SIDDHI INDUSTRIES, MUMBAI v. ITO WD 19(3)(4), MUMBAI

ITA 692/MUM/2010 | 2004-2005
Pronouncement Date: 30-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 69219914 RSA 2010
Assessee PAN EEEAR2004A
Bench Mumbai
Appeal Number ITA 692/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 1 day(s)
Appellant SIDDHI INDUSTRIES, MUMBAI
Respondent ITO WD 19(3)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted I
Tribunal Order Date 30-03-2011
Date Of Final Hearing 15-03-2011
Next Hearing Date 15-03-2011
Assessment Year 2004-2005
Appeal Filed On 28-01-2010
Judgment Text
1 ITA NO.7117/MUM/2007 & ITA NO.692/MUM/2010 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI J JJ J BENCH BENCH BENCH BENCH MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI MUMBAI BENCHES MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI D MANMOHAN VP & SHRI D MANMOHAN VP & SHRI D MANMOHAN VP & SHRI D MANMOHAN VP & SHRI R K PANDA AM SHRI R K PANDA AM SHRI R K PANDA AM SHRI R K PANDA AM ITA NO. ITA NO. ITA NO. ITA NO. 7117/MUM/2007 7117/MUM/2007 7117/MUM/2007 7117/MUM/2007 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR2 22 20 00 004 0404 04- -- -5) 5)5) 5) & && & ITA NO. 692/MUM/2010 ITA NO. 692/MUM/2010 ITA NO. 692/MUM/2010 ITA NO. 692/MUM/2010 (ASST Y (ASST Y (ASST Y (ASST YE EE EAR 2004 AR 2004 AR 2004 AR 2004- -- -05) 05) 05) 05) M/S SIDDHI INDUSTRIES 303-304 SALISBURY PARK PALI HILL BANDRA (W) MUMBAI VS THE INCOME TAX OFFICER WARD 19(3)(4) MUMBAI ( (( ( APPELLANT APPELLANT APPELLANT APPELLANT ) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO.AAUFS0715J AAUFS0715J AAUFS0715J AAUFS0715J A SSESSEE BY SHRI K R LAKSHIMARAYANAN REVENUE BY SHRI SANDEEP DAHIYA SR DR PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM PER R K PANDA AM THE APPEAL IN ITA NO. 7117/MUM/2007 FILED BY THE AS SESSEE IS DIRECTED AGAINST THE ORDER DATED 10.10.2007 OF THE CIT(A)-XI X RELATING TO ASSESSMENT YEAR 2004-05. THE APPEAL IN ITA NO.692/MUM/2010 FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30.12.2009 OF THE CIT(A)/XX X) MUMBAI RELATING TO ASSESSMENT YEAR 2004-05 IN THE PENALTY MATTER U/S 271(1)( C) OF THE I T ACT. FOR THE SAKE OF CONVENIENCE BOTH THESE APPEALS WERE HEA RD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. ITA NO. 7117/ ITA NO. 7117/ ITA NO. 7117/ ITA NO. 7117/MUM/2007 MUM/2007 MUM/2007 MUM/2007( ASST YEAR 2004 ( ASST YEAR 2004 ( ASST YEAR 2004 ( ASST YEAR 2004- -- -05) 05) 05) 05) 2 THIS APPEAL WAS EARLIER DISMISSED BY THE TRIBUNAL FOR NON PROSECUTION. SUBSEQUENTLY THE TRIBUNAL VIDE ORDER DATED 9.7.201 0 RECALLED ITS EARLIER ORDER. HENCE THIS IS A RECALLED MATTER. 2 ITA NO.7117/MUM/2007 & ITA NO.692/MUM/2010 3 THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT( A) IN CONFIRMING THE ORDER PASSED BY THE ASSESSING OFFICER U/S 144 OF THE I T ACT AND FURTHER DISALLOWED THE CLAIM U/S 80IB OF THE ACT. 3.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSES SEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF ALL TYP ES OF INJECTION MOULDED PRODUCTS AND PLASTIC RELATED ITEMS. THE ASSESSEE IN ITS RETURN OF INCOME CLAIMED DEDUCTION U/S 80IB OF THE ACT OF RS. 7 11 157/-. FROM THE TAX AUDIT REPORT FILED ALONG WITH RETURN OF INCOME THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS TAKEN OVER AN INDUSTRIAL UNDERTAKING IN THE NAME AN D STYLED AS M/S VINOD PLASTICS AS A GOING CONCERN W.E.F 1.4.2003. AS PER THE DEE D OF ASSIGNMENT IT WAS EXECUTED AND REGISTERED ON 30.4.2003. TO VERIFY TH E CLAIM OF DEDUCTION U/S 80IB THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE COPY OF THE DEED OF ASSIGNMENT WHICH THE ASSESSEE PRODUCED. ON GOING T HROUGH THE DEED OF AGREEMENT THE ASSESSING OFFICER NOTED THAT M/S VIN OD PLASTICS HAD ALREADY STARTED MANUFACTURING AND SALES OF THE INJECTION MO ULDED PRODUCTS AND PLASTIC RELATED ITEMS WHICH THE ASSESSEE TOOK OVER. HE AS KED THE ASSESSEE TO EXPLAIN AS TO HOW THE CONDITIONS LAID DOWN U/S 80IB2(II) A RE SATISFIED AND ALSO TO EXPLAIN AS TO WHY THE DEDUCTION U/S 80IB SHOULD NOT BE DISA LLOWED. 3.2 IT WAS SUBMITTED BY THE ASSESSEE THAT IT HAD IN VESTED RS.6 86 847/- IN PLANT AND MACHINERY OUT OF WHICH PLANT AND MACHINER Y VALUED AT RS. 86 505/- ONLY HAS BEEN ACQUIRED FROM M/S VINOD PLASTICS AS PER DEED OF ASSIGNMENT. THE PLANT AND MACHINERY ACQUIRED FROM M/S VINOD PLASTIC S IS 12.6% OF THE TOTAL INVESTMENT AND PLANT AND IS LESS THAN 20% OF THE TO TAL INVESTMENT IN PLANT AND 3 ITA NO.7117/MUM/2007 & ITA NO.692/MUM/2010 MACHINERY. THEREFORE THE ASSESSEES CASE IS COVERE D BY EXPLANATION 2 TO SUB. SEC.( 2) TO SEC. 80IB OF THE ACT. 3.3 THE ASSESSING OFFICER NOTED THAT THE ASSESSEE H AD PURCHASED THE PLANT AND MACHINERY FROM M/S MEWA HYDRAULICS 806 SWARAN PARK MUNDKA INDL. AREA NANGOLIA NEW DELHI AND FROM M/S PLY YERA INDUSTRIE S GALA NO.4 BHRAT NIWAS BOHARI ROAD NR. OSHIWARA BRIDGE S V ROAD JOGESHW ARI (W) MUMBAI. THE ASSESSING OFFICER CALLED FOR THE INFORMATION U/S 13 3(6) OF THE I T ACT 1961 FROM THE ABOVE PARTIES AS PER THE ADDRESS SUPPLIED BY TH E ASSESSEE. SINCE BOTH THE LETTERS CALLING FOR INFORMATION WERE RECEIVED BACK UN-SERVED WITH POSTAL REMARKS LEFT THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE NEW ADDRESS. 3.4 THE ASSESSING OFFICER DEPUTED THE WARD INSPECTO R TO ENQUIRE ON THE BASIS OF THE NEW ADDRESS THAT WAS FURNISHED BY THE ASSES SEE AND TO COLLECT THE NECESSARY INFORMATION. THE WARD INSPECTOR REPORTED THAT NO SUCH PARTY EXITS AT THE GIVEN ADDRESS. THE ASSESSING OFFICER AGAIN ASK ED THE ASSESSEE TO FURNISH THE LATEST ADDRESS OF THESE TWO PARTIES. IN ABSENCE OF ANY COMPLIANCE TILL THE DATE OF PASSING OF THE ORDER THE ASSESSING OFFICER PROCEED ED TO COMPLETE THE ASSESSMENT U/S 144 OF THE I T ACT. HE NOTED THAT M /S VINOD PLASTICS HAD ALREADY INSTALLED THE PLANT AND MACHINERY TO MANUFACTURE A LL TYPES OF INJECTION MOULDED PRODUCTS AND PLASTIC RELATED ITEMS. IT HAD GOT ALL THE NECESSARY PERMISSIONS ELECTRICAL CONNECTIONS AND IT HAD ACTUALLY PRODUCED AND SOLD THE ITEMS. THESES FACTS ESTABLISH THAT THE PLANT AND MACHINERY WERE ALREADY IN EXISTENCE. SUCH INSTALLED PLANT AND MACHINERY AND OTHER ASSETS ALON G WITH OTHER BENEFITS AND LIABILITIES WERE TAKEN OVER BY THE ASSESSEE. SINCE THERE WAS NO EVIDENCE OF PURCHASE OF NEW MACHINERY WORTH RS. 6 86 847/- AND SINCE THE PARTIES FROM 4 ITA NO.7117/MUM/2007 & ITA NO.692/MUM/2010 WHOM THE ASSESSEE HAS CLAIMED TO HAVE PURCHASED SUC H MACHINERY DO NOT EXIST AT THE GIVEN ADDRESSES; THEREFORE THE ASSESSING OF FICER WAS OF THE OPINION THAT THE INSTALLATION OF NEW PLANT & MACHINERY AS CLAIME D BY THE ASSESSEE IS NOT VERIFIABLE. RELYING ON A COUPLE OF DECISIONS HE HELD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80IB(2)(II) OF THE ACT. H E ACCORDINGLY DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB AMOUNTING TO RS. 7 11 157/- 4 IN APPEAL THE CIT(A) UPHELD THE ORDER PASSED BY THE ASSESSING OFFICER U/S 144 OF THE ACT AND ALSO UPHELD THE DISALLOWANCE O F DEDUCTION U/S 80IB(2)(II) OF THE ACT. WHILE DOING SO THE CIT(A) FURTHER NOTED THAT THE ASSESSEE WAS UNABLE TO FURNISH EVEN ANY OTHER EVIDENCE TO SUPPORT THE INST ALLATION OF THE SAID PLANT AND MACHINERY. 5 AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSE SSEE IS IN APPAL HERE BEFORE US. 6 THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ASSESSEE HAS NO CONTROL OVER THE PARTIES AFTER THE TRANSACTIONS ARE OVER. FURTHER THEY ARE NOT RELATED PARTIES. HE SUBMITTED THAT GIVEN ONE MORE OPPORTUNITY HE WILL PRODUCE SATISFACTORY EVIDENCE REGARDING INSTALLATION OF THE PLANT & MACHINERY AND THE GENUINENESS OF THE PURCHASE. HE ALSO RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS KANCHWALA GEMS REPORTED IN 33 S OT 27(JP) AND THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS RELIANC E PETROPRODUCT PVT LTD REPORTED IN 322 ITR 158. 5 ITA NO.7117/MUM/2007 & ITA NO.692/MUM/2010 6.1 THE LD DR ON THE OTHER HAND WHILE SUPPORTING THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) SUBMITTED THAT ONLY IN CASE S OF ASSESSEES HAVING INDUSTRIAL UNITS AT SILVAS THE PARTIES FROM WHOM P URCHASES ARE MADE DISAPPEAR. HE HOWEVER SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATIO N. 7 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE PARTIES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSI DERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DISPUTE TO THE FACT TH AT THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB ON THE G ROUND THAT THE NOTICE U/S 133(6) SENT TO THE PARTIES FROM WHOM THE PLANT & M ACHINERY WERE PURCHASED WERE RETURNED UN-SERVED. FURTHER THE ASSESSEE HA D TAKEN OVER THE RUNNING UNIT OF M/S VINOD PLASTICS. THEREFORE IN ABSENCE OF VER IFIABLE EVIDENCE OF INSTALLATION OF PLANT & MACHINERY WORTH RS. 6 86 847/- THE BENE FIT OF DEDUCTION U/S 80IB CLAIMED BY THE ASSESSEE WAS NOT ALLOWABLE. SINCE T HERE WAS NO CO-OPERATION FROM THE SIDE OF THE ASSESSEE TO THE STATUTORY NOTI CES THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE IN THE EX-PART E ORDER PASSED BY HIM. IT IS THE SUBMISSION OF THE LD COUNSEL FOR THE ASSESSEE T HAT AFTER THE PLANT & MACHINERY WERE PURCHASED IT HAS NO CONTROL OVER TH E SELLER. IN OUR OPINION FOR CLAIMING DEDUCTION U/S 80IB THE ASSESSEE MUST FULF IL THE CONDITIONS LAID DOWN IN THE PROVISIONS. HIS ONUS IN THE INSTANT CASE WAS M ORE SINCE IT HAD TAKEN OVER A RUNNING UNIT NAMELY M/S VINOD PLASTICS. IT WAS ALL THE MORE NECESSARY ON THE PART OF THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO TH E SATISFACTION OF THE ASSESSING 6 ITA NO.7117/MUM/2007 & ITA NO.692/MUM/2010 OFFICER THAT IT HAD PURCHASED PLANT & MACHINERY WOR TH RS. 6 86 847/- WHICH IS MORE THAN 80% OF THE TOTAL VALUE OF THE PLANT & MAC HINERY. THE RESPONSIBILITY OF THE ASSESSEE INCREASES WHEN THE NOTICES WERE ISSUED U/S 133(6) ARE RETUNED BY THE POSTAL AUTHORITIES AND THE WARD INSPECTOR DEPUT ED BY THE ASSESSING OFFICER ALSO WAS UNABLE TO TRACE THE PARTIES AT THE GIVEN A DDRESSES BY THE ASSESSEE. 7.1 IN THE INSTANT CASE THE ASSESSEE FAILED TO DIS CHARGE THE ONUS CAST ON IT. HOWEVER CONSIDERING THE TOTALITY OF THE FACTS OF T HE CASE AND IN THE INTEREST OF JUSTICE WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY TO SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER REGARDING FULFILMENT OF THE COND ITIONS FOR CLAIMING DEDUCTION U/S 80IB. WE THEREFORE DEEM IT PROPER TO RESTORE THE MATER BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO GIVE ON E MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE ITS CLAIM OF DEDUCTION U/S 80IB. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WIT H LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOL D AND DIRECT ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWE D FOR STATISTICAL PURPOSE. ITA NO. ITA NO. ITA NO. ITA NO. 692 692 692 692/ // /MUM/2010 MUM/2010 MUM/2010 MUM/2010( ASST YEAR 2004 ( ASST YEAR 2004 ( ASST YEAR 2004 ( ASST YEAR 2004- -- -05) 05) 05) 05) 8 THE ASSESSEE IN THE GROUNDS OF APPEAL HAS CHALLEN GED THE ORDER OF THE CIT(A) IN CONFIRMING THE PENALTY OF RS. 2 55 129/ - LEVIED BY THE ASSESSING OFFICER U/S 271(1)( C) OF THE ACT. WE HAVE ALREADY RESTORE D THE QUANTUM PROCEEDINGS TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION VIDE OUR ORDER OF EVEN DATED IN ITA NO7117/MUM/2007. THEREFORE WE RESTORE THE GROUNDS IN THE 7 ITA NO.7117/MUM/2007 & ITA NO.692/MUM/2010 IMPUGNED APPEAL TO THE FILE OF THE ASSESSING OFFICE R FOR FRESH ADJUDICATION IN THE LIGHT OF THE OUTCOME OF THE ORDER IN THE QUANTUM PR OCEEDINGS. WE HOLD AND DIRECT ACCORDINGLY. 9 IN THE RESULT BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 30 TH DAY OF MAR 2011. SD/- SD/- ( (( ( D MANMOHAN D MANMOHAN D MANMOHAN D MANMOHAN ) )) ) VICE PRESIDENT ( (( ( R K PANDA R K PANDA R K PANDA R K PANDA ) )) ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 30 TH MAR 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPOND ENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI