TMI Blog2010 (1) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... inadequate. The observation was also made in regard to employment of less than 10/20 workers and the assessee firm claimed to have employed 14 persons during the financial year 1999-2000, out of which 3 persons were working exclusively as office staff. Thus, it was concluded that 11 persons could be held to be engaged for manufacturing process and keeping in view of the nature of the manufacturing process, as claimed by the assessee, and its turn over, the expenses were considered very much on the lower side - Order of CIT u/s 263 restored. - ITA No. 37 of 2006 - - - Dated:- 5-1-2010 - Deepak Gupta, V.K. Ahuja, JJ. Vinay Kuthiala and Vandana Kuthiala, Advs. for the Appellant M.M. Khanna, Sr. Adv. with Surinder Mohan, Adv. for the Respondent JUDGEMENT V.K. Ahuja, J:- This is an appeal filed by the appellant against the order of the Income Tax Appellate Tribunal, Chandigarh Bench(A), Chandigarh, hereinafter referred to as the ITAT, dated 13.12.2005, vide which the appeal filed by the assessee was allowed and the order passed by the Commissioner of Income Tax, hereinafter referred to as the CIT, ordering fresh assessment by the Assessing Officer, was se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving findings on each of the issues raised by the CIT in its order holding the order of the Assessing Officer as erroneous and prejudicial to the interest of the Revenue. The learned counsel for the Revenue, during the course of arguments, had pointed out that in the order passed by the CIT, it had considered each aspect of the case and had given reasoning also for disagreeing with the assessment made by the Assessing Officer. However, the ITAT, while setting aside the order of the CIT, had not referred to each of the points raised by the CIT in its impugned order giving reasoning for disagreeing with the assessment made by the Assessing Officer. It was submitted that the CIT had observed in regard to the gross profit rate being shown very high and no inquiry had been conducted by the Assessing Officer of his own and he had only gone through the invoices and books of account produced during the course of assessment proceedings, which findings were upheld by the ITAT wrongly. It was submitted that the CIT had considered each aspect of the case including the question as to huge profits being shown in the earlier years, less use of electricity for running the Unit and as such the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged in any manufacturing process at Parwanoo, within the meaning of Sections 80-1A and 80-1B of the Income Tax Act, inasmuch as it appeared to have not engaged between ten to twenty workers, no power had been used in the manufacturing process, the business transacted between the firm and a sister concern of the partners of the firm, situated at Delhi, indicated that it (the business) was so arranged that it yielded to the assessee firm more profits than ordinarily expected, the value of the plant and machinery transferred from unit-I to unit-II of the assessee firm, was much higher than 20% of the total value of the machinery and plant used in the business of unit-II. It was held that hence no deduction could have been claimed under Section 80-1 in view of explanation 2 to sub-section (2) of the said provision and the activities of the firm did not amount to manufacturing of any goods or articles for the purpose of claiming tax holiday under Sections 80-1A and 80-1B of the Income Tax Act. Consequently, the Commissioner of Income Tax ordered that only 5% of the total declared net profits of the assessee firm could be said to be its income from the business at Parwanoo, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with an erroneous order while interpreting the provisions of Section 263 of the Act. The decision in Commissioner of Income Tax, Shimla versus Greenworld Corporation Parwanoo, (2009) 7 Supreme Court Cases 69, shows that the powers of the Commissioner under Section 263 of the Income Tax Act were considered and it was held that reopening of proceedings in terms of Sections 147 and 148 of the Income Tax Act cannot be initiated at any point of time. It was further held that the proceedings are to be initiated within the limitation prescribed under Section 149 of the Act, which is two years from the assessment year in question. Reliance was also placed upon the decision in Commissioner of Income Tax versus Green World Corporation, [2009] 314 ITR 81, wherein it was held that the order passed by the Assessing Officer at dictates of the Commissioner is a nullity. The notice was issued for reassessment, which was challenged by the assessee in appeal by special leave. The Apex Court exercised its jurisdiction under Article 142 and directed the assessment to be reopened. The provisions of Section 263 of the Act were also considered in this regard. Coming to the order in questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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