I COM INDIA P. LTD, V. ITO WD 1(2),

MA 877/MUM/2009

• Counselvise Citation: [2010] 123 COUNSELVISE.COM (IT) 5296 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2004-2005
• Appeal Filed On: 24-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R S SRIVASTAV
• Assessee Lawyers: M K GOPAL
• Keywords: Additional evidence
• Section: 80IB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDER SINGH, ACCOUNTANT MEMBER M.A. NO.877/MUM./2009 (ARISING OUT OF ITA NO.6215/MUM./2009 ) (ASSESSMENT YEAR : 2004 05 ) DATE OF HEARING : 17.9.2010 EAICOM INDIA PVT. LTD. C/O M/S. KAVERI TELECOM PRODUCTS 31 36, 1 ST MAIN, 2 ND STAGE, ARAKERE MICO LAYOUT, BANNERGHATTA ROAD BANGALORE 560 076 AABCC9919L .. APPELLANT V/S INCOME TAX OFFICER, WARD 9(1)(2) MUMBAI .... RESPONDENT FOR ASSESSEE : SHRI M.K. GOPAL FOR REVENUE : SHRI R.S. SRIVASTAV O R D E R PER RAJENDRA SINGH, A.M. THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE ASSES SEE POINTING OUT CERTAIN MISTAKES IN THE ORDER OF THE TRIBUNAL DATE D 6 TH FEBRUARY 2009, IN ITA NO.3033/MUM./2008. IT HAS BEEN MENTIONED THAT T HE MISTAKES POINTED OUT ARE APPARENT FROM RECORD AND, THEREFORE, THE MIST AKES SHOULD BE RECTIFIED. 2. BEFORE WE PROCEED TO DEAL WITH THE MISTAKES POINTE D OUT, IT WILL BE APPROPRIATE TO GIVE BRIEF BACKGROUND OF THE CASE. THE ASSESSEE WHO WAS IN THE BUSINESS OF ASSEMBLING AND TESTING OF TRANSMISSION E QUIPMENT / ANTENNAE, HAD CLAIMED DEDUCTION U/S.80IB WHICH IS ALLOW ABLE ONLY WHEN THE BUSINESS CONSISTS OF MANUFACTURE/PRODUCTION ON FULFILLMENT OF CERTAIN EAICOM INDIA PVT. LTD. M.A NO.877/MUM./2009 2 CONTRCTS. THE ASSESSING OFFICER, IN THE ASSESSMENT ORDER, HELD THAT THE ASSESSEE WAS ONLY IN THE BUSINESS OF TRADING OR ASSEMBLING O R TESTING WORK AND NOT IN THE BUSINESS OF MANUFACTURE OR PRODUCTION. T HE ASSESSING OFFICER ALSO HELD THAT THERE WAS NO ELECTRICITY USED IN THE BUSI NESS NOR THERE WAS EVIDENCE THAT THE ASSESSEE HAD EMPLOYED MORE THAN 20 WOR KERS. THEREFORE, THE CONDITIONS OF SECTION 80IB OF THE ACT WERE NOT SATISF IED. THE ASSESSING OFFICER, ACCORDINGLY, DISALLOWED THE CLAIM. 3. IN APPEAL, THE CIT(A) HELD THAT THE ASSESSEE WAS ASSEM BLING ANTENNAE FROM VARIOUS COMPONENTS AND THE PRODUCT WAS SUBSTANTIALLY DIFFERENT FROM THE COMPONENTS USED AND, THEREFORE, THE ASSESSEE WAS ENGA GED IN THE BUSINESS OF MANUFACTURE / PRODUCTION. AS REGARDS EVIDENCE OF ACTUAL MANUFACTURE ON PRODUCTION, ASSESSEE DURING THE APPELLATE PROCEEDINGS, SUBMITTED FURTHER DETAILS AND EVIDENCE IN THE FORM OF ELECTRICITY BILLS IN THE NAME OF THE OWNER OF THE PREMISES SHRI ZACKARIA, AND T HE PREVIOUS TENANT SHRI BHUSHANPATI. IT WAS SUBMITTED THAT THE EARLIER OCCUPANT SHRI BHUSHANPATI, HAD PAID EXCESS AMOUNT DURING HIS PERIOD OF OCCUPATION WHICH HAD BEEN ADJUSTED AGAINST ELECTRICITY CONSUMPTION DURING THE RELEVANT PREVIOUS YEAR AND THEREFORE NIL CHARGES WERE SHOWN IN T HE BOOKS. IT WAS ALSO CLAIMED THAT THE ELECTRICITY BILL HAD BEEN RECEIVED ONL Y IN 2005 FROM NOVEMBER 2003 ONWARDS. THE ASSESSEE SUBMITTED COPY OF THE BILLS IN THE NAME OF SHRI ZACKARIA, AND THE PREVIOUS OCCUPANT. THE A SSESSING OFFICER, IN THE REMAND REPORT, HOWEVER, MENTIONED THAT NO SUCH D ETAILS OR SUBMISSIONS HAD BEEN MADE BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDI NGS. THE DETAILS FILED WERE, THEREFORE, IN CONTRAVENTION OF TH E PROVISIONS OF RULE 46A, WHICH DID NOT ALLOW ADMISSION OF ADDITIONAL EVIDENCE E XCEPT IN PRESCRIBED CIRCUMSTANCES AND ASSESSEES CASE WAS NOT COVERED BY THOSE EXCEPTIO NS. THE ASSESSING OFFICER, ACCORDINGLY, MENTIONED IN THE REMAN D REPORT THAT PREVIOUS FINDINGS IN THIS REGARD SHOULD BE UPHELD. EAICOM INDIA PVT. LTD. M.A NO.877/MUM./2009 3 4. THE CIT(A), HOWEVER, CONSIDERED THE ADDITIONAL EVIDEN CE AND NOTED THAT BOTH THE BILLS I.E., IN THE NAME OF SHRI ZACKARI A, FOR ` 13,958 AND SHRI BHUSHANPATI FOR ` 10,593, WERE FOR THE PERIOD OF NOVEMBER 2003 TO NOVEMBER 2005, TOTALLING ` 24,551. IT WAS ALSO NOTED BY HIM THAT THE TOTAL PRODUCTION DURING THE PERIOD WAS ` 13,52,86,296. THE CIT(A), THEREFORE, OBSERVED THAT THE ELECTRICITY EXPENDITURE OF ` 24,551 WAS UNREALISTIC. IT WAS ALSO OBSERVED BY HIM THAT THERE WAS NO CONSUMPTION OF TH E ELECTRICITY IN THE MONTH OF MAY 2003 AND JUNE 2003, IN WHICH TOTAL SALE S WERE ` 3,43,59,900. NO ELECTRICITY BILLS WERE GIVEN IN RESPECT OF PRODUCTION DURING MAY 2003 AND JUNE 2003. THERE WAS ALSO NO EVIDENCE THAT THE ASSESSEE HA D EMPLOYED REQUISITE NUMBER OF WORKERS. FURTHER, THE ASSESSEE HAD A LSO FAILED TO PRODUCE BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS. THE CIT(A) WAS, THEREFORE, SATISFIED THAT THERE WAS NO MANUFACTURIN G ACTIVITY BY THE ASSESSEE DURING THE RELEVANT PERIOD AND THE FINDING OF THE ASSESSING OFFICER WAS UPHELD. 5. IN FURTHER APPEAL, THE TRIBUNAL HELD THAT ASSEMBLING OF ANTENNAE FROM VARIOUS COMPONENTS WAS A MANUFACTURING ACTIVITY. AS RE GARDS THE FACT WHETHER THE ASSESSEE HAD ACTUALLY MANUFACTURED THE PROD UCTS, THE TRIBUNAL AGREED WITH THE FINDING OF THE CIT(A) THAT THE ASSESSE E HAD NOT MANUFACTURED PRODUCTS AS THERE WAS NO SUFFICIENT CONSUMPTIO N OF ELECTRICITY. THE TRIBUNAL NOTED THAT THE TOTAL ELECTRICITY BILL FO R THE PERIOD FROM NOVEMBER 2003 TO NOVEMBER 2005, IN THE NAME OF SHRI ZACKARIA AND SHRI BHUSHANPATI WAS ` 24,551 AND THE TOTAL AMOUNT OF ARREARS INCLUDED IN T HE BILLS WAS ONLY ` 11,646 AND, THEREFORE, IF THE AMOUNT OF ` 11,646 WAS SPREAD OVER 25 MONTHS, THE MONTHLY CONSUMPTION CAME TO ` 446 PM WHICH DID NOT EXPLAIN THE HUGE PRODUCTION SHOWN BY THE ASSESSEE. THE AUDITOR IN THE AUDIT REPORT HAD ALSO MENTIONED THAT THE ASSESSEE HAD NOT USED ANY ELECTRICITY FOR ITS MANUFACTURING. THE AUDITORS WERE ALSO BLANK ABOUT T HE NUMBER OF WORKERS EMPLOYED BY THE ASSESSEE. THE TRIBUNAL NOTED THA T THE TOTAL SALARY / EAICOM INDIA PVT. LTD. M.A NO.877/MUM./2009 4 WAGES SHOWN WAS AT ` 2,73,970 AND, THEREFORE, ANNUAL PAYMENT PER WORKER CAME TO ONLY ` 27,398 IN THE CASE THE TOTAL NUMBER OF WORKERS WAS TAK EN AT 10 AND IN CASE THE TOTAL NUMBER OF WORKERS WAS ADOPTED AT 20, THE ANNUAL PAYMENT PER WORKER CAME TO ONLY ` 13,699 WHICH WAS BEYOND PREPONDERANCE OF PROBABILITY. THE TRIBUNAL ALSO NOTED THAT THE ASSESSEE HAD PAID JOB WORK CHARGES OF ` 4,21,800 OUT OF WHICH ` 2,18,400 WAS INCLUDED UNDER THE HEAD MANUFACTURING EXPENSES . THE TRIBUNAL, THEREFORE, CONCLUDED THAT THE ASSESSEE WAS GETTING MANUFACTURING DONE THROUGH JOB WORK AND NOT THROUGH OWN EMPLOYEES. MOREOVER, THERE ARE NO EVIDENCE THAT THE ELECTRICITY HAD BEEN USED FOR THE PURPOSE OF PRODUCT ION AND ASSESSEE HAD EMPLOYED REQUISITE NUMBER OF WORKERS. THERE WAS NO EL ECTRICITY CONSUMPTION SHOWN IN THE BOOKS. EVEN AFTER CONSIDERING TH E ADDITIONAL OF BILLS RECEIVED LATER, THE ELECTRICITY CONSUMPTION WAS FOU ND NEGLIGIBLE COMPARED TO PRODUCTION DECLARED. THEREFORE, THE TRIBU NAL CONFIRMED THE ORDER OF THE LEARNED CIT(A) AS CONDITIONS FOR ALLOWING DEDUCTION UNDER SECTION 80IB WERE NOT SATISFIED. 6. AGAINST THE ORDER OF THE TRIBUNAL, THE ASSESSEE HAS FILED THE MISCELLANEOUS APPLICATION, IN WHICH IT HAS BEEN POINTED O UT THAT THE ASSESSEE HAD FILED ADDITIONAL EVIDENCE BEFORE THE CIT(A) AND ON EXAMINATION OF THE SAME IN THE REMAND REPORT, THE ASSESSING OFFICER WAS SATISF IED AS HE HAD NOT RAISED ANY OBJECTION IN THE REMAND REPORT. THEREFORE, BASED ON THE SAME MATERIAL IN CASE CIT(A) WANTED TO DISALLOW THE CLAIM, H E WAS REQUIRED TO GIVE OPPORTUNITY TO THE ASSESSEE WHICH WAS NOT GIVEN. EVEN THE TRIBUNAL DID NOT GIVE ANY OPPORTUNITY TO EXPLAIN THE MATTER. THEREFO RE, LACK OF OPPORTUNITY HAD CAUSED PREJUDICE TO THE INTEREST OF ASSESSEE WHICH WA S A MISTAKE APPARENT FROM RECORD AND THEREFORE, THE APPEAL MAY B E RECALLED FOR FRESH ADJUDICATION. 7. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE FOR THE A SSESSEE REITERATED THE POINTES MADE IN THE MISCELLANEOUS APPLI CATION AND EMPHASIZED EAICOM INDIA PVT. LTD. M.A NO.877/MUM./2009 5 THE FACT THAT THE ORDER OF THE TRIBUNAL HAD BEEN PASS ED WITHOUT GIVING OPPORTUNITY TO EXPLAIN THE MATTER. IT WAS, ACCORDINGLY , REQUESTED THAT THE ORDER MAY BE RECALLED FOR FRESH ADJUDICATION AFTER GI VING OPPORTUNITY TO THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OT HER HAND, SUBMITTED THAT THE TRIBUNAL HAD PASSED A REASONED AND S PEAKING ORDER AND IT HAD NO POWER TO REVIEW ITS OWN DECISION. THEREFORE, THE MISCELLANEOUS APPLICATION SHOULD BE REJECTED. 8. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CA REFULLY. THE ASSESSING OFFICER, IN THIS CASE, HAD DENIED THE CLAIM OF DE DUCTION UNDER SECTION 80IB ON THE GROUND THAT THE BUSINESS OF THE ASSESSEE WAS NOT MANUFACTURING AND THAT THERE WAS ALSO NO EVIDENCE THAT THE ASSESSEE HAD DONE ANY MANUFACTURING ACTIVITY AND EMPLOYED THE REQ UISITE NUMBER OF WORKERS AS REQUIRED IN SECTION 80IB. IN APPEAL, THE ASSE SSEE FURNISHED ADDITIONAL EVIDENCE IN THE FORM OF ELECTRICITY BILLS TO SHOW THAT THERE WAS ELECTRICITY CONSUMPTION FOR PRODUCTION WHICH WAS FORWARDE D BY THE CIT(A) TO THE ASSESSING OFFICER FOR REMAND REPORT. CASE OF THE ASSESSE E IS THAT IN THE REMAND REPORT, THE ASSESSING OFFICER HAD NOT GIVEN ANY A DVERSE FINDINGS ON THESE MATERIALS AND, THEREFORE, IN CASE CIT(A) WAS NO T GOING TO ACCEPT THEM, HE WAS REQUIRED TO GIVE OPPORTUNITY TO THE ASSESSEE. ON PERUSAL OF REMAND REPORT OF THE ASSESSING OFFICER, HOWEVER, IT IS NOTICED TH AT THE ASSESSING OFFICER HAD NOT CONSIDERED THE ADDITIONAL EVIDENCE AT A LL AS THESE WERE IN VIOLATION OF RULE 46A AND, THEREFORE, THE QUESTION O F ANY ADVERSE FINDING BY THE ASSESSING OFFICER DOES NOT ARISE. THE LEARNED CIT(A), HOWEVER, CONSIDERED THE ADDITIONAL EVIDENCE AND AFTER PROPER AN ALYSIS OF THE SAME CAME TO THE CONCLUSION THAT IT DOES NOT SUPPORT THE CASE OF MANUFACTURING BY THE ASSESSEE. THE CIT(A) ALSO HELD THAT THERE WAS NO EVID ENCE THAT THE ASSESSEE HAD ENGAGED REQUISITE NUMBER OF WORKERS. THE AUD IT REPORT WAS SILENT ON THE NUMBER OF WORKERS ENGAGED. NOT SATISFIED WITH THE DECISION OF CIT(A), THE ASSESSEE FILED APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL HAD HEARD THE ASSESSEE AS WELL AS THE DEPARTMENT. IN CASE, THE ASSESSEE DID NOT EAICOM INDIA PVT. LTD. M.A NO.877/MUM./2009 6 HAVE ADEQUATE OPPORTUNITY BEFORE THE CIT(A), HE HA D FULL OPPORTUNITY TO EXPLAIN THE SAME BEFORE THE TRIBUNAL. THE TRIBUNAL C OULD NOT ANTICIPATE AS TO WHAT EXPLANATION ASSESSEE WANTED TO GIVE. IT WAS FOR TH E ASSESSEE TO EXPLAIN THE MISSING LINKS IN THE EXPLANATION GIVEN EARLIER. TH E TRIBUNAL HAD PASSED THE ORDER AFTER TAKING INTO ACCOUNT THE ENTIRE MATERI AL ON RECORD AFTER HEARING THE ASSESSEE AND NO CASE HAS BEEN MADE THAT THE T RIBUNAL HAD OMITTED TO CONSIDER ANY MATERIAL OR ANY SUBMISSIONS OF T HE ASSESSEE. THE TRIBUNAL HAS PASSED A REASONED AND SPEAKING ORDER AS DISMI SSED IN PARA 4 EARLIER. THE TRIBUNAL HAS NO POWER TO REVIEW ITS OWN DECISION. WE DO NOT SEE ANY APPARENT ERROR IN THE ORDER. THERE IS, THEREFORE , NO MERIT IN THE MISCELLANEOUS APPLICATION AND THE SAME IS REJECTED. 9. IN THE RESULT, ASSESSEES MISCELLANEOUS APPLICATION IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON 8 TH OCTOBER 2010. SDD/ (D. MANMOHAN) VICE PRESIDENT SD/- (( RAJENDER SINGH ACCOUNTANT MEMBER MUMBAI, DATED : 8 TH OCTOBER 2010 COPIES OF THE ORDER FORWARDED TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT, MUMBAI (4) CIT(A), MUMBAI (5) DR, E BENCH (6) GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES