TMI Blog2019 (11) TMI 1098X X X X Extracts X X X X X X X X Extracts X X X X ..... levant documents which had been examined and taken on record. A.O after due verification of available facts and records allowed the claim of the assessee and accepted the returned income. We therefore are of the view that the Ld. Pr. CIT was not justified in holding that the assessment order dt. 30/11/2016 passed by the A.O. was erroneous or prejudicial to the interest of the Revenue particularly when there is no such discussion for the said assessment year in the impugned order, the only discussion was relating to the A.Y. 2012-13. Accordingly, we do not see any justification on the part of the Ld. Pr. CIT in setting aside the assessment order passed by the A.O. - Appeal of the Assessee is allowed. - ITA NO. 855/Chd/2019 - - - Dated:- 20-11-2019 - Shri. N.K. Saini, VP And Shri , Sanjay Garg, JM For the Assessee : Shri Gautam Jain, Advocate, Shri Tej Mohan Singh, Advocate For the Revenue : Shri Charanjit Singh, CIT(DR) ORDER PER N.K. SAINI, VICE PRESIDENT This is an appeal by the Assessee against the order dt. 26/03/2019 of Ld. Pr. CIT, Shimla. 2. Following grounds have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire action is without application of mind and hence untenable. 7. That various adverse findings are factually incorrect, contrary to facts and evidence on records, legally misconceived, vague, arbitrary and, thus untenable. 8. That the authority below have framed the impugned order without granting sufficient proper opportunity to the appellant and therefore the same are contrary to principles of natural justice and hence vitiated. 3. From the above grounds it is gathered that only grievance of the assessee relates to the action of the Ld. Pr. CIT in setting aside the assessment order passed by the A.O. by invoking the provisions of Section 263 of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). 4. Facts of the case in brief are that the Assessee e-filed the return of income on 08/10/2014 declaring taxable income at NIL later on the case was selected for scrutiny, the A.O. accepted the returned income of the Assessee by passing the assessment order dt. 30/11/2016 under section 143(3) of the Act. The A.O. observed in the said assessment order that the assessee was engaged in the business of manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid order to hold the assessment order in the case of the assessee for the year under consideration is erroneous and prejudicial to the interest of the Revenue. It was further submitted that the assessee was a partnership firm constituted on 09/03/2012 and the year under consideration was the third year of its existence. It was also stated that the assessment order passed by the A.O. was neither erroneous nor prejudicial to the interest of the Revenue and it was also not a case of lack of enquiry or lack of investigation on the part of the A.O. It was further stated that the claim of the assessee under section 80IC of the Act was allowed by the A.O. in accordance with law after examination of the books of accounts on merit of the case, the assessee also submitted to the Ld. Pr. CIT as under: S.No. Observation in the notice Submission of the Assessee i) As per Report in Form No. 10CCB your firm started manufacturing activities on 09.03.2012 i.e. F.Y. 2011-12 relevant to the A.Y. 2012-13. If the your contention is accepted that it had started its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacturing activities as on 09.03.2012, as reported in Form No. 10CCB is not correct. One of the conditions of claiming deduction u/s 80IC of the Act is that manufacturing facility has to start before 1st April 2012. It is submitted that assessee has started manufacturing facility before the expiry of sunset clause since sales have been made to Uniwork Electroniks amounting to ₹ 1,27,500/- on 31.3.2012. Further certificate from single clearing agency of Govt, as well as certificate of registration with Excise and Taxation department of Himachal Pradesh substantiates that the assessee has started its manufacturing facility before 1st April 2012. Merely because the date mentioned in the Form 10CCB is prior to the date of purchases and certificate of registration from Excise and Taxation Department on dated 27.8.2012, it will not preclude the eligible assessee from claiming tax holiday u/s 80IC of the Act. The party M/s Uniwork Electronic, from whom your firm had made purchases and also, in whose favour, the only sale Invoice dated 31.03.2012 was issued does not exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evident from para 5.7 of assessment order for Assessment year 2015-16, wherein the assessing officer has obtained information incharge/ETO concerned regarding transportation of material/ machinery that the goods were received by the assessee on 27.3.2012 and not on 31.3.2012. iii) Therefore the contention of the Assessing officer that production was started only on 31.3.2012 is factually incorrect. Moreover the sales bilty which substantiates that the dispatch of the final goods from the factory premises of the assessee has been made on 31.3.2012, hence the assessee is eligible to claim deduction u/s 801C of the Act. You have also failed to produce the Wages/Salary Register maintained for the relevant period, even in response to the summons issued u/s 131 of the Income Tax Act, 1961 on 05.10.2017. You have also claimed payment of salary of ₹ 19,345/- for the month of March,2012. However; no payment was made till 31.03.2017. No salary register was produced. Thus, there is no evidence as to whether you had carried out any activity, as claimed. Further, you have debited ₹ 9553/- on account of Rent. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,27,500/- during the year under consideration. However, no payment was received till 31.03.2012. The firm's claim in reply dated 06.10.2017 that the balance outstanding against Ws Uniwork Electroniks as on 31.03.2012 was ₹ 97,257/- is only to one sided accounting treatment given by the assessee in its books of accounts relating to so called purchase and sales transaction with the said party. Further, the firm has also claimed that it had received the payment from the said party on 28.03.2013, after elapse of period of about one year. The receipt of payment after about year is also not a general trading practice.... The benefit of deduction u/s 801C of the Income Tax Act, 1961 is available to an undertaking or enterprise, ... which has begun or begins to manufacture or produce.... . Thus, your engagement in Manufacturing is the foremost precondition, which must be fulfilled, before an assessee becomes eligible to claim deduction u/s 8010 of the Income Tax Act, 1961. The assessee in this case, however, could not prove that it had actual started its manufacturing activities till 31.03.2012 {i.e. before 01.04.2012} I and therefore, the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO u/s 133(6) of the Act remained un-responded; v) Since, the Single Window Clearance Agency of the Stale Government and the alleged raw material purchase bill from M/s Uniwork Electronic, Delhi are dated 31.03.2012, therefore, the AO has held that it was not possible for the assessee to start its manufacturing on 31.03.2012 itself; vi) Inspite of having been issued specific summon u/s 131of the Act, the assessee has failed to produce the wages/salary register for the relevant period. Secondly, the AO on verification of books of account/inquiries conducted has found that no payment of salary/wages was made by the assessee till 31.03.2017 for the previous year ending as on 31.03.2012. It was also found that though the assessee has debited /claimed expenses on account of rent of ₹ 9,553/- and electricity of ₹ 4,325/- for the year ended as on 31.03.2012, but neither the assessee could produce any details nor any evidences of having paid such expenses. It was also found that as per the books of account maintained for the A.Y. 2012-13 no cash withdrawals were made during the period 26.03.2012 to 31.03.2012. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eness of the same is also found doubtful). All the necessary government certificates/clearances etc. required for the start of business was not obtained by the assesse as on 09.03.2012 as discussed above. Further, from the verification of books of account of the assessee, the AO during the course of assessment proceedings for the A.Y. 2015-16, has noticed various discrepancies/ infirmities vis-a-vis its claim of deduction u/s 80IC of the Act. Inspite thereof, the AO has allowed the deduction u/s 80IC in the case of the assessee for the relevant assessment year i.e. A.Y. 2012-13. All these facts brought on record as discussed above as well as as discussed by the AO in the assessment order for the A.Y. 2015-16 in respect of its claim of deduction u/s 80IC of the Act, proves beyond doubt that the assessment order passed by the AO for the A.Y. 2012-13 in haste and without conducting due enquires, is in the nature of an assessment order becoming erroneous in so far as it is prejudicial to the interest of revenue within the meaning of the provisions of section 263 of the Act. 6.2 The reliance was placed on the following case laws: i) Malabar Industrial Co. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is the copy of the Registration granted by the Industry Department relevant for claiming the deduction under section 80IC of the Act. It was further stated that the assessee had not claimed any exemption for the assessment year 2012-13 and that there was substantial expansion in that assessment year, later on the assessee firm was changed to a partnership firm which was earlier a proprietorship concern. However the unit of the assessee was engaged in manufacturing activity and was eligible for deduction under section 80IC of the Act. It was stated the A.O. after proper verification and application of mind allowed the claim of the assessee under section 80IC of the Act for the year under consideration, therefore the assessment order passed by the A.O. was just order and the Ld. Pr. CIT was not justified in setting aside the same. 9. In his rival submissions the Ld. CIT DR strongly supported the orders passed by the Ld. Pr. CIT and further submitted that the assessee claimed to have started the manufacturing from 09/03/2012 and not in the year 2010. It was further submitted that the Assessment Year 2012-13 mentioned by the Ld. Pr. CIT was a typograph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O. for the A.Y. 2012-13 was in haste and without conducting the enquiries so it became erroneous in so far as it is prejudicial to the interest of the Revenue within the meaning of the provisions of section 263 of the Act, however no such findings has been given for the year under consideration i.e. A.Y. 2014-15. 11. It is well settled that for the assessment proceedings each year is independent separate, and in the absence of any adverse remarks given by the Ld. Pr. CIT that no such enquiries were made by the A.O. for allowing the claim under section 80IC of the Act for the year under consideration i.e. 2014-15, we are of the view that the Ld. Pr. CIT was not justified in setting aside the assessment order passed by the A.O. under section 143(3) of the Act dt. 30/11/2016 for the year under consideration i.e. A.Y. 2014-15 and directing the A.O. to reassess or recompute the income by conducting further enquiries, particularly when, the A.O. while passing the assessment order dt. 30/11/2016 for the A.Y. 2014-15 clearly stated that the assessee had furnished all the relevant documents which had been examined and taken on record. Nothing contrary to the said obser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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