DCIT, New Delhi v. M/s. Luminous Electronics Pvt.. Ltd., New Delhi

ITA 561/DEL/2010 | 2004-2005
Pronouncement Date: 09-07-2010 | Result: Allowed

Appeal Details

RSA Number 56120114 RSA 2010
Assessee PAN AAACL2078R
Bench Delhi
Appeal Number ITA 561/DEL/2010
Duration Of Justice 5 month(s) 3 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Luminous Electronics Pvt.. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 09-07-2010
Date Of Final Hearing 23-06-2010
Next Hearing Date 23-06-2010
Assessment Year 2004-2005
Appeal Filed On 05-02-2010
Judgment Text
I.T.A. NO. 453 561 /DEL/2010 1/18 IN THE INCOME TAX APPELLATE TRIBUNAL NEW DELHI BENCH D BEFORE SHRI I. P. BANSAL JUDICIAL MEMBER AND SHRI A K GARODIA ACCOUTANT MEMBER ITA NO. 453 561 /DEL/2010 (ASSESSMENT YEAR 2002-03 2004-05 RESPECTIVELY) DCIT CIRCLE 4(1) VS. M/S. LUMINOUS ELECTRONICS P VT. LTD. NEW DELHI KHASRA NO.189 NEAR ELECTRIC POLE NO.49 VILL & POST-KAKROLA NEW DELHI 110 043 (APPELLANTS) (RESPONDENTS) PAN / GIR NO. AAACL2078R APPELLANT BY: SMT. KAVITA BHATNAGAR CIT DR RESPONDENT BY: SHRI AJAY KR. MATTO CA ORDER PER A. K. GARODIA AM: 1. BOTH THESE APPEALS ARE REVENUES APPEALS DIRECTED A GAINST TWO SEPARATE ORDERS OF LD. CIT(A)-VII NEW DELHI DATED 21.11.2009 FOR THE ASSESSMENT YEAR 2002-03 AND DATED 22.12.200 9 FOR THE ASSESSMENT YEAR 2004-05. BOTH THESE APPEALS WERE H EARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2002-03: I.T.A. NO. 453/DEL/2010: THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED BY THE ASSESSEE DECLARING NET INCOME OF RS.14 00 360/- ON 31.10.2002. THE ASSESSMENT WAS COMPLETED ON 31.08.2006 AS INCOME AT RS.20 71 900/-. AGAINST THAT ASSESSMENT NO APPEAL WAS FILED BY THE ASSESSEE. THEREAFTER THE A.O. INITIATED REASSESSMENT PROCEEDINGS ON THE BASIS OF THE REASONS I.T.A. NO. 453 561 /DEL/2010 2/18 RECORDED BY HIM AND NOTICE U/S 148 WAS ISSUED AND S ERVED ON THE ASSESSEE ON 30.03.2007. ON PAGE 2 OF THE REASSESSMENT ORDER IT IS NOTED BY THE A.O. THAT INFORMATION WAS RECEIVED THAT THE ASSESSE E COMPANY HAS OBTAINED BOGUS UNSECURED LOANS FROM TWO PARTIES NAM ELY M/S. GARG PETROLEUM PVT. LTD. AND M/S. SHANKAR FININVEST PVT. LTD. RS.5 LACS EACH DURING THAT YEAR. IT IS FURTHER NOTED BY THE A.O. THAT THE INFORMATION ALSO REVEALED THAT THESE TWO PARTIES HAVE MERELY PROVIDE D ACCOMMODATION ENTRIES TO THE ASSESSEE COMPANY. IT IS ALSO NOTED BY THE A.O. THAT THE ASSESSEE COMPANY HAS FILED VARIOUS DOCUMENTS TO JUS TIFY AND ESTABLISH THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF THESE TWO PARTIES AND THEREAFTER IT IS OBSERVED BY THE A.O. THAT DUE TO CATEGORICAL ADMISSION OF THESE ENTRY OPERATORS AND OTHER FACTS THE SAME CRE DITS ARE DEEMED TO HAVE NOT BEEN EXPLAINED SATISFACTORILY AND THEREAFTER H E MADE ADDITION OF THIS AMOUNT OF RS.10 LACS U/S 68 OF THE I. T. ACT. BEIN G AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CI T(A) WHO DELETED THIS ADDITION AND NOW THE REVENUE IS IN APPEAL BEFORE US . THE LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(A). A QUERY WAS RAISED BY THE BENCH AS TO WHAT IS THE FINDING GIVEN BY THE LD. CIT(A) REGARDING FULFILLMENT OF THREE CONDITIONS PRECEDENT TO HOLD T HAT THE REQUIREMENT OF SECTION 68 ARE SATISFIED THAT BEING IDENTITY AND CR EDITWORTHINESS OF THE LOAN CREDITORS AND THE GENUINENESS OF THE LOAN TRAN SACTION. OUR ATTENTION WAS DRAWN TO PARA 5.1 TO 5.4 OF THE ORDER OF LD. CI T(A). IT IS ALSO SUBMITTED THAT CONFIRMATION OF THESE LOAN CREDITORS ALONG WITH THEIR BANK STATEMENTS ARE AVAILABLE IN THE PAPER BOOK. IT IS POINTED OUT BY HIM THAT THE CONFIRMATION OF M/S. GARG PETROLEUM PVT. LTD. I S AVAILABLE ON PAGE 10 OF THE PAPER BOOK AND THE COPY OF ITS BANK ACCOUNT IS AVAILABLE ON PAGE 11 OF THE PAPER BOOK. SIMILARLY THE COPY OF THE L OAN CONFIRMATION OF I.T.A. NO. 453 561 /DEL/2010 3/18 M/S. SHANKAR FININVEST PVT. LTD. IS AVAILABLE ON PA GE 15 OF THE PAPER BOOK. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND HAVE GO NE THROUGH THE MATERIAL ON RECORD AND THE ORDERS OF AUTHORITIES BE LOW. WE FIND THAT THE A.O. HAS STATED IN THE ASSESSMENT ORDER THAT THE AS SESSEE COMPANY HAS FURNISHED VARIOUS DOCUMENTS TO JUSTIFY AND ESTABLIS H THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF THESE LOAN CRED ITORS BUT HE HAS NOT SPECIFIED AS TO WHAT DOCUMENTS ARE FURNISHED BEFORE HIM AND HE HAS NOT GIVEN ANY COMMENTS ON THESE DOCUMENTS AS TO WHETHER THESE DOCUMENTS FULFILL THE REQUIREMENT OF SECTION 68 OR NOT. HE H AS MADE ADDITION ON THE BASIS OF INFORMATION RECEIVED BY HIM THAT THESE PAR TIES ARE ENTRY OPERATORS. LD. CIT(A) HAS NOTED IN PARA 5.1 OF HIS ORDER THAT IN RESPECT OF BOTH THESE PARTIES THE ASSESSEE HAS FURNISHED THE COPY OF THEIR BALANCE SHEETS & P & L ACCOUNTS FOR THE RELEVANT YEAR ALONG WITH PROOF OF FILING OF THE INCOME TAX RETURNS BY THESE TWO LOAN CREDITO RS AND THEIR BANK STATEMENTS. REGARDING IDENTITY IT WAS STATED BY T HE LD. CIT(A) THAT THE SAME IS ESTABLISHED ON THE BASIS OF BANK ACCOUNT AN D PAN AND IN VIEW OF THESE FACT THAT THEIR INCOME TAX RETURNS WERE ALSO FILED BY THEM. REGARDING CREDITWORTHINESS IT IS STATED BY HIM THA T IT IS SEEN THAT THE LENDERS HAVE FILED INCOME TAX RETURNS AND THE LENDE RS HAVE SUFFICIENT FUNDS TO MAKE THE INVESTMENT AND TO ADVANCE LOANS A ND THESE LOANS HAVE DULY BEEN DISCLOSED IN THEIR BALANCE SHEETS. WE AR E NOT SATISFIED ON THIS ASPECT BECAUSE WE FIND THAT ON PAGE 10 OF THE PAPER BOOK STATED TO BE LOAN CONFIRMATION OF M/S. GARG PETROLEUM PVT. LTD. IT IS A COPY OF ACCOUNT OF THIS PARTY IN THE BOOKS OF THE ASSESSEE COMPANY ITSELF AND HENCE IT IS NOT A CONFIRMATION BY THE OPPOSITE PART Y ALTHOUGH SOME SIGNATURE AND PAN HAS BEEN APPENDED THERETO BUT STI LL IT CANNOT BE EQUATED WITH A CONFIRMATION. ON PAGE 11 OF THE PAP ER BOOK IS A COPY OF BANK STATEMENT OF THAT PARTY WITH THE THE KARUR VYS YA BANK LTD. AS PER I.T.A. NO. 453 561 /DEL/2010 4/18 THIS THERE IS A CREDIT ENTRY OF RS.5 LACS ON 21.12 .2001AND ON THE NEXT DATE I.E. ON 22.12.2001 THE CHEQUE OF RS.5 LACS IN FAVO UR OF THE ASSESSEE WAS CLEARED. IN THE COURSE OF HEARING BEFORE US WHEN WE ENQUIRED ABOUT THE SOURCE OF THIS CREDIT ENTRY IN THEIR BANK STATEMENT ON 21.12.2001 IT WAS THE SUBMISSION BY THE LD. A.R. THAT HE IS NOT AWARE ABOUT THE SAME. APART FROM THESE TWO ENTRIES THE OPENING BALANCE O N 21.12.2001 WAS ONLY RS.3 810/- AND THIS BANK STATEMENT IS FOR THE PERIOD FROM 1.12.2001 TO 05.01.2002 AND THERE IS NO OTHER ENTRY DURING TH IS PERIOD AS PER THIS BANK STATEMENT AND THE CLOSING BALANCE IS ONLY RS.3 770/-. THIS BANK STATEMENT DOES NOT INSPIRE CONFIDENCE REGARDING THE CREDITWORTHINESS OF THIS LOAN CREDITOR. THE BALANCE SHEET OF THIS LOAN CREDITOR IS AVAILABLE ON PAGE 13 OF THE PAPER BOOK AND WE FIND THAT AGAINST SHARE CAPITAL OF RS.6.90 LACS THIS COMPANY IS HAVING RESERVE AND SU RPLUS OF RS.27.60 LACS WHICH IS NOTHING BUT SHARE PREMIUM IN THE RATIO OF RS.40/- PER SHARE AGAINST PAID UP SHARE OF RS.10/- EACH. AS PER THE P & L ACCOUNT OF THAT COMPANY AVAILABLE ON PAGE 14 OF THE PAPER BOOK THE RE IS A PROFIT OF RS.5137/- DURING THIS YEAR AND THERE WAS LOSS OF RS .5308/- IN THE IMMEDIATELY PRECEDING YEAR. FROM THIS P & L ACCOUN T OF THIS LOAN CREDITOR IT APPEARS THAT THE SOURCE OF FUNDS IN TH E HANDS OF THAT LOAN CREDITOR ITSELF IS DOUBTFUL BECAUSE WHO WILL PAY SH ARE PREMIUM OF RS.40/- FOR EVERY SHARE OF RS.10/- EACH FOR A COMPANY HAVIN G SUCH A TRACK RECORD OF PROFITABILITY. NOW WE EXAMINE THE DOCUMENTS AV AILABLE IN THE PAPER BOOK REGARDING THE 2 ND PARTY I.E. SHANKAR FININVEST PVT. LTD. IT IS SUBMITTED BEFORE US THAT THE CONFIRMATION OF THIS P ARTY IS AVAILABLE ON PAGE 15 OF THE PAPER BOOK. WE AGAIN FIND THAT THIS IS ALSO A COPY OF LEDGER ACCOUNT OF THIS PARTY IN THE BOOKS OF THE AS SESSEE ONLY WHICH IS COUNTERSIGNED BY THIS PARTY AND HENCE THIS ALSO CAN NOT BE EQUATED WITH THE LOAN CONFIRMATION. THE BANK STATEMENT OF THIS PAR TY IS AVAILABLE ON PAGE 16 OF THE PAPER BOOK BUT THE SAME IS NOT LEGIBLE. IN THIS BANK STATEMENT I.T.A. NO. 453 561 /DEL/2010 5/18 ALSO THERE IS IMMEDIATE CREDIT BEFORE CLEARING OF THE LOAN CHEQUE AND THE SOURCE OF THIS CREDIT ALSO COULD NOT BE EXPLAINED. BALANCE SHEET OF THIS PARTY IS NOT AVAILABLE IN THE PAPER BOOK AND HENCE FROM THESE DOCUMENTS WHICH ARE AVAILABLE BEFORE US AND WHICH WERE SUBMIT TED BY THE ASSESSEE BEFORE THE LD. CIT(A) IT CANNOT BE HELD THAT THE A SSESSEE FULFILLED THE TWO OF THE 3 REQUIREMENTS I.E. CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTION. BUT SINCE THESE DO CUMENTS WERE NOT EXAMINED BY THE A.O. AND NO FINDING IS GIVEN BY HIM AND BY LD. CIT(A) WITH REGARD TO THESE DOCUMENTS WE FEEL THAT IN THE INTEREST OF JUSTICE THIS MATTER SHOULD GO BACK TO THE FILE OF THE A.O. FOR F RESH DECISION AND HENCE WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR FRESH DECISION. H E SHOULD EXAMINE ALL THE DOCUMENTS WHICH THE ASSESSEE FURNISHES IN THIS REG ARD AND SHOULD DECIDE THIS ISSUE AFRESH BY WAY OF SPEAKING ORDER IN CONNE CTION WITH THESE DOCUMENTS. HE SHOULD PASS NECESSARY ORDER AS PER L AW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT THIS APPEAL OF THE REVENU E STANDS ALLOWED FOR STATISTICAL PURPOSE. 3. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESS MENT YEAR 2004-05 I.E. I.T.A. NO. 561/DEL/2010: THE GROUND NO.1 IS GENERAL. THE GROUND NO.2 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .10 00 000/- MADE BY THE A.O. UNDER SECTION 68 OF THE I. T. ACT BEING THE BOGUS CASH CREDITS. THE LD. CIT(A) IGNORED THE FACT THAT THE ASSESSEE D ID NOT DISCHARGE THE ONUS OF PROVING THE CREDITWORTHINESS OF THE CRE DITORS AND GENUINENESS OF THE TRANSACTIONS. I.T.A. NO. 453 561 /DEL/2010 6/18 3.2.1 THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGE 2 OF THE ASSESSMENT ORDER THAT INFORMATION WAS RECEIV ED FROM THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT THA T THE ASSESSEE COMPANY OBTAINED BOGUS UNSECURED LOAN FROM M/S. FOR TRESS IMPEX P. LTD. OF RS.10 LACS DURING THIS YEAR. IT IS FURT HER NOTED BY THE A.O. THAT THE INFORMATION REVEALED THAT THIS LOAN C REDITOR MERELY PROVIDED ACCOMMODATION ENTRY TO THE ASSESSEE COMPAN Y. THE A.O. HAS FURTHER NOTED THAT THE ASSESSEE COMPANY HAS FIL ED VARIOUS DOCUMENTS TO JUSTIFY AND ESTABLISH THE IDENTITY GE NUINENESS AND CREDITWORTHINESS OF THIS PARTY BUT WITHOUT GIVING A NY FINDING WITH REGARD TO THESE DOCUMENTS THE A.O. HAS MADE ADDITI ON OF THIS AMOUNT OF RS.10 LACS U/S 68 ON THIS BASIS THAT DUE TO CATEGORICAL ADMISSION OF THIS PARTY BEING AN ENTRY OPERATOR AD DITION IS BEING MADE AS PER THE PROVISIONS OF SECTION 68 OF THE I. T. ACT. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE LD. CIT(A) WHO HAS DELETED THIS ADDITION AND NOW THE RE VENUE IS IN APPEAL BEFORE US. 3.2.2 THE LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. A.R. FOR THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). 3.2.3 WE HAVE CONSIDERED THE RIVAL SUBMISSION AND HAVE GO NE THROUGH THE MATERIAL ON RECORD AND THE ORDERS OF AUTHORITIE S BELOW. WE FIND THAT THE A.O. HAS STATED IN THE ASSESSMENT ORDER TH AT THE ASSESSEE COMPANY HAS FURNISHED VARIOUS DOCUMENTS TO JUSTIFY AND ESTABLISH THE IDENTITY GENUINENESS AND CREDITWORTHINESS OF T HE LOAN CREDITOR BUT HE HAS NOT SPECIFIED AS TO WHAT DOCUMENTS ARE F URNISHED BEFORE HIM AND HE HAS NOT GIVEN ANY COMMENTS ON THESE DOCU MENTS AS TO WHETHER THESE DOCUMENTS FULFILL THE REQUIREMENT OF SECTION 68 OR NOT. HE HAS MADE ADDITION ON THE BASIS OF INFORMAT ION RECEIVED BY HIM THAT THESE PARTIES ARE ENTRY OPERATORS. LD. CI T(A) HAS NOTED IN I.T.A. NO. 453 561 /DEL/2010 7/18 PARA 5.1 OF HIS ORDER THAT IN RESPECT OF THESE PART IES THE ASSESSEE HAS FURNISHED THE COPY OF THEIR BALANCE SHEET & P & L ACCOUNT FOR THE RELEVANT YEAR ALONG WITH PROOF OF FILING OF THE INCOME TAX RETURN BY THIS LENDER COMPANY ALONG WITH ASSESSMENT ORDER OF THAT COMPANY U/S 143(3) ALONG WITH ITS BALANCE SHEET. R EGARDING IDENTITY IT WAS STATED BY THE LD. CIT(A) THAT THE SAME IS ESTABLISHED ON THE BASIS OF BANK ACCOUNT AND PAN AN D IN VIEW OF THIS FACT THAT ITS INCOME TAX RETURN WAS ALSO FILED BY THAT COMPANY. REGARDING CREDITWORTHINESS IT IS STATED BY HIM THA T IT IS SEEN THAT THE LENDERS HAVE FILED INCOME TAX RETURNS AND THE L ENDERS HAVE SUFFICIENT FUNDS TO MAKE THE INVESTMENT AND TO ADVA NCE LOANS AND THESE LOANS HAVE DULY BEEN DISCLOSED IN ITS BALANCE SHEET. WE ARE NOT SATISFIED ON THIS ASPECT BECAUSE WE FIND THAT O N PAGE 32 OF THE PAPER BOOK STATED TO BE LOAN CONFIRMATION OF M/S. FORTERS IMPEX PVT. LTD. IT IS A COPY OF ACCOUNT OF THIS PARTY IN THE BOOKS OF THE ASSESSEE COMPANY ITSELF AND HENCE IT IS NOT A CONFI RMATION BY THE PARTY ALTHOUGH SOME SIGNATURE AND PAN HAS BEEN APPE NDED THERETO BUT STILL IT CANNOT BE EQUATED WITH A CONFIRMATION. COPY OF BANK STATEMENT OF THE PARTY. THE BALANCE SHEET OF THIS LOAN CREDITOR IS AVAILABLE ON PAGES 22-27 OF THE PAPER BOOK AND WE F IND THAT AGAINST SHARE CAPITAL OF RS.6.57 LACS THIS COMPANY IS HAVING RESERVE AND SURPLUS OF RS.124.49 LACS WHICH INCLUDE S SHARE PREMIUM OF RS.124.49 LACS IN THE RATIO OF ABOUT RS .190/- PER SHARE AGAINST EACH PAID UP SHARE OF RS.10/- EACH. AS PER THE P & L ACCOUNT OF THAT COMPANY AVAILABLE ON PAGE 23 OF THE PAPER BOOK THERE IS A PROFIT OF RS.5466/- DURING THIS YEAR AND THERE WAS PROFIT OF RS.2049/- IN THE IMMEDIATELY PRECEDING YEAR. FR OM THIS P & L ACCOUNT OF THIS LOAN CREDITOR IT APPEARS THAT THE SOURCE OF FUNDS IN THE HANDS OF THAT LOAN CREDITOR ITSELF DOUBTFUL BEC AUSE WHO WILL PAY I.T.A. NO. 453 561 /DEL/2010 8/18 SHARE PREMIUM OF ABOUT RS.190/- FOR EVERY SHARE OF RS.10/- EACH FOR A COMPANY HAVING SUCH A TRACK RECORD OF PROFITA BILITY. WE FIND THAT FROM THESE DOCUMENTS WHICH ARE AVAILABLE BEFOR E US AND WHICH WERE SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A ) IT CANNOT BE HELD THAT THE ASSESSEE FULFILLED THE TWO OF THE 3 R EQUIREMENTS I.E. CREDITWORTHINESS OF THE LOAN CREDITOR AND GENUINENE SS OF THE TRANSACTION. BUT SINCE THESE DOCUMENTS WERE NOT EX AMINED BY THE A.O. AND NO SPECIFIC FINDING IS GIVEN BY HIM OR BY LD. CIT(A) WITH REGARD TO THESE DOCUMENTS WE FEEL THAT IN THE INTE REST OF JUSTICE THIS MATTER SHOULD GO BACK TO THE FILE OF THE A.O. FOR FRESH DECISION AND HENCE WE SET ASIDE THE ORDER OF LD. CIT(A) ON T HIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR FRESH DECISION. HE SHOULD EXAMINE ALL THE DOCUMENTS WHICH THE ASSE SSEE FURNISHES IN THIS REGARD AND SHOULD DECIDE THIS ISSUE AFRESH BY WAY OF SPEAKING ORDER IN CONNECTION WITH THESE DOCUMENTS. HE SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUS SION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 3.3 THE GROUND NO.3 READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .1 26 63 086/- MADE BY THE A.O. ON ACCOUNT OF SUPPRESSION OF SALES OF DELHI UNIT. THE LD. CIT(A) IGNORED THE FACT THAT THE SALE IS MA DE INCLUDING EXCISE DUTY AND NOT EXCLUDING EXCISE DUTY. 3.3.1 THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGE 2 OF THE ASSESSMENT ORDER THAT THE ASSESSEE COMPANY S TATED TO HAVE FLOATED A NEW UNIT AT BADDI IN HIMACHAL PRADESH DUR ING THIS YEAR. IT WAS ALSO STATED BEFORE THE A.O. THAT COMMERCIAL PRODUCTION IN THE SAID UNIT COMMENCED W.E.F. 1.10.2003. IT IS NO TED BY THE A.O. THAT SURPRISINGLY IT WAS SEEN THAT IMMEDIATELY AFTE R THE CONSTITUTION I.T.A. NO. 453 561 /DEL/2010 9/18 OF BADDI UNIT ERSTWHILE DELHI UNIT OF THE ASSESSEE S COMPANY STARTED SENDING ASSEMBLED PRODUCTS TO THE BADDI UNIT AND FI NISHED GOODS WERE RECEIVED BY THE DELHI UNIT FROM BADDI UNIT FOR FURTHER SALES. THE A.O. HAS STATED THAT ASSEMBLIES WORTH RS.250.40 LACS WERE TRANSFERRED FORM DELHI TO BADDI UNIT WHEREAS FINISH ED GOODS WORTH RS.195.01 LACS WERE TRANSFERRED BY BADDI UNIT TO DE LHI UNIT DURING THE RELEVANT PERIOD UNDER CONSIDERATION. THE A.O. FURTHER SAYS THAT NO EVIDENCE TO ESTABLISH THE MOVEMENT OF SUCH GOODS BETWEEN DELHI AND BADDI UNITS OR VICE VERSA IN THE FORM OF GOODS RECEIPT NOT/ BILTY OCTROI PAYMENT BILLS THE NAMES & ADDRE SSES ETC. OF THE TRANSPORTER WERE FURNISHED. THEREAFTER THE A.O. H AS STATED ON PAGE 3 OF THE ASSESSMENT ORDER THAT THE DATA FURNISHED B Y THE ASSESSEE WAS THOROUGHLY ANALYZED AND ON THE BASIS OF THIS AN ALYSIS OF DATA CLEAR DISCREPANCY WAS NOTICED. THE A.O. SAYS THAT D ETAILS OF SALES ACCOUNTED FOR IN DELHI IS OUT OF THE GOODS MANUFACT URED BY DELHI UNIT AS WELL AS SALES MADE OUT OF STOCK TRANSFERRED FROM BADDI UNIT. IT IS FURTHER OBSERVED BY THE A.O. THAT IT WAS SEEN THAT DELHI UNIT WAS SELLING THE SAME ITEMS MANUFACTURED BY IT AT A LOWER PRICE WHEREAS OUT OF STOCK TRANSFERRED FORM BADDI UNIT S AME ITEMS WERE SOLD BY DELHI UNIT TO THE SAME PARTIES AT A CONSIDE RABLY HIGHER PRICE. INSTANCES OF SUCH ITEMS SOLD BY DELHI UNIT OUT OF OWN MANUFACTURING AS AGAINST STOCK TRANSFERRED FROM BAD DI UNIT ARE HIGHLIGHTED BY THE A.O. IN THE FORM OF A TABLE APPE ARING ON PAGE 3 OF THE ASSESSMENT ORDER. ON THE BASIS OF THIS TABL E THE A.O. HAS WORKED OUT SUPPRESSED SALES AT DELHI OF RS.1 26 63 086/-. THE FIRST ITEM OF TABLE IS 1400 VA SOLO N WHICH WAS SOLD @ R S.3179/- PER PIECE OUT OF STOCK TRANSFER FROM BADDI UNIT OUT OF OWN MANUFACTURED GOODS AT DELHI THE SAME ITEM WAS SOLD FOR A PRICE OF RS.2850/- PER PIECE ONLY AND THE PRICE REALIZED FOR M DELHI PRODUCT I.T.A. NO. 453 561 /DEL/2010 10/18 WAS LESS BY RS.329/- PER PIECE. IN THIS MANNER TH E A.O. HAS GIVEN A DETAIL OF 14 ITEMS IN THIS TABLE AND APPLYING THE RATES BY WHICH THE PRICE OF DELHI GOODS IS LOWER THAN THE PRICE OF BAD DI UNIT GOODS TO THE QUANTITY SOLD BY THE ASSESSEE OF DELHI GOODS T HIS SUPPRESSED SALE FIGURE WAS WORKED OUT BY THE A.O. AND HE MADE ADDITION THEREOF BY ALLEGING THAT TO THAT EXTENT THE SALE O F DELHI UNIT WAS UNDER DISCLOSED. BEING AGGRIEVED THE ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THI S ADDITION AND NOW THE REVENUE IS IN APPEAL BEFORE US. 3.3.2 THE LD. D.R. SUPPORTED THE ASSESSMENTS ORDER WHEREA S THE LD. A.R. FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD . CIT(A). A SPECIFIC QUERY WAS RAISED BY THE BENCH WITH REGARD TO THE REASON FOR UNDER PRICING OF DELHI GOODS. IN REPLY IT WAS SUB MITTED BY THE LD. A.R. THAT NO EXCISE DUTY IS PAID ON THE GOODS MANUF ACTURED BY BADDI UNIT BECAUSE THE EXEMPTION IS AVAILABLE TO IT BUT FOR GOODS MANUFACTURED AT DELHI EXCISE DUTY IS PAYABLE @ 16% AND THE CUSTOMER IS CONCERNED WITH THE PRICE INCLUSIVE OF E XCUSE DUTY AND IF THIS PRICE IS COMPARED THE PRICE OF DELHI UNIT IS HIGHER THAN THE PRICE OF BADDI UNIT AND NO ADDITION IS JUSTIFIED. HE DREW OUR ATTENTION TO PAGE 36 OF THE PAPER BOOK WHICH IS A S ALE INVOICE FOR DELHI GOODS FOR SALE OF LUMINOUS INVERTER SOLO N 14 00. IT IS SUBMITTED THAT THESE ITEMS WERE SOLD @ RS.2850/- PE R PIECE + EXCISE DUTY @ 16% WHICH COMES TO RS.456/- PER PIEC E AND TOTAL COMES TO RS.3306/- PER PIECE. IT IS SUBMITTED THAT SALE BILL FOR THE SAME ITEM OF BADDI UNIT IS AVAILABLE ON PAGE 37 OF THE PAPER BOOK AND IT COULD BE SEEN THAT THIS WAS SOLD @ RS.3179/- PER PIECE AND NO EXCISE DUTY WAS CHARGED THEREUPON AND HENCE THE PRICE OF DELHI UNIT GOODS ARE HIGHER AND NOT LOWER. AT THIS JUNCT URE A FURTHER QUERY WAS RAISED BY THE BENCH AS TO WHETHER THE BUY ER IS GETTING I.T.A. NO. 453 561 /DEL/2010 11/18 CREDIT OF EXCISE DUTY AS PER MODVAT/CENVAT RULES AN D IN REPLY IT WAS SUBMITTED BY THE LD. A.R. THAT HE IS NOT CLEAR ON THIS ASPECT AND THIS QUESTION WAS NOT RAISED BY THE AUTHORITIES BELOW. IT WAS POINTED OUT BY THE BENCH THAT THIS ASPECT IS VERY C RUCIAL TO DECIDE THIS ISSUE AND IN REPLY IT WAS SUBMITTED BY THE LD . A.R. THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR FRESH DECISION AFTER EXAMINING THIS ASPECT. 3.3.3 WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHO RITIES BELOW. WE FIND THAT WHILE MAKING THIS ADDITION OF RS.126 6 3 086/- THE A.O. HAS CONSIDERED THE DIFFERENCE IN PRICE FOR GOO DS OF BADDI UNIT WITH THE GOODS OF DELHI UNIT AND FOR SUCH COMPARISO N OF PRICES HE HAS CONSIDERED THE PRICE OF DELHI UNIT NET OF EXCIS E DUTY REALIZED BY THE ASSESSEE FROM CUSTOMERS. IT IS ALSO THE SUBMIS SION BEFORE US THAT THE CUSTOMER IS CONCERNED WITH THE GROSS PRICE INCLUSIVE OF EXCISE DUTY AND SALES TAX AND IF THIS IS CONSIDERED THE PRICE OF DELHI UNIT IS NOT LOWER BUT IN FACT HIGHER. BUT BE FORE AGREEING TO THIS ASPECT THAT PRICE OF DELHI UNIT INCLUSIVE OF E XCISE DUTY SHOULD BE COMPARED WITH THE PRICE OF BADDI UNIT THIS ASPE CT HAS TO BE EXAMINED AS TO WHETHER THE CUSTOMERS ARE GETTING AN Y MODVAT/CENVAT CREDIT ON ACCOUNT OF EXCISE DUTY PAID BY THEM FOR BUYING THE GOODS OF DELHI UNIT OF THE ASSESSEE. IF THE CUSTOMERS ARE GETTING MODVAT/CENVAT CREDIT THEN THE ACTION TAKEN BY THE A.O. APPEARS TO BE CORRECT BECAUSE IN THIS SITUATION TH E CUSTOMERS GET SEPARATE CREDIT OF EXCISE DUTY BEING PAID BY THEM F OR BUYING THE GOODS OF DELHI UNIT AND HENCE IT CANNOT BE ACCEPTED THAT WHEN THE ASSESSEE IS SELLING THE GOODS OF BADDI UNIT AT HIGH ER PRICE IT WILL SELL THE GOODS OF DELHI UNIT AT A LOWER PRICE TO TH E SAME CUSTOMER. BUT IF THE CUSTOMER IS NOT ELIGIBLE FOR MODVAT/CENV AT CREDIT THAT I.T.A. NO. 453 561 /DEL/2010 12/18 EFFECTIVE PRICE OF DELHI UNIT HAS TO BE CONSIDERED AFTER INCLUDING THE EXCISE DUTY ELEMENT AND IF THIS IS DONE THE PRICE OF DELHI UNIT IS HIGHER AND HENCE IT CANNOT BE ALLEGED THAT THE SALE OF DELHI UNIT GOODS ARE SUPPRESSED. THIS ASPECT WAS NOT EXAMINED BY THE AUTHORITIES BELOW AND HENCE WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE F ILE OF THE A.O. FOR FRESH DECISION AFTER EXAMINING THIS ASPECT. THE BU RDEN IS ON THE ASSESSEE TO PROVE BEFORE THE A.O. AS TO WHETHER THE CUSTOMERS ARE GETTING MODVAT/CENVAT CREDIT OR NOT. IN THIS REGAR D THE ASSESSEE CAN OBTAIN OR FURNISH THE COPY OF RT-12 RETURN BEIN G FIELD BY THOSE CUSTOMERS WITH THE EXCISE DEPARTMENT FOR THE RELEVA NT PERIOD BECAUSE IN SUCH RETURNS COMPLETE ACCOUNT HAS TO BE DISCLOSED REGARDING MODVAT/CENVAT CREDIT BEING AVAILED BY THO SE CUSTOMERS. IF THIS IS NOT FEASIBLE OTHER SUITABLE EVIDENCE AC CEPTABLE TO THE A.O. CAN BE FURNISHED AND THEREAFTER THE A.O. SHALL DEC IDE THIS ASPECT AFRESH. IF IT IS FOUND THAT THE CUSTOMERS ARE NOT ELIGIBLE FOR ANY MODVAT/CENVAT CREDIT IN CONNECTION WITH THE GOODS O F DELHI UNIT THE ASSESSEE BEING PURCHASED BY THEM THEN NO ADDIT ION CAN BE MADE BY ALLEGING THAT THE DELHI SALES ARE SUPPRESSE D. THE A.O. SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.3 RAISED BY THE REVENUE STANDS ALLOWED FO R STATISTICAL PURPOSES. 3.4 THE GROUND NO.4 OF THE APPEAL READS AS UNDER: 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .1 47 085/- MADE BY THE A.O. BEING THE FREIGHT CHARGES FOR WHIC H NO VOUCHER/EVIDENCES WERE PRODUCED. I.T.A. NO. 453 561 /DEL/2010 13/18 4.1 THE LD. CIT(A) IGNORED THE FACT THAT THE ASSESSEE D ID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM EITHER DURING ASSESSMENT OR DURING APPELLATE PROCEEDING. 3.4.1 THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. ON PAGE 4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT P ROVIDED ANY DETAILS REGARDING FREIGHT OUTWARD EXPENSES OF RS.1 47 085/-. ON PAGE 6 OF THE ASSESSMENT ORDER ALSO IT IS OBSERVED BY THE A.O. THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE REG ARDING ACTUAL MOVEMENT OF GOODS BY DELIBERATELY WITHHOLDING INFOR MATION REGARDING FREIGHT CHARGES PAID DURING THE YEAR CLAI MED IN RESPECT OF BADDI UNIT OF RS.1 47 085/- AND ON THIS BASIS HE M ADE DISALLOWANCE OF THE SAME. BEING AGGRIEVED THE ASS ESSEE CARRIED THE MATER IN APPEAL BEFORE CIT(A) WHO HAS DELETED T HE DISALLOWANCE AND NOW THE REVENUE IS IN APPEAL BEFOR E US. 3.4.2 LD. D.R. FOR THE REVENUE SUPPORTED THE ASSESSMENT O RDER WHEREAS THE LD. A.R. FOR THE ASSESSEE SUPPORTED THE ORDER O F LD. CIT(A). IT IS ALSO SUBMITTED BY HIM THAT THE REMAND REPORT OF THE A.O. IS AVAILABLE ON PAGE 175-176 OF THE PAPER BOOK. THE R ELEVANT COMMENTS OF THE A.O. IN THIS REGARD ARE AVAILABLE O N PAGE 176 OF THE PAPER BOOK WHEREIN IT IS NOTED BY THE A.O. THAT THE ASSESSEE HAS SUBMITTED ONLY 3 BILLS AND COPY OF THE LEDGER A CCOUNT REGARDING FREIGHT EXPENSES AND THIS COMMENT OF THE A.O. IS IN CONNECTION WITH THIS DISALLOWANCE IN ASSESSMENT YEAR 2004-05 A ND 2005-06 TAKEN TOGETHER BECAUSE A COMMON REMAND REPORT WAS S UBMITTED BY THE A.O. FOR THE 3 ASSESSMENT YEARS I.E. ASSESSMENT YEARS 2003- 04 2004-05 & 2005-06.A QUERY WAS RAISED BY THE BEN CH AS TO HOW THE LD .CIT(A) COULD DECIDE THIS ISSUE ON THE BASIS OF 3 BILLS ONLY. IT WAS SUBMITTED BY THE LD. A.R. THAT THIS OBSERVAT ION OF THE A.O. IS NOT CORRECT AND ALL THE BILLS WERE FURNISHED BEF ORE HIM BUT HE I.T.A. NO. 453 561 /DEL/2010 14/18 COULD NOT SHOW ANY OBJECTION RAISED BY THE ASSESSEE IN THIS REGARD BEFORE THE LD .CIT(A) IN THE REJOINDER FILED BY THE ASSESSEE BEFORE LD. CIT(A) ON 17.11.2009 COPY OF WHICH IS AVAILABLE ON PAGES 158-174 OF THE PAPER BOOK. 3.4.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSED T HE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT DISALLOWANCE WAS MADE BY THE A.O. ON THE BASIS THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE REGARDI NG ACTUAL MOVEMENT OF GOODS BY DELIBERATELY WITHHOLDING INFOR MATION REGARDING FREIGHT CHARGES PAID DURING THE YEAR. IT IS ALSO OBSERVED BY THE A.O. THAT NO DETAILS OF FRIGHT OUTWARD OF RS .1 47 085/- WERE PROVIDED. IN THE COURSE OF REMAND PROCEEDINGS ALS O AS PER THE REMAND REPORT THE ASSESSEE HAS FURNISHED ONLY 3 BI LLS OF FREIGHT CHARGES FOR THIS YEAR AS WELL AS FOR THE NEXT YEAR. THERE IS NO COMMENT OF LD. CIT(A) REGARDING THIS ALLEGATION OF THE A.O. THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE REG ARDING ACTUAL MOVEMENT OF GOODS BY DELIBERATELY WITHHOLDING INFOR MATION REGARDING FREIGHT CHARGES PAID DURING THE YEAR AND WE FEEL THAT THE ORDER OF LD. CIT(A) ON THIS ISSUE CANNOT BE SUSTAIN ED AND WE FEEL THAT IN THE INTEREST OF JUSTICE THIS MATTER SHOULD GO BACK TO THE FILE OF THE A.O. FOR FRESH DECISION. WE THEREFORE SET ASIDE THE ORDER OF LD .CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BAC K TO THE FILE OF THE A.O. FOR FRESH DECISION. THE ASSESSEE SHALL FU RNISH EVIDENCE REGARDING ACTUAL MOVEMENT OF GOODS FOR WHICH THESE FREIGHT CHARGES ARE BEING SAID TO HAVE BEEN INCURRED BY THE ASSESSEE. THE ASSESSEE SHALL ALSO FURNISH COMPLETE DETAILS OF THE SE FREIGHT CHARGES ALONG WITH ALL BILLS AND THEREAFTER THE A.O. SHALL PASS NECESSARY ORDER AS PER LAW. NEEDLESS TO MENTION THAT THE A.O . SHALL PROVIDE I.T.A. NO. 453 561 /DEL/2010 15/18 ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THIS GROUND OF THE REVENUE IS ALSO ALLOWED FOR STATISTICAL PURP OSES. 3.5 THE GROUND NO.5 OF APPEAL READS AS UNDER: 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD .CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.3 11 590/- MADE B THE A.O. DISALLOWING THE DEDUCTION CLAIMED B Y THE ASSESSEE U/S 90IC OF THE ACT. 5.1 THE LD. CIT(A) IGNORED THE DISCREPANCIES POINTE D OUT BY THE A.O. IN ACCOUNTING SYSTEM ADOPTED BY THE ASSESSEE. 3.5.1 THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN THE ASSESSMENT ORDER THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IC OF THE I. T. ACT WITH RESPECT TO BADDI UNIT. THE A.O. WAS NOT SATISFIED REGARDING APPORTIONMENT OF EXPENDITURE BETWEEN DELH I UNIT AND BADDI UNIT. IT IS NOTED BY THE A.O. THAT ONLY ADVE RTISEMENT EXPENSES WERE STATED TO HAVE BEEN ATTRIBUTED ON SAL E RATIO OF RESPECTIVE UNIT WHEREAS SOME OTHER EXPENSES ARE STA TED TO HAVE BEEN ATTRIBUTED ON ACTUAL BASIS AND SOME OTHER EXPE NSES ARE ATTRIBUTED IN THE RATIO OF PURCHASE COST. IT IS F URTHER NOTED BY THE A.O. THAT ELECTRICITY EXPENSES AMOUNTING TO RS.44 1 86/- ONLY WERE INCURRED FOR BADDI UNIT WHICH WERE GROSSLY INSUFFI CIENT TO EFFECT PRODUCTION AND SALE OF RS.4.55 CRORES AS SHOWN IN T HE BADDI UNIT. IT IS ALSO NOTICED BY THE A.O. THAT NO FREIGHT INWA RD FOR SO-CALLED ASSEMBLIES RECEIVED BY BADDI UNIT FROM DELHI UNIT W AS SHOWN TO HAVE BEEN INCURRED IN THIS YEAR. THE A.O. HAS STAT ED THAT THE INTER UNIT TRANSFER OF ASSEMBLY STAND COMPLETELY SHATTERE D AND IT IS CONSTRUED TO BE IN THE NATURE OF A FAX AVOIDANCE SC HEME EXECUTED WITH THE SOLE PURPOSE AND INTENTION TO DEFRAUD THE REVENUE AUTHORITIES. BY MAKING THESE OBSERVATIONS THE A.O . REJECTED THE CLAIM OF THE ASSESSEE REGARDING DEDUCTION U/S 80IC OF THE I. T. ACT I.T.A. NO. 453 561 /DEL/2010 16/18 FOR AN AMOUNT OF RS.3 11 590/-. BEING AGGRIEVED T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS ALLOWED THIS CLAIM OF THE ASSESSEE AND NOW THE REVENUE IS IN APPEAL BEFORE US. 3.5.2 THE LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. A.R. SUPPORTED THE ORDER OF THE LD. CIT(A). 3.5.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE P ERUSED THE MATERIAL ON RECORD. WE FIND THAT THE MAIN OBJECTIO N OF THE A.O. IN THIS REGARD WAS THAT THE ASSESSEE COULD NOT ESTABLI SH THAT THE ASSESSEE WAS IN FACT PRODUCING GOODS AT BADDI UNIT. THE REASONS GIVEN BY HIM ARE THAT VERY SMALL AMOUNT OF ELECTRIC ITY CHARGES OF RS.44 186/- WERE SAID TO BE INCURRED AT BADDI UNIT WHICH IS NOT SUFFICIENT TO TAKE CARE OF SUCH A HUGE PRODUCTION O F RS.4.55 CRORES. IT IS ALSO OBSERVED BY THE A.O. THAT NO DETAILS OF FREIGHT OUTWARD OF RS.1.47 LACS WERE PROVIDED AND THE ASSESSEE HAS FAI LED TO FURNISH ANY EVIDENCE REGARDING ACTUAL MOVEMENT OF GOODS BY DELIBERATELY WITHHOLDING INFORMATION. IN SPITE OF THESE SPECIFI C OBJECTIONS OF THE A.O. LD. CIT(A) HAS DECIDED THIS ISSUE WITHOUT ADDRESSING THESE SPECIFIC GRIEVANCES OF THE A.O. THE RELEVANT PARA OF THE ORDER OF LD. CIT(A) IS PARA 8.4 WHICH IS REPRODUCED BELOW : 8.4 AS WOULD BE EVIDENT FORM THE ABOVE THESE ARE THE REQUIREMENTS FOR CLAIMING DEDUCTION U/S 80-IC OF TH E ACT. IT IS NOT DISPUTED BY THE A.O. THAT THE ASSESSEE HAS N OT FULFILLED THE ABOVE CONDITIONS WHICH ARE REQUIRED FOR CLAIMI NG DEDUCTION U/S 80-IC OF THE ACT. THE CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT THAT MERE NON REAS ONABLENESS OF EXPENSE AND NON-PRODUCTION OF EVIDENCES IN SUPPO RT OF THE EXPENSES CANNOT BE A GROUND FOR REJECTION OF THE AS SESSEES CLAIM FOR DEDUCTION U/S 890-IC OF THE ACT. AFTER H AVING CONSIDERED THE TOTALITY OF THE FACTS AND CIRCUMSTAN CES OF THE CASE IT IS NOT UNFAIR TO CONCLUDE THAT ALL THE NEC ESSARY CONDITIONS REGARDING DEDUCTION U/S 80-IC OF THE ACT STOOD FULFILLED BY THE APPELLANT. UNDER THE CIRCUMSTANCE S THE A.O. IS DIRECTED TO ALLOW DEDUCTION U/S 80IC AFTER VERIF ICATION OF I.T.A. NO. 453 561 /DEL/2010 17/18 THE FACT AS TO WHETHER ALL THE CONDITIONS REGARDING DEDUCTION UNDER SECTION 80-IC HAVE DULY BEEN FULFILLED BY THE ASSESSEE OR NOT. SUBJECT TO THE ABOVE REMARKS GROUND NO.6 IS ALLOWED. 3.5.4 FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A) WE FIND THAT NO FINDING IS GIVEN BY LD. CIT(A) IN CONNECTION WITH T HESE OBJECTIONS OF THE A.O. THAT ELECTRICITY EXPENSES WERE NOT SUFF ICIENT TO EFFECT THIS HUGE PRODUCTION OF RS.4.55 CRORES AND THE ASSE SSEE COULD NOT FURNISH ANY EVIDENCE REGARDING ACTUAL MOVEMENT OF G OODS ALTHOUGH IT IS CLAIMED BY THE ASSESSEE THAT SEMI FINISHED GO ODS WERE TRANSFERRED FORM DELHI TO BADDI UNIT AND FINISHED G OODS WERE TRANSFERRED FROM BADDI TO DELHI FOR ACTUAL SALE. B EFORE US ALSO NO DETAILS HAVE BEEN FURNISHED REGARDING THE NATURE OF SEMI FINISHED GOODS BEING TRANSFERRED FROM DELHI TO BADDI AND WHA T TYPE OF FINISHING HAS BEEN DONE BY BADDI UNIT AND WHETHER S UCH HUGE PRODUCTION IS POSSIBLE BY INCURRING ELECTRICITY EXP ENDITURE OF RS.44 185/- ONLY. NOTHING IS FURNISHED BEFORE US R EGARDING EVIDENCE OF ACTUAL MOVEMENT OF GOODS ALSO. THIS AS PECT HAS ALREADY BEEN RESTORED BACK BY US TO THE FILE OF THE A.O. WHILE DECIDING GROUND NO.4 OF THE REVENUES APPEAL. ONE MORE ASPECT HAS BEEN RESTORED BACK BY US BEFORE THE A.O. WHILE DECIDING GROUND NO.3 OF THE REVENUES APPEAL IN CONNECTION W ITH ADDITION MADE BY THE A.O. OF RS.126.63 LACS ON ACCOUNT OF AL LEGATION OF SUPPRESSION OF SALES OF DELHI UNIT. WE FEEL THAT T HIS ISSUE IS ALSO INTERCONNECTED WITH THOSE TWO ISSUES AND HENCE ON T HIS ISSUE ALSO A FRESH DECISION IS REQUIRED SINCE THE ORDER OF CIT(A ) ON THIS ISSUE CANNOT BE SUSTAINED FOR WHICH NO FINDING IS GIVEN B Y HIM WITH REGARD TO VARIOUS SPECIFIC OBJECTIONS RAISED BY THE A.O. WE THEREFORE SET ASIDE THE ORDER OF LD. CIT(A) ON THI S ISSUE ALSO AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION. I.T.A. NO. 453 561 /DEL/2010 18/18 THE ASSESSEE HAS TO PROVIDE NECESSARY DETAILS REGAR DING THE NATURE OF SEMI-FINISHED GOODS STATED TO HAVE BEEN TRANSFER RED FROM DELHI TO BADDI UNIT ALONG WITH EVIDENCE FOR THE ACTUAL MO VEMENT OF GOODS. THE ASSESSEE HAS ALSO TO FURNISH DETAILS OF THE ACTUAL PROCESSING DONE BY BADDI UNIT TO COVERT THOSE SEMI FINISHED GOODS INTO FINISHED GOODS AND THE ASSESSEE HAS TO SATISFY THAT SUCH A HUGE PRODUCTION OF RS.4.55 CRORES AT BADDI UNIT IS POSSI BLE BY INCURRING ELECTRICITY AND POWER EXPENDITURE OF RS.0.44 LACS O NLY. AFTER EXAMINING ALL THESE ASPECTS THE A.O. SHOULD PASS N ECESSARY ORDER AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF REVENUE IS ALSO ALLOW ED FOR STATISTICAL PURPOSES. 4. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 0 9 TH JULY 2010. SD./- SD./- (I. P. BANSAL) (A K GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 09 TH JULY 2010 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR ITAT NEW DELHI