T RANSFERRED TO THE UNDERSIGNED. UNDERSIGNED HAD ISSUED A DETAILED LE TTER TO THE ASSESSEE AS PER THIS OFFICE LETTER DATED 23/2/2010 , WHICH WAS DULY SERVED UPON THE ASSESSEE WITH REGARD TO COMPLIANCE OF NOTICE U/S 148 ISSUED IN THIS CASE ALONG WITH NOTICE U/S 142(10 OF THE ACT. 2.3. IN RESPONSE TO THIS NOTICE AND LETTER ASSESSEE MOVED AN APPLICATION THROUGH HIS COUNSEL DATED 30.03.2010 IN WHICH ASSESSEE COMMUNICATED THAT RETURN FILED EARLIER VIDE LETTER DATED 30.11.2003 MAY BE TREATED AS FILED U/S 148 OF THE ACT . ON 13. 08.2010 A NOTICE U/S 142(1) WAS AGAIN ISSUED TO THE ASSESSEE ASKING THE ASSESSEE TO PRODUCE THE BOOKS AND OTHER DOCUMENTS AS MENTIONED IN THE SAID NOTICE BUT THE COUNSEL OF THE ASSESSEE SOUGHT ADJOU RNMENT. ON 23.09.2010 AGAIN NOTICE U/S 1421(1) AND 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE ASKING THE ASSESSEE TO COMPLY WITH THE SAID NOTICES ON 29.09.2010. ITA NOS. 654 & 655(ASR)/2013 6 2.4. IN RESPONSE TO THESE NOTICES THE COUNSEL FOR T HE ASSESSEE HAS PLEADED AS UNDER: IN RESPONSE TO YOUR NOTICE U/S 143(2) OF THE ACT FOR THE A.Y. 2003-04 IT IS RESPECTFULLY SUBMITTED AS UNDER: BRIEF HISTORY OF THE CASE IS THAT ASSESSMENT ORDER FOR THE A.Y. 2003-04 WAS PASSED U/S 143(3) OF THE ACT ON 31.3.2006. THEN ITO WARD 1(2) ISSUED A NOTICE U/S 154/155 DATED 19.02.2009 TO REC TIFY & ENHANCE THE ASSESSMENT ON THE GROUND THAT THE ASSESSEE HAS PURC HASED PER BOTTLES & USED THEM AS PACKING MATERIAL FOR SALE OF MINERAL WATER & ITAT AHMEDABAD BENCH IN THE CASE OF AQUA MINERAL PVT. LT D. VS. DCIT (2005) 95 TTJ (AHD) 658 DATED 31.05.2005 HAS HELD T HAT ACTIVITY INVOLVED IN PRODUCTION OF DEMATERIALIZED WATER BY R EMOVING MINERALS DOES NOT AMOUNTS TO MANUFACTURING & IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB. IN RESPONSE TO THIS NOTICE ASSESSEE FIELD A D ETAILED REPLY DATED 23.4.2009 CONTENDING THAT SECTION 154/155 IS NOT A PPLICABLE IN THE PRESENT CASE, BECAUSE THE POINT RAISED BY YOUR GOOD SELF IS NOT MISTAKE APPARENT ON RECORD. THE SCRUTINY ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT IS VALIDLY FRAMED & THE AO HAS PASSED THE ORDER AFTER FULLY DI SCUSSING THE PROCESS OF MANUFACTURING, SKILLED & UNSKILLED PERSO NS WHO ARE CONNECTED WITH MANUFACTURING ACTIVITIES & JUSTIFYIN G THE FULFILLMENT OF CONDITIONS REQUIRED U/S 80IB WITH DOCUMENTARY EVIDE NCE & HAVING HIS FULL SATISFACTION THAT ASSESSEES FIRM HAS FULL FI LLED ALL REQUIREMENTS U/S 80IB. THE AO GOT HIMSELF FULLY SATISFIED THAT BUSINESS BEING DONE BY THE ASSESSEE FIRM CLEARLY AMOUNTS TO MANUFACTURE OF NEW PRODUCTS. MOREOVER, THE JUDGMENT OF THE TRIBUNAL IS NOT PRIMA FACIE CASE FOR REOPENING OF ASSESSMENT SINCE IT IS ALL SUBJECT TO FURTHER JUDICIAL SCRUTINY BY THE HIGH COURT & SUPREME COURT. MOREOVE R, TRIBUNAL IS NOT JURISDICTIONAL TRIBUNAL WHOSE JUDGMENT IS APPLI CABLE FOR REOPENING OF ASSESSMENT. THE FACTS OF THE CASE M/S. AQUA MINERAL PVT. LTD ON WHICH YOU GOODSELF IS RELYING IS TOTALLY DI FFERENT FROM OUR CASE. THEREAFTER INCOME TAX OFFICE RANGE 1(1) ISSUED A N OTICE U/S 142(10 DATED 1.5.2009 & THEN ISSUED NOTICE U/S 148 OF THE ACT DATED 20.07.2009, IT MEANS NOTICE U/S 148 WAS ISSUED AFTE R REOPENING OF THE CASE WHICH IS BAD IN LAW. SECONDLY INCOME TAX OFFIC ER STARTED THE ITA NOS. 654 & 655(ASR)/2013 7 PROCEEDINGS U/S 147 DURING THE PENDENCY OF PROCEEDI NGS U/S 154/155 IS ALSO BAD IN LAW. IT IS FURTHER SUBMITTED THAT OUR UNIT IS A MANUFACT URING UNIT REGISTERED WITH DIC JAMMU DATED 30.06.1991. THE MANUFACTURING ACTIVITIES ARE NATURAL MINERAL WATER & PET. BOTTLES & SODA WATER. RAW MATERIAL OF THE UNIT AS PER SCHEME APPROVED BY THE DIC JAMMU IS PET PERFORM FOR MANUFACTURING PET BOTTLES, PVC SHRINKS & NECK PLASTIC TAMPER PROOF CAP, CHEMICALS ETC. COPY OF TH E REGD. CERTIFICATE ALONGWITH SCHEME IS ENCLOSED HEREWITH. SO THE DETAI LED MANUFACTURING PROCESS OF OUR UNIT IS TO MANUFACTURE PET BOTTLES F ROM PET PERFORMS & PLASTIC GRANULES & THEN FILLING, SEALING, LABELING & PACKING OF PACKED DRINKING WATER & SODA WATER, MACHINERY USED FOR MAN UFACTURING PET BOTTLES IS PRE FORM BLOW MOULDING MACHINE. PET BOTT LE PRINTING MACHINE & SHRINK TUNNEL. PREFORM PLASTIC GRANULES A RE HEATED IN ELECTRIC OVEN & THEN BLOWN IN BLOW MOULDING MACHINE S AS PER SIZE & DESIGN OF BOTTLE. PACKAGED DRINKIGN WATER IN SECOND PHASE RAW WATER IS TAKEN FROM DEEP BORE WELL & STORED IN STORAGE TANK. THIS RAW WATER HAVE 350-370 TDS (TDS MEANS TOTAL DISSOLVED SOLVENTS) AT OUR PLANT. TDS IN WATE R VARIES FROM PLACE TO PLACE. RAW WATER FROM STORAGE TANK PUMPED THROUGH DM PLAN T . BY ADJUSTING ROTO-METER FIXED IN DM PLANT,. WE CAN RED UCE TDS OF RAW WATER & THE SAME IS REDUCED TO 135-145 TDS & STORE IN 55 TANK. THIS WATER IS CALLED PACKAGED DRINKING WATER. THE T DS OF RAW WATER & PACKAGED DRINKING WATER IS CHECKED WITH THE HELP OF DIGITAL TDS METER. FROM SS TANK PACKAGED DRINKING WATER WITH THE HELP OF SS MONO BLOCK PUMP IS PASSED THROUGH FITTER UNIT HAVING 5 M ICRON. 1MICRON, 5 MICRON & 02 MICRON FITTER. THEN THIS WATER IS PA SSED THROUGH ULTRA VIOLET RAYS UNIT (IV) TO KILL ALL TYPE OF B ACTERIA & SEND TO FILLING UNIT WHERE THIS WATER IS FILLED IN PET BOTT LES. FILLED BOTTLES ARE COPIES, LABELED & THEN PASSED THROUGH SHRINK TUNNE L, WHERE LABELS GET SHRINKED & FIXED ON BOTTLE. FINALLY THESE BOTTLES ARE PACKED IN CARTON BOXES & READY FOR SALE. ADDITIONAL LINE FOR MANUFACTURING SODA WATER WAS GR ANTED BY DIC VIDES NO. SSI-J/1194 DT. 03.06.2000. THE MANUFACTUR ING PROCESS IS AS UNDER: ITA NOS. 654 & 655(ASR)/2013 8 1) PACKAGED DRINKING WATER AFTER PASSING THROUGH MICRO N FILTERS IS PASSED THROUGH HEAT-EXCHANGER & THE TEMPERATURE OF WATER IS REDUCED TO 1.2C. 2) THE CHILLED WATER IS SPRINKLED IN CARBONATOR WHERE CO2 GAS IS PASSED. CO2 GAS GETS MIXED WITH CHILLED WATE R & SODA WATER IS READY. THIS SODA WATER IS THEN SENT TO FIL LING MACHINE WHERE BOTTLES ARE FILELD, CAPED, LABELED & THEN PAC KED IN CARTON BOXES. THE WHOLE MANUFACTURING PROCESS WAS FILED & EXPLAIN ED BEFORE THE ASSESSING AUTHORITY AT THE TIME OF ASSESSMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 2003-04, THE INCOME TAX OFFICER ASKED FOR TO FURNISH THE DETAILS OF BELIEF RESUME REGARDING THE NATURE OF MANUFACTURING PROCESS CARRI ED ON, COPIES OF BILLS PERTAINING TO PLANT & MACHINERY. MONTH WISE D ETAILS OF FINISHED GOODS BEING MANUFACTURED, RAW MATERIAL BEING USED A ND THE PARTICULARS OF SKILLED & UNSKILLED PERSONS WHO ARE CONNECTED WITH THE MANUFACTURING ACTIVITIES ALONGWITH OTHER REQUIREMEN TS FOR FULFILLMENT OF CONDITIONS PRESCRIBED U/S 80IB OF INCOME TAX ACT . AT THE TIME OF ASSESSMENT PROCEEDINGS ASSESSEE FURNISHED COPY OF P ROJECT REPORT & COPY OF SCHEME DULY APPROVED BY THE DIC JAMMU, PURC HASE OF THE PLANT & MACHINERY USED IN THE MANUFACTURING OF THE PET BOTTLES, COPIES OF PURCHASE BILLS OF PERFORM PLASTIC GRANULE S USED AS RAW MATERIAL FOR MANUFACTURING OF PLASTIC PET BOTTLES A S EVIDENCE IN SUPPORT OF MANUFACTURING ACTIVITIES FOR CLAIM OF DE DUCTION U/S 80IB OF THE ACT. ASSESSEE ALSO FILED DETAILED MANUFACTURING PROCESS TO BE CARRIED OUT FOR MANUFACTURING OF PACKAGED DRINKING WATER, SODA WATER & PET BOTTLES. TO SUBSTANTIATE THE CLAIM OF DEDUCTION U/S 80IB ASSESSEE FURNISHED COPY OF SALES TAX ASSESSMENT ORDER DULY P ASSED BY THE ASSESSING AUTHORITY SALES TAX JAMMU WHEREIN THE NAT URE OF BUSINESS HAS BEEN SHOWN AS MANUFACTURING OF PLASTIC BOTTLES ALONGWITH THE DEMINERALIZATION OF THE WATER THEREOF. ASSESSEE ALS O FURNISHED COPY OF PURCHASE BILLS OF PRE FORM PLASTIC GRANULES USED AS RAW MATERIAL FOR THE MANUFACTURING OF PLASTIC BOTTLES ALONGWITH COPI ES OF SUNDRY CREDITORS. IT PROVES THAT THE NATURE OF THE UNIT IS TO MANUFACTURE PET BOTTLES & THEN IT IS FILLED WITH PROCESSED PACKAGED DRINKING WATER, LABELED & CAPPED FOR SALE THEREOF. THE COPIES OF DO CUMENTARY EVIDENCE CORROBORATING THE ABOVE FACTS ARE MADE AS ANNEXURE TO THIS EXPLANATION. THE PROFIT OF THE UNIT FORM MANUFACTUR ING ACTIVITY WAS CALCULATED AFTER TAKING IN TO ACCOUNT THE PURCHASE OF RAW MATERIAL I.E. ITA NOS. 654 & 655(ASR)/2013 9 PERFOM PLASTIC GRANULES & SALE OF MINERAL WATER ALO NGWITH THE MANUFACTURED PLASTIC BOTTLES. AFTER GOING THROUGH T HE RECORD, MANUFACTURING ACTIVITIES OF THE UNIT & OTHER DOCUME NTS PRODUCED AT THE TIME OF ASSESSMENT, THE ASSESSING AUTHORITY WAS SATISFIED REGARDING FULFILLMENT OF CONDITION REQUIRED U/S 80IB & GRANTE D DEDUCTION U/S 80IB. NOW IN CONTRAST TO THE ABOVE FACTS, AUDIT OBJECTION HAS BEEN RAISED RELYING ON THE JUDGMENTS OF ITAT AHMADABAD IN THE C ASE OF AQUA MINERAL PVT. LTD. IN WHICH THE FACTS OF THE CASE A RE TOTALLY DIFFERENT. IT IS SEEN THAT THE ASSESSEE IN THAT CASE WAS NOT MANU FACTURING ANY PLASTIC BOTTLES BUT WAS PURCHASING READYMADE BOTTLE S & WAS ONLY INVOLVED IN THE BOTTLING OF THE SAME WITH DE-MINERA LIZED WATER. THE REFERENCE TO THIS EFFECT IS AVOIDABLE TO PARA 13 OF THE RELIED JUDGMENT. IT IS ALSO OBSERVED THAT IN CASE OF AQUA MINERAL TH E ASSESSEE WAS USING POTABLE (TAP) WATER RECEIVED FROM THE MUNICIPAL COR PORATION WHICH IS FIT FOR HUMAN CONSUMPTION AS MUNICIPAL CORPORATION HAD ALREADY CARRIED OUT THE NECESSARY CHLORINATION & FILTRATION BEFORE FEEDING SAME TO THE GENERAL PUBLIC & THE WATER IS ALREADY F IT FOR HUMAN CONSUMPTION. HOWEVER, THE WATER IN THE ABOVE CASE I S TAKEN FROM THE BORE WELL & PASSED THROUGH THE STAGES AS DISCUSSED IN THE SUPRA PARAGRAPHS BEFORE FILLING THE SAME INTO THE MANUFAC TURED PLASTIC BOTTLES. THE RAW WATER IN THIS CASE IS NOT FIT FOR HUMAN CONSUMPTION & NEEDED TO PASS THROUGH THE VARIOUS STAGES BEFORE FI LLING THE SAME IN THE BOTTLES. HERE THE FACTS OF THE RELIED CASE ARE TOTALLY DIFFE RENT FROM THE INSTANT CASE AS ENUMERATED ABOVE. IN THE INSTANT CASE THE A SSESSEE IS CARRYING OUT ACTIVITY OF MANUFACTURING OF PET BOTTLES & IN T HE SECOND STAGE OF THE MANUFACTURING ACTIVITIES THE SOME IS FILLED, SE ALED, LABELED FOR PACKAGED DRINKING WATER & SODA WATER. HENCE FACTS O F THE CASE RELIED UPON IS TOTALLY DIFFERENT FROM THE ABOVE CASE. IN OUR CASE WE ARE DERIVING PROFIT FROM THE MANUFAC TURING OF THE PET BOTTLES & SUBSEQUENTLY FILLING OF THE SAME WITH MIN ERAL WATER PROCESSED FROM NORMAL WATER. AS AN MANUFACTURING OF PET BOTTLES PROCESS INVOLVED THE HEATING OF THE PRE-PERFORM PLA STIC GRANULES IN TO THE ELECTRIC OVEN & BLOWN IN BLOW MOULDING MACHINE AS PER SIZE & DESIGN OF THE BOTTLES. WE HAVE FURNISHED THE COPY O F DIC REGISTRATION,, PROJECT REPORT IN WHICH THE PROCESS & THE MACHINE INVOLVED IN MANUFACTURING ACTIVITIES OF THE PET BOTTLES IS CLEA R. MOREOVER, THE ITA NOS. 654 & 655(ASR)/2013 10 NECESSARY COPIES OF MACHINERY INSTALLED & BILLS OF RAW MATERIAL PURCHASED DURING THE YEAR UNDER ASSESSMENT WERE FUR NISHED AT THE TIME OF ASSESSMENT, SO THE CLAIM OF THE ASSESSEE RE GARDING DEDUCTION U/S 80IB CANNOT BE DENIED MERELY IN APPLYING THE RA TIO JUDGMENT OF THE ABOVE MENTIONED CASE OF THE ITAT AHMEDABAD BENC H, WHERE FACTS OF THE CASE ARE TOTALLY DIFFERENT & DISTINGUISHED. THE AUDIT PARTIES FAILED TO APPRECIATE THE MANUFACTURING ACTIVITIES I NVOLVED IN OUR UNIT & TAKEN IN TO CONSIDERATION ONLY A PART OF THE MAN UFACTURING ACTIVITIES. THE WHOLE PROCESS IS A COMPOSITE ACTIVI TY & CANNOT BE SEPARATED. IT IS A WELL SETTLED PRINCIPLE THAT THE PARTIAL RELIEF OR SPLITTED RELIEF CANNOT BE SEPARATED & COMPUTED BY T HE A.O. UNDER SECTION 80IB OF THE INCOME TAX ACT BY SEGREGATING & SPLITTING A PART OF THE COMPOSITE MANUFACTURING ACTIVITIES AT HIS O WN DISCRETION AS HELD IN NUMBER OF JUDGMENTS OF APEX COURT AS IN THE CASE OF METTU CHEMICALS & INDUSTRIAL COPN. LTT. VS. CIT (1996) 21 7 ITR 768(SC): 86 TAXMAN 157(SC). AS THIS IS CLEAR THAT THE MANUFA CTURING OF PET BOTTLES FROM THE PERFORM PLASTIC GRANULES & FILLING THE SAME WITH THE MINERAL WATER IS A SINGLE PROCESS AMOUNTS TO THE MA NUFACTURING ACTIVITIES OR PRODUCTION OF ARTICLES OR THING WITH IN THE MEANING OF SEC. 80 OF THE ACT & THE ASSESSMENT MODE IS TOTALLY AS P ER LAW & INCOME TAX OFFICER HAS RIGHTLY GRANTED DEDUCTION U/S 80IB OF THE ACT WHILE PASSING ASSESSMENT ORDER U/S 143(3) OF THE ACT. THE SAME CAN NOT BE DENIED ON MERE SURMISES AND CONJECTURES OF THE AUDI T PARTY WHO HAVE NOT GONE THROUGH THE FACTS, CIRCUMSTANCES & DOCUMEN TARY EVIDENCE OF THE CASE. THE ATTENTION OF YOUR GOODSELF IS INVITED TO JUDGME NT OF SUPREME COURT IN THE CASE OF VADIAL CHEMICALS LTD. VS. STAT E OF ANDHRA PRADESH & OTHERS REPORTED IN SALES TAX CASES VO.. 1 42(76). THE RELEVANT EXTRACT OF JUDGMENT IS REPRODUCED AS UNDER : THE STATE GOVT. INDUSTRIES DEPTT. HAVING EXERCISED ITS MIND & HAVING ISSUED THE REGISTRATION, THE COMMERCIAL TAX DEPTT. WHICH IN THIS CASE INCLUDE INCOME TAX DEPTT. COULD NOT GO BEYOND IT. T HE REGISTRATION & RECOGNITION BY INDUSTRIES DEPTT. AS INDUSTRIES COUL D NOT BE CANCELLED BY THE INCOME TAX AUTHORITIES. THE ASSESSEE-FIRM CA SE IS COVERED UNDER THE DOCTRINE PROCLAIMED & ENUNCIATED BY THE A PEX COURT IN THIS JUDGMENT. MOREOVER, A READING OF SEC. 147 ALONG WITH SEC. 14 9 & 151 OF THE ACT WOULD INDICATE THAT TWO CONDITIONS ARE NECESSARY TO BE SATISFIED FOR INITIATING PROCEEDINGS U/S 147(A) THE FIRST CONDITI ON IS THAT THE ITO MUST HAVE REASON TO BELIEVE THAT SOME INCOME CHAR GEABLE TO TAX ITA NOS. 654 & 655(ASR)/2013 11 HAD ESCAPED ASSESSMENT. THE SECOND CONDITION IS THA T THE ESCAPEMENT OCCURRED DUE TO EITHER: I) OMISSION OR FAILURE ON THE PART OF ASSESSEE TO MAKE A RETURN U/S 139 FOR ANY ASSESSMENT YEAR, OR II) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ITS ASSESSMENT. AS SAID BY THE SUPREME COURT IN CALCUTTA DISCOUNT C O. LTD. VS. ITO (1961) 41 ITR 191 AN ITO WOULD HAVE JURISDICTION TO ISSUE A NOTICE U/S 148 ONLY WHEN BOTH THE CONDITIONS CO EXIST. THE SE ARE CONDITIONS PRECEDENT FOR PUTTING INTO FORCE OF THE MACHINERY O F REASSESSMENT. IN THE ABSENCE OF THESE CONDITIONS, THE ITO WOULD HAVE NO JURISDICTION TO EMBARK UPON AN INQUIRY . THE SCOPE OF THIS SECTION HAS BEEN CONSIDERED BY THE SUPREME COURT IN A NUMBER OF OTHE R CASES AS WELL. THE ASSESSEES FIRM HAD MADE ALL DISCLOSURES TO THE ITO AT THE TIME OF ORIGINAL ASSESSMENT & FULFILS ALL THE ESSENTIAL CON DITIONS FOR CLAIMING EXEMPTION U/S 80IB . WHEN THE PRIMARY FACTS NECESSARY FOR ASSESSMENT HAD BEEN FULLY AND TRULY DISCLOSED TO ITO, HE WAS NOT ENTITLED, ON CHA NGE OF OPINION, TO COMMENCE PROCEEDINGS FOR ASSESSMENT U/S 147(1) OF T HE ACT. IN ITO VS. NAWAB MIR BARKAT ALI KHAN BAHADUR {1974} 97 ITR 239, THE SUPREME COURT OBSERVED, INTER ALIA, THAT HAVING SEC OND THOUGHTS ON THE SAME MATERIAL DID NOT WARRNT THE INITIATION OF PROCEEDINGS U/S 147. ONCE THE ASSESSEE HAS DISCLOSED ALL THE PRIMARY FAC TS THAT IS THE END OF HIS DUTY. IT IS THEN FOR THE AO TO DRAW THE PROPER CONCLUSIONS FROM THOSE FACTS. IF THE CONCLUSIONS DRAWN BY THE AO FRO M THE PRIMARY FACTS DISCLOSED BY THE ASSESSEE ARE ERRONEOUS, THE ASSESS ING AUTHORITY FROM THE PRIMARY FACTS DISCLOSED BY THE ASSESSEE ARE ERR ONEOUS, THE ASSESSING AUTHORITY CANNOT REOPEN THE ASSESSMENT. J .P. BAJPAI (HUF) V. CIT [2004] 140 TAXMAN 34. THE ALLAHABAD HIGH COURT IN GIRDHAR GOPAL GULATI V. UNION OF INDIA [2004] 140 TAXMAN 312 HELD THAT ONCE AN ASSESSMENT IS PROPOSED TO BE MADE U/S 143(3), IT IS EXPECTED THAT THE A.O. WI LL MAKE ALL RELEVANT & DETAILED ENQUIRIES BEFORE PASSING THE ASSESSMENT ORDER. HE CAN MAKE ALL ENQUIRIES TO OBTAIN THE MATERIAL HE DEEMS FIT FOR FINDING OUT THE CORRECT INCOME OF THE ASSESSEE. THE AO CANNOT I SSUE NOTICE U/S 148 AFTER THE ASSESSMENT HAS BEEN MADE, UNLESS THER E IS DELIBERATE ITA NOS. 654 & 655(ASR)/2013 12 CONCEALMENT BY THE ASSESSEE OR THERE IS INFORMATION THAT THE INCOME HAS ESCAPED ASSESSMENT. THE MADRAS HIGH COURT IN CIT VS. METTUR CHEMICAL & INDUSTRIAL CORN. [2002] 242 ITR 119 HELD THAT REASSESSMENT BAS ED SOLELY ON THE AUDIT PARTYS REMARKS WOULD BE INVALID UNDER THE L AW. THE DELHI HIGH COURT TOO IN DUNCAN SERVICES LTD. VS. ITO [199 1] 198 ITR 264/[1993] 66 TAXMAN 106 & TRANSWORLD INTERNATIONAL INC. V. CIT [2005] 142 TAXMAN 35 HELD THAT AUDIT PARTYS VIEW REGARDING INTERPRETATION OF LEGAL PROVISION WOULD NOT CONSTIT UTE A REASON FOR ISSUE OF NOTICE. IT IS THE OFFICER ISSUING THE NOTI CE U/S 148 WHO MUST HIMSELF BE SATISFIED ABOUT THE CORRECTNESS OF THE A UDIT REPORT. IT IS CLEAR BEYOND DOUBT THAT SEC. 148 IS NOT APP LICABLE IN THE PRESENT CASE SINCE THE POINT RAISED BY YOUR GOODSELF ARE NO T MISTAKE FROM RECORD. MERELY DUE TO CHANGE OF OPINION SEC. 147(A0 CANNOT BE INVOKED IN RESPECT OF THESE ITEMS. IT IS THEREFORE, REQUESTED THAT KEEPING IN VIEW THE ABOVE FACTS & CIRCUMSTANCES OF THE CASE THE INCOME TAX OFFICER HA S RIGHTLY GRANTED DEDUCTION U/S 80IB OF THE ACT, WHILE PASSING ORDER U/S 143(3). THE SAME CANNOT BE DENIED ON MERE SURMISES & CONJECTURE S OF THE DOCUMENTARY EVIDENCE & MOREOVER THE SAME CANNOT BE REOPENED WHEN THE ASSESSEE HAS DISCLOSED ALL THE FACTS, PRO CEDURE OF MANUFACTURING, FULLY AND TRULY TO THE ITO & ASSESSM ENT HAS COMPLETED U/S 143(3). IT IS, THEREFORE, REQUESTED THAT KEEPING IN VIEW OF THE FORE GOING FACTS, PROCEEDINGS INITIATED MAY KINDLY BE WITHDRAWN. 3. IN THIS CASE DIRECTIONS US/ 144A OF THE ACT, ON THIS ISSUE WERE ALSO SOUGHT FROM THE ADDL. CIT. RANGE-1, JAMMU VIDE THIS OFFICE LETTER NO.DCIT/CIR.1./JAMU/2010-11/1750 DATED 27.12.2010 A ND THE SAME HAVE BEEN RECEIVED BY THE UNDERSIGNED VIDE HIS OFFI CE LETTER NO. ADDL. CIT/R-1/JMU/2010-11/1028 ON 31.12.2010 WHICH ARE PL ACED ON RECORDS. THE REPLY FILED BY THE ASSESSEE HAS BEEN GONE THROU GH WITH REGARD TO THE ASSESSMENT RECORDS AND THE FACTS OF THE CASE. F OR BETTER UNDERSTANDING OF THE FACTS AND ISSUE THE BACKGROUN D OF THE MATTER IS DISCUSSED AS UNDER: ITA NOS. 654 & 655(ASR)/2013 13 THE ASSESSEE SET UP A NEW INDUSTRIAL UNDERTAKING WH ICH HAS STARTED COMMERCIAL PRODUCTION FROM THE PERIOD RELEVANT TO A Y 2000-01 FOR MANUFACTURING OF MINERAL WATER AND SODA WATER AND HAS CLAIMED DEDUCTION U/S 80IB OF THE ACT. THE ISSUE IS THAT WHETHER ON THE FACTS OF THE CASE THE OPERATIONAL ACTIVITY UNDERTAKEN BY THE ASSESSEE AMOUNTS TO MAN UFACTURE WITHIN THE MEANING OF THE TERM U/S 80IB. THE WORD MANUFAC TURE IS NOT DEFINED IN THE ACT. THE HONBLE SUPREME COURT IN AS PINWALL & CO. LTD. VS. CIT (2001) 170 CTR (SC) 68 : (2001) 251 IT R 323 (SC) HAS STATED THAT IN THE ABSENCE OF DEFINITION OF THE WOR D MANUFACTURE THEREIN, IT HAS TO BE GIVEN A MEANING AS IS UNDERST OOD IN COMMON PARLANCE. IT FURTHER THAT IT IS TO BE UNDERSTOOD A S MEANING THE PRODUCTION OF ARTICLE FOR USE FORM RAW OR PREPARED MATERIAL BY GIVING SUCH MATERIAL NEW FORMS, QUALITIES OR COMBINATIONS WHETHER BY HAND LABOUR OR MACHINES, SO THAT IF THE CHANGE MADE IN T HE ARTICLE RESULTS IN A NEW AND DIFFERENT ARTICLE THEN IT WOULD AMOUNT TO A MANUFACTURING ACTIVITY. IT IS, THEREFORE, CLEAR THAT MANUFACTURE IS MORE CO MPREHENSIVE AND EXTENSIVE AND THAT EVERY PROCESS, OR INDEED EVEN A SERIES OF PROCESSES, MAY NOT LEAD TO MANUFACTURE. AND IT IS ONLY WHERE T HAT A NEW AND COMMERCIALLY DISTINCT ARTICLE, WITH AN IDENTITY OF ITS OWN, COMES INTO EXISTENCE THAT MANUFACTURE CAN BE SAID TO HAVE TA KE PLACED. IN THE INSTANT CASE, THERE IS NOT EVEN A SLIGHTEST CHANGE IN RAW MATERIAL VIS--VIS FINISHED PRODUCT. RAW MATERIAL I S WATER AND FINISHED IS ALSO WATER. IN MANUFACTURING NEW PRODUC T ENTIRELY WITH DIFFERENT SHAPE, SIZE AND CHEMICAL PROPERTIES IS RE QUIRED TO COME INTO EXISTENCE WHICH IS NOT THERE IN THIS CASE BECAUSE I T IS ONLY THE TREATMENT GIVEN TO WATER TO GET PURE WATER FIT FOR DRINKING. SINCE NO NEW PRODUCT IS FORMED IN THIS CASE, THE D ECISION OF THE HONBLE ITAT AHMEDABAD BENCH IN THE CASE OF QUA MIN ERALS PVT. LTD. VS. DCIT VIDE NO.(2005) 97 TTJ (AHD.) 658 DATED 31. 05.2005 IS SQUARELY APPLICABLE IN THE CASE OF ASSESSEE. I AM INCLINED TO HOLD THAT IN ABSENCE OF MANUFACTURING PROCESS DEDUCTION U/S 8 0IB CANNOT BE ALLOWED. HENCE, DEDUCTION U/S 80IB IS NOT ALLOWED T O THE ASSESSEE. 5. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. ITA NOS. 654 & 655(ASR)/2013 14 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. ARORA , RELIED UPON THE SUBMISSIONS MADE BEFORE THE A.O. AND THE LD. CIT(A) . 7. THE LD. JCIT(DR), MR. MAHAVIR SINGH, ON THE OTHE R HAND, RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. GROUNDS NO. 1 & 5 ARE GENERAL IN NATURE, THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. AS REGARDS GROUND NO.2 WITH REGARDING TO RE-OPENING OF ASSESSMENT, IT IS AN UNDISPUTED FACT THAT THE AO CO MPLETED ASSESSMENT BY ALLOWING DEDUCTION U/S 80IB OF THE ACT UNDER SECTIO N 143(3) VIDE ORDER DATED 30.01.2006. THEREAFTER, THE ITO WARD 1(2) ISS UED A NOTICE U/S 154/155 OF THE ACT, DATED 09.02.2009 TO WITHDRAW DEDUCTION U/S 80IB IN VIEW OF THE DECISION OF ITAT, AHMEDABAD BENCH IN THE CASE OF A QUA MINERAL PVT. LTD. VS. DCIT (2005) 97 TTJ (AHD.) 658 DATED 31.05.2005. NO ACTION WAS TAKEN U/S 154/155 BY THE AO BEING ISSUED THE SAID NOTICE. THEREAFTER, A NOTICE U/S 142(1) DATED 01.05.2009 WAS ISSUED, PLACED AT PB-6, THE COPY OF RELEVANT NOTICE IS REPRODUCED FOR THE SAKE OF CONVENIENCE: NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961 M/S. MODERN BEVERAGES, 71 EAST EXTEN, TRIKUTA NAGAR, JAMMU. D/SIR, IN CONNECTION WITH INCOME TAX PROCEEDINGS FOR THE A SSESSMENT YEARS 2003-04 & 2004-05. ITA NOS. 654 & 655(ASR)/2013 15 (A)PREPARE A TRUE AND CORRECT RETURN OF YOUR INCOM E THE FIRMS INCOME/FAMILYS INCOME/ THE LOCAL AUTHORITYS INCOM E/THE COMPANYS INCOME/INCOME OF THE AO/INCOME OF THE BODY OF INDIV IDUALS/INCOME OF IN RESPECT OF WHICH YOU ARE ASSESSABLE UNDER T HE INCOME TAX ACT, 1961 DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR MENTIONED ABOVE. THE RETURN SHOULD BE IN THE APPROP RIATE FORM AS PRESCRIBED IN RULE 12 OF THE INCOME TAX RULES, 1962 . IT SHOULD BE DULY VERIFIED AND SIGNED WITH THE PROVISIONS OF SECTION 14D OF THE SAID ACT AND DELIVERED AT MY OFFICE ON BEFORE- (B) PRODUCE OR CAUSE TO BE PRODUCED BEFORE ME AT MY OFFICE ON 12.05.2009 AT 4.00 P.M. THE ACCOUNTS AND/OR DOCUMEN TS SPECIFIED AS PER UNDER (C) FURNISH IN WRITING AND VERIFIED IN THE PRESCRIBED MANNER INFORMATION CALLED FOR AS PER ANNEXURE AND ON THE P OINTS OR MATTERS SPECIFIED THEREIN BEFORE ME IN MY OFFICE ON 12.05.2009 AT 4.00 PM. 1. PLEASE FURNISH THE DOCUMENTARY EVIDENCE IN DUPLICAT E IN SUPPORT OF YOUR REPLY, IF ANY. YOURS FAITHFULLY, SD/- (YASH PAL PUNJ) ITO WARD 1(2), JAMMU. 8.1. THEREAFTER, THE AO ISSUED NOTICE U/S 148 DATED 20/07/2009 WHICH IS ALSO PLACED ON RECORD AND IS REPRODUCED AS UNDER: NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 DATED: 20/07/2009 M/S. MODERN BEVERAGES, 71, EAST EXTENSION, TRIKUTA NAGAR, JAMMU PAN: AAHFM6708I ITA NOS. 654 & 655(ASR)/2013 16 WHEREAS I HAVE REASON TO BELIEVE THAT YOUR INCOME I N THE INCOME OF THE ----- IN RESPECT OF WHICH YOU ARE ASSESSABLE/CHARGEABLE TO TAX FOR THE A.Y. 2003-04 H AS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF TH E ACT. I, THEREFORE, PROPOSE TO ASSESS/REASSESS THE INCOME FOR THE SAID ASSESSMENT YEAR AND I HEREBY REQUIRE YOU TO DELIVER TO ME WITHIN 30 DAYS FROM THE DATE OF SERVICE OF THIS NOTICE TO RET URN IN THE PRESCRIBED FORM OF YOUR INCOME/INCOME OF THE ---- IN RESPECT O F WHICH YOU ARE ASSESSABLE FOR THE SAID ASSESSMENT YEAR. THIS NOTICE IS BEING ISSUED AFTER OBTAINING NECESSA RY SATISFACTION/APPROVAL OF THE CIT, JAMMU VIDE HIS OF FICE LETTER NO. CI/J&K/ITO(TECH)/2009-10/3012 DATED 16.07.2009. SD/- (YASH PAL PUNJ) ITO, WARD 1(2) JAMMU. ASSESSING OFFICER 8.2. AT THE OUTSET, ON 01.05.2009, THERE WAS NO AS SESSMENT PENDING OF THE ASSESSEE AND THE NOTICE U/S 142(1) OF THE ACT WAS I SSUED ON 01.05.2009 WHEREAS NOTICE U/S 148 WAS ISSUED ON 20.07.2009 AS REPRODUCED HEREINABOVE FROM WHICH CLEARLY A PRESUMPTION IS MADE THAT THE AO HAS RECORDED THE REASONS U/S 148 AFTER ISSUANCE OF NOTICE U/S 142(1) OF THE ACT. NOTICE U/S 142(1) HAS BEEN ISSUED TO THE ASSESSEE ON 01.05.20 09. THEREFORE, THE NOTICE ISSUED U/S 148 WAS ISSUED ON 20.07.2009 ITSELF IS BAD IN LAW BECAUSE UNLESS ON THIS DATE, THE AO IS ENTITLED TO ISSUE NOTICE U/ S 142(1) AND 143(2) OF THE ACT AND THIS ACTION OF THE AO DOES NOT GIVE ANY JUR ISDICTION TO MAKE ITA NOS. 654 & 655(ASR)/2013 17 REASSESSMENT. SINCE NOTICE ITSELF IS BAD IN LAW AND ASSESSMENT SO MADE IS DIRECTED TO BE QUASHED. 8.3. AS REGARDS THE REOPENING OF THE ASSESSMENT ON THE BASIS OF AUDIT OBJECTION RELYING UPON THE DECISION OF ITAT, AHMEDA BAD BENCH IN THE CASE OF AQUA MINERAL PVT. LTD. VS. DCIT (2005) 97 TTJ ( AHD.) 658 DATED 31.05.2005, THE FACTS OF WHICH CASE ARE QUITE DIFFE RENT FROM THE FACTS OF THE PRESENT CASE AND THE ASSESSEE HAD SUBMITTED MANUFAC TURING PROCESS IN WHICH THE ASSESSEE MANUFACTURED PET BOTTLES. SUBSEQUENTL Y, FILLING THE SAME WITH MINERAL WATER PROCESSED FROM NORMAL WATER WHEREAS I N THE CASE OF AQUA MINERAL PVT. LTD. THE ASSESSEE IS USING POTABLE WA TER RECEIVED FROM THE MUNICIPAL CORPORATION WHICH IS FIT FOR HUMAN CONSUM PTION AS MUNICIPAL CORPORATION HAD ALREADY CARRIED OUT THE NECESSARY C HLORINATION & FILTRATION BEFORE FEEDING SAME TO THE GENERAL PUBLIC & THE WAT ER IS ALREADY FIT FOR HUMAN CONSUMPTION. WHEREAS THE ASSESSEE HAS SUBMITT ED THE EXPLANATION DURING THE ORIGINAL ASSESSMENT PROCEEDINGS REPRODUC ED HEREINABOVE. WHEREAS WATER IN THE PRESENT CASE IS TAKEN FROM BOR E-WELL AND PASSED THROUGH VARIOUS STAGES EXPLAINED BY THE ASSESSEE, A S REPRODUCED HEREINABOVE BEFORE FILLING THE SAME INTO MANUFACTURED PLASTIC B OTTLES, SINCE MANUFACTURING OF PET BOTTLES AND FILLING MINERAL WA TER IS A COMPOSITE MANUFACTURING ACTIVITY. THEREFORE, THE DECISION OF ITAT AHMEDABAD BENCH ITA NOS. 654 & 655(ASR)/2013 18 IN THE CASE OF AQUA MINERAL PVT. LTD. VS. DCIT (SUP RA) CANNOT BE MADE APPLICABLE IN THE PRESENT FACTS AND CIRCUMSTANCES O F THE CASE. MOREOVER, ON THE BASIS OF THE DECISION OF ITAT AHMEDABAD BENCH I N THE CASE OF AQUA MINERAL PVT. LTD. VS. DCIT (SUPRA), WHICH IS DIFFER ENT ON THE FACTS , WILL TANTAMOUNT TO DIFFERENT OPINION OF THE AO FOR REOP ENING THE ASSESSMENT, WHICH CANNOT BE PERMITTED TO REOPEN THE ASSESSMENT U/S 147 OF THE ACT, WHICH IS NOT THE SPIRIT OF LAW ON THIS ACCOUNT ALON E. THE AO IS NOT JUSTIFIED IN REOPENING OF ASSESSMENT ON THE CHANGE OF OPINION AND THE REASSESSMENT SO MADE IS BAD IN LAW. THE RELIANCE IS MADE ON THE DEC ISION OF VARIOUS COURTS OF LAW AS UNDER: 1) CIT VS. KELVINATOR OF INDIA LTD. REPORTED IN 320 IT R 561 (SC) 2) PARVEEN P. BHARUCHA VS. DCIT AND ANOTHER 348 ITR 3 25 (B0M) 3) SOHNA FORGE (P) LTD. VS. JCIT (OSD) 151 TTJ (DEL)(U O)49. 4) NTPC LTD VS. DCIT & OTHERS 350 ITR 614 5) JAYESH RAICHAND SHAH VS. ACIT 212 TAXMAN 306 (GUJ.) 6) CIT VS. RELIANCE ENERGY LTD. 81 DTR 130 7) RAMBAGH PALACE HOTELS PRIVATE LTD VS. DCIT 350 ITR 660 (DELHI) 8.4. IN VIEW OF THE ABOVE DISCUSSION, GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 9. AS REGARDS GROUNDS NO. 3 & 4, THE AO HAS MADE A DISALLOWANCE OF DEDUCTION U/S 80IB OF THE ACT WHICH WAS CONFIRMED B Y THE LD. CIT(A). ITA NOS. 654 & 655(ASR)/2013 19 9.1. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UP ON THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. 9.2. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 9.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. AS OUR FINDINGS IN DECIDING THE LEGAL ISSUE, THE AS SESSEE IS MANUFACTURING PET BOTTLES AND NECESSARY MANUFACTURING PROCESS HAS BEE N SUBMITTED BEFORE THE AO AS WELL AS THE LD. CIT(A) AND ALSO THE ASSESSEE IS FILLING THE DRINKING WATER, SODA WATER IN THE SAID PET BOTTLES AFTER PR OCESSING THE SAME FROM NORMAL WATER AND IT IS A COMPOSITE MANUFACTURING AC TIVITY AND THEREFORE, AS HELD WHILE DECIDING THE LEGAL GROUND, THE FACTS OF THE DECISION IN THE CASE OF ITAT AHMEDABAD BENCH IN THE CASE OF AQUA MINERAL PV T. LTD. VS. DCIT (SUPRA) ARE DISTINGUISHABLE TO THE FACTS OF THE PRESENT CASE. THEREFORE, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTIO N OF THE A.O. AND DISALLOWING DEDUCTION UNDER SECTION 80IB OF THE ACT , SINCE THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS LAID DOWN U/S 80IB OF THE ACT. MOREOVER, THE ASSESSEE HAS BEEN ALLOWED EXEMPTION U/S 10B FOR T HE ASSESSMENT YEAR 2000-01 AND 80IB DEDUCTION HAS BEEN ALLOWED FOR THE ASSESSMENT YEARS 2001-02 AND 2002-03 IN THE PRECEDING YEARS. THE DE PARTMENT IN THE SCRUTINY ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07 HAS ALLO WED DEDUCTION UNDER ITA NOS. 654 & 655(ASR)/2013 20 SECTION 80IB OF THE ACT TO THE SAME ASSESSEE-COMPAN Y UNDER THE SAME SET OF FACTS AND CIRCUMSTANCES, WHICH FACTS ARE ON RECORD, IN THE ORDER OF THE LD. CIT(A). THEREFORE, IN VIEW OF THE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE HEREINBELOW, THE LD. CIT(A) IS NO T JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. UNDER SECTION 80IB OF THE AC T AND THE DEPARTMENT HAS TO FOLLOW CONSISTENCY BECAUSE NO NEW FACTS HAVE BE EN BROUGHT ON RECORD DURING THE YEAR UNDER CONSIDERATION: 1. CIT VS. PRAKASH INDUSTRIES LTD. (2010) 324 ITR 391 (P&H) 2. RADHASOAMI SATSANG VS. CIT (1992) 266 ITR 321 (SC) 3. BERGER PAINTS INDIA LTD. VS. CIT (2004) 266 ITR 99 4. CIT VS. J.K. CHARITABLE TRUST (2009) 308 ITR 161 5. C.K. GANGADHARAN VS. CIT (2008) 304 ITR 61 (SC) 9.4. AS REGARDS TO THE FINDINGS IN PARA 4.3 WITH RE GARD TO THE THIRTEENTH SCHEDULES, THE ASSESSEE IS MANUFACTURING PLASTIC B OTTLES ALONGWITH MINERAL WATER AND THEREFORE, THE OBSERVATIONS OF THE LD. CI T(A) WITHOUT GIVING ANY OPPORTUNITY TO THE ASSESSEE IN THIS REGARD CANNOT B E MADE APPLICABLE AGAINST THE ASSESSEE. IN THE FACTS AND CIRCUMSTANCES, THE O RDER OF THE LD. CIT(A) IS REVERSED AND THE A.O. IS DIRECTED TO ALLOW DEDUCTIO N U/S 80IB OF THE ACT TO THE ASSESSEE, AS CLAIMED BY THE ASSESSEE. ACCORDIN GLY, GROUNDS NO. 3 & 4 OF THE ASSESSEE ARE ALLOWED. ITA NOS. 654 & 655(ASR)/2013 21 10. NOW, WE TAKE UP, APPEAL OF THE ASSESSEE IN ITA NO.655(ASR)/2013 FOR THE ASSESSMENT YEAR 2004-05. THE FACTS IN THE PRESE NT APPEAL ARE IDENTICAL TO THE FACTS IN ASSESSEES OWN APPEAL FOR THE ASSESSME NT YEAR 2003-04 IN ITA NO.654(ASR)/2013, THEREFORE, OUR ORDER HEREINABOVE IN ITA NO.654(ASR)/2013 IS IDENTICALLY APPLICABLE IN THE P RESENT CASE AND THEREFORE, ALL THE GROUNDS OF THE ASSESSEE IN THE PRESENT APPE AL I.E. IN ITA NO.655(ASR)/2013 ARE ALLOWED. THUS, BOTH THE APPEA LS OF THE ASSESSEE ARE ALLOWED. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE IN ITA NOS. 654 & 655(ASR)/2013 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH FEBRUARY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24TH FEBRUARY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S. MODERN BEVERAGES, JAMMU. 2. THE DCIT, CIRCLE-1, JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) ITA NOS. 654 & 655(ASR)/2013 22 INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR