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2016 (5) TMI 295 - AT - Income TaxValidity of assessment u/s 153A - Held that:- In the assessment year 2002-03 return has been processed under sec. 143(1) accepting the claimed deduction. No new fact has been revealed during the assessment years under consideration during the course of search. In other words, no incriminating material was found on the date of the search to justify the initiation of proceedings under sec. 153A of the Act. We thus respectfully following the ratio laid down by the Hon'ble jurisdictional High Court of Delhi in the above cited case of Kabul Chawla (2015 (9) TMI 80 - DELHI HIGH COURT ) hold that the Assessing Officer was not justified in invoking the provisions of sec. 153A of the Act in the present case in the absence of incriminating material found during the course of search and in absence of pendency of assessment proceedings on the date of the search. The invocation of the provisions of section 153A of the Act is thus held as invalid and void-ab-initio. In consequence, the assessments for the assessment years under consideration framed in furtherance to the said initiation of proceedings under sec. 153A of the Act are held as void and the same are accordingly quashed. - Decided in favour of assessee Denial of deduction under sec. 80IB - activities not amounting to manufacturing - Held that:- There is no dispute that activities of the assessee on the films purchased by it from Jindal Polyester Ltd. go through different activities like anti-static/corona treatment/quoting; slitting/cutting/rebinding of treated films; packing of finished products, finished goods (corona treatment films) and then dispatch. Thus, the films used as raw-material is converted into entirely a new product useful for its customer for printing the same useable as wrappers for the products of its customers like uncle chips/lays. The packets containing the products of its customers are made of the same films produced by the assessee after putting its activities discussed above on the said raw-films purchased from Jindal Polyester Ltd. It has not been rebutted by the Revenue that the raw-material is of such quality that no printing can be done on the same and it is possible only after the output made by the assessee through the above discussed process of the films which become ready for the metallic quoting on which final printing takes place. Thus, we find that the end-product has different identity after the manufacturing process of the assessee. Besides, in the earlier assessment years 2001-02 and 2002-03, the Revenue itself has accepted the claimed deduction under sec. 80IB of the Act of the assessee on the same manufacturing process and when there is no change in those facts of the case, the Revenue is not justified in deviating from its stand. We thus do not find infirmity in the first appellate order holding the assessee eligible for the claimed deduction under sec. 80IB of the Act as the activities were amounting to manufacturing - Decided in favour of assessee. Addition made on account of sales treated as unexplained receipts - Held that:- CIT(Appeals) has accepted the submissions of the assessee with this finding that Mr. Yadav was acting as commission agent for purchasing and supplying the bank draft/pay orders to various parities against cash including the assessee and that there was no business of the assessee company other than trading and manufacturing of poly films and related products. Thus, it is not sustainable to hold that the entire receipts are taxable as unexplained deposits. The Learned CIT(Appeals) noted further that addition of bank credit, its peak and profit already having been taxed in the hands of Mr. Yadav cannot be sustained in the hands of the assessee company. - Decided in favour of assessee.
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