ITO, Rishikesh v. M/s. M.L. Creation, Rishikesh

ITA 932/DEL/2013 | 2009-2010
Pronouncement Date: 11-11-2014 | Result: Dismissed

Appeal Details

RSA Number 93220114 RSA 2013
Assessee PAN AAPFM5910L
Bench Delhi
Appeal Number ITA 932/DEL/2013
Duration Of Justice 1 year(s) 8 month(s) 27 day(s)
Appellant ITO, Rishikesh
Respondent M/s. M.L. Creation, Rishikesh
Appeal Type Income Tax Appeal
Pronouncement Date 11-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 11-11-2014
Date Of Final Hearing 27-08-2014
Next Hearing Date 27-08-2014
Assessment Year 2009-2010
Appeal Filed On 14-02-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SMT DIVA SINGH JUDICIAL MEMBER AND SH. PRAMOD KUMAR ACCOUNTANT MEMBER I.T.A .NO. - 932 /DE L/201 3 (ASSESSMENT YEAR - 200 9 - 1 0 ) ITO WARD - 1 RISHIKESH (APPELLANT) VS M/S M.L. CREATION A - 15 - 17 - 18 MINI INDUSTRIAL ESTATE RANIPOKHARI RISHIKESH PAN - AAPFM5910L (RESPONDENT) APPELLANT BY SH. SUNIL KR. SHARMA SR. DR RESPONDENT BY SH. R . K.GUPTA CA & SH.P.S.KASHYAP CA ORDER PER DIVA SINGH JM TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 03 . 12 .201 2 OF THE CIT(A) - I DEH RADUN PERTAINING TO 200 9 - 1 0 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: - 1. WHETHER LD. CIT( A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE A.O. WAS WRONG IN DENYING THE BENEFIT OF DEDUCTION U/S 80_IC TO THE ASSESSEE. 2. WHETHER THE LD. CIT(A) HAS ERRED IN ALLOWING THE ACTIVITIES OF THE ASSESSEE AS GENUINE WITHOUT APPRECIATING THE FACTS THAT M ANUFACTURING WAS NOT ACTUALLY CARRIED OUT BY THE ASSESSEE. 3. WHETHER THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.20 60 730/ - MADE ON THE GROUND OF DISALLOWANCE OF CLAIM UNDER SECTION 80 - IC OF THE IT ACT 1961. 4. THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 2 I.T.A .NO. - 932 /DEL/201 3 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE S RETURN FILED ELECTRONICALLY ON 30.09.2009 AFTER BEING PROCES SED U/S 143(1) WAS SUBJECTED TO SCRUTINY ASSESSMENT BY I SSUANCE OF NOTICE U/S 143(2) DATED 19.08.2010. 2.1. THE ASSESSEE IN THE YEAR UNDER CONSIDERATIO N CLAIMED THAT IT HA D STARTED MANUFACTURING OF GOLD ITEMS AT A - 15 17 & 18 MINI INDUSTRIAL ESTATE RANIPOKH ARI AND DISTRICT DE HRADUN. IN SUPPORT OF THE SAID CLAIM FORM NO - 10CCB WAS FILED CLAIMING THAT THE MANUFACTURING ACTIVITIES COMMENCED FROM 06.11.2008 AND DEDUCTION U/S 80IC ACCORDINGLY WAS CLAIMED FOR THE FIRST TIME. THE AO IN THE SCRUTINY PROCEEDINGS SHOW - CAUSED THE ASSESSEE ON 26.12.2011 ON THE FOLLOWIN G GROUNDS R EQUIRING THE ASSESSEE TO EXPLAIN THE ALLOWABILITY OF ITS CLAIM: - ANNEXURE TO NOTICE U/S 142(1) M/ S M.L.CREATIONS A.Y. 2009 - 10 . IT HAS BEEN NOTICED THAT THE BRANCH OFFICE AT DELHI SENT RAW MATERIAL (GOLD BAR) TO ITS HEAD OFFICE CUM FACTORY PREMISES AT RANIPOKHARI THROUGH RETAIL INVOICE/CASH MEMO / BILL WHICH HAS BEEN SHOWN SALE/TRANSFER AGAINST CENTRAL FORM 'F'. FURTHER IT HAS ALSO BEEN NOTICED THAT THE PURCHASE OF RAW MATERIAL AND S A LE (TRANSFER) O F FINISHED GOODS HAVE BEEN CHECKED. FOR EX AMPLE THE HEAD OFFICE RANIPOKHARI RE CEIVED 6 000 GMS. GOLD FOR RS.1 57 91147/ - ON 01.11.2011 FURTHER ON 7.11.2011 THE RANIPOKHARI FACTORY RECEIVED 4 000 GM. GOLD FOR RS.2 19 44 800/ - FURTHER ON 20.11.2011 IT RECEIVED 5 000 GMS. OF GOLD FOR RS.1 44 53 1 00 / - . AMONGST THESE DATES ONLY FINISHED GOODS OF 5 260.700 GMS. G OLD COSTING TO RS.3 26 81 111/ - HAVE BEEN SENT TO THE BRANCH OFFICE AT NEW DELHI. THIS SHOWS THAT THE QUANTITY OF FINISHED GOODS IS NOT IN COMMENSURATE WITH THE RAW MATERIAL DIS PATCH FROM THE BRANCH OFFICE NEW DELHI. THEREFORE IT MAY BE THAT THERE IS AN ARRANGEMENT TO D ISPATCH THE RAW MATERIAL ON HIGHER SIDE TO FACTORY PREMISES ON PAPER AND THEN THE DOCUMENTATION OF DISPATCH OF FINISHED GOODS FROM FACTORY TO ITS BRANCH OFFICE A T NEW DELHI HAS BEEN MADE. IN THE DETAILS OF LABOUR PAID IT HAS BEEN MENTIONED THAT THE FIRM HAVE ENGAGED ONLY TWO DESIGNERS FOR MANUFACTURING/DESIGNING OF THE ORNAMENTS. TOTAL SALES SHOWN BY YOU AT RS.1 52 94 575/ - AND A NET PROFIT OF RS.20 60 725/ - HAS BEEN DECLARED. THE MANUFACTURING ACTIVITIES HAVE BEEN STARTED BY THE FIRM FROM 6.11.2008. THE SALES SHOWN APPROXIMATELY IN FIVE MONTHS ARE QUITE EXCESSIVE KEEPING IN VIEW THE FACT THAT ONLY TWO DESIGNERS AS CLAIMED BY YOU CANNOT MAKE FINISHED ORNAMENTS IN SUCH A SHORT SPAN OF TIME. IT IS WORTHWHILE TO MENTION HERE THAT TO DESIGN AN GOLD ORNAMENT AMPLE TIME IS NEEDED AS ALL WORK IS MANUAL AND TIME CONSUMING. DURING THE COURSE OF INQUIRY IN RESPECT OF MANUFACTURING ACTIVITIES IT HAS ALSO NOTICED THAT A SALE INVOICE CUM/DELIVERY CHALAN DATED 10.12.2011 ISSUED BY THE FACTORY TO ITS BRANCH AT DELHI FOR GOLD JEWELLERY OF 3 304.600 3 I.T.A .NO. - 932 /DEL/201 3 GMS. FOR RS.91 86 788/ - THERE IS SIGNATURE OF SHRI HIMANSHU SHEKHAR RECEIVING THE GOODS WHEREAS IN THE CHALLAN IT HAS BE EN MENTIONED THAT 'GOODS DISPATCHED FOR BRANCH OFFICE BY HAND THROUGH MR. RAJ KUMAR WHO IS TRAVELLING BY TRAIN NO.1442 BETWEEN DOIWALA TO DELHI ON 10.12.2011'. SHRI HIMANSHU SHEKHAR IS ONE OF THE PARTNERS OF THE FIRM. THIS SHOWS THAT THE GOODS HAVE BEEN RECEIVED AND HANDED OVER ONLY ON PAPERS AND NOT ON ACTUAL BASIS. ANOTHER SALES INVOICE CUM DELIVERY CHALLAN DATED 16.12.2011 ISSUED BY THE FACTORY TO THE BRANCH OFFICE FOR GOLD JEWELLERY OF 4 220.120 GRM. AND 2 012.230 GRM. FOR RS.L 61 07 552/ - THER E IS SIGNATURE OF SHRI RAJ KUMAR BUT NO SIGNATURES ARE APPEARING AS OF RECEIVING PERSON. IN VIEW OF THE ABOVE FACTS AND KEEPING IN VIEW THE QUANTITY OF RAW MATERIAL SHOWN AS RECEIVED FROM BRANCH OFFICE TO HEAD OFFICE IN A SHORT SPAN OF TIME IT IS NOT POSSIBLE TO MANUFACTURE/DESIGN THE GOLD ORNAMENTS AS SHOWN BY THE FIRM IN ITS RETURN OF INCOME. PLEASE SHOW CAUSE AS TO WHY YOU HAVE NOT DONE ANY MANUFACTURING WORK AT THE FACTORY PREMISES BUT THROUGH THE OTHER AGENCY AND THROUGH VARIOUS PERSONS THEREFORE THERE REMAINS NO REASONS FOR GRANTING THE BENEFIT OF MANUFACTURING ACTIVITIES TO YO UR CONCERN BECAUSE THE WORK WHICH HAS NOT DONE BY YOU PRIMARILY DO NOT ENTITLE FOR CLAIMING DEDUCTION U/S 80IC OF THE INCOME TAX ACT 1961. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES DETAILED ABOVE THE ENTIRE DEDUCTION CLAIMED U/S 80 IC IS REQUI RED TO BE DISALLOWED.' 2.2. IN RESPONSE TO THE SAME THE ASSESSEE IS FOUND TO HAVE OFFERED EXPLANATION VIDE LETTER DATED 28.12.2011 . HOWEVER FOR THE FOLLOWING REASONING IT WAS NOT ACCEPTED BY THE AO: - THE CONTENTIONS OF THE ASSESSEE HAVE BEEN CONSIDERED CAREFULLY AND IT HAS BEEN NOTICED THAT THE DEPARTMENT HAS ONLY TEST CHECKED THE PROCESS MAINTENANCE OF RECORDS ACTUAL MANUFACTURING OF ARTICLES AT THE SITE ETC. IF THE INSTANCES OF THE CURRENT PERIOD HAS BEEN TAKEN INTO ACCOUNT IT MEANS THAT THE ASSESSEE DID THE SAME PRACTICE IN THE PAST ALSO. IT IS WORTHWHILE TO MENTION HERE THAT THE MANUFACTURING PROCESS HAS BEEN DONE ONLY FOR FIVE MONTH FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE PRACTICE ADOPTED BY AN ASSESSEE IN THE BEGINNING ALWAYS REMA IN SAME IN THE SUCCEEDING YEARS ALSO AND THE ASSESSEE CANNOT TAKE PLEA THAT THE EVIDENCES TAKEN WAS FOR THE CURRENT YEAR. THEREFORE THE PLEA OF THE ASSESSEE HAS NO FORCE. IN VIEW OF THESE FACTS AND AFTER CONSIDERING THE DISPROPORATION OF QUANTITY OF GOL D RECEIVED VIS - A - VIS SALES OF FINISHED GOODS IT IS NOT POSSIBLE TO MANUFACTURE THE ARTICLES SHOWN BY THE ASSESSEE. THEREFORE IT IS CONCLUDED THAT THE ASSESSEE FIRM HAD NOT MADE ANY MANUFACTURING ACTIVITIES AT THE FACTORY PREMISES AT A - 15 17 & 18 MINI I NDUSTRIAL ESTATE RANIPOKHARI DISTT. DEHRADUN DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE 4 I.T.A .NO. - 932 /DEL/201 3 THERE REMAINS NO REASONS FOR GRANTING THE BENEFIT OF MANUFACTURING ACTIVITIES IN THIS CASE. THE DEDUCTION CLAIMED U/ S 80 IC OF THE INCOME TAX ACT 19 61 AT RS.20 60 730 / - BY THE ASSESSEE IS REJECTED AND THE SAME IS TAXED ACCORDINGLY. 2.3 AS A RESULT THEREOF ADDITION OF RS. 20 60 730/ - WAS MADE BY HIM. 3. AGGRIEVED BY THIS THE ASSESSEE WENT IN APPEAL BEFORE THE CIT( A) WHEREIN AGAIN RELIANCE WAS PLACED UPON THE EXPLANATION OFFERED VIDE LETTER DATED 28.12.2011 FILED BEFORE THE AO . RELYING ON THE SAME IT WAS CONTENDED THAT ALL PURCHASES AND SALES ARE VERIFIABLE FROM REGULAR RECORDS PRODUCED BEFORE THE AO AND REASONS ASS IGNED FOR MAKING THE ADDITION WERE STATED TO B E CONTRARY TO FACTS AND ARGUMENTS ON RECORD. IT WAS CONTENDED THAT THE MANUFACTURING IS A CONTINUING PROCESS AND WHATEVER IS UNSOLD REMAINS IN THE STOCK ACCORDINGLY THE REASONING THAT RAW MATERIAL RECEIVED WA S MORE AND MANUFACTURING IS LESS WAS CONTENDED TO BE CONTRARY TO ACCEPTED FACTS WHERE ADMITTEDLY IT REMAINS AS UNFINISHED STOCK. SIMILARLY IN REGARD TO THE MAINTENANCE OF THE FINANCIAL RECORDS ETC. THE FOLLOWING SUBMISSIONS ADVANCED BEFORE THE AO W ERE AGA IN RELIED UPON BEFORE THE CIT(A) THESE ARE EXTRACTED FROM THE IMPUGNED ORDER HEREUNDER FOR READY REFERENCE : - 1.1.3. FURTHER THE FOLLOWING SUBMISSION WAS MADE IN APPEAL: ' .... THE ASSESSEE HAS BEEN MAINTAINING THE COMPLETE FINANCIAL RECORDS NECESSARY AND WHICH CAN BE MAINTAINED FOR RECORDING THE MANUFACTURING ACTIVITIES. THESE RECORDS INCLUDES THE FOLLOWINGS: - CASH BOOK . LEDGER . STOCK REGISTER OF RAW MATERIAL. STOCK REGISTER OF FINISHED GOODS . WORKSHOP IN CHARGE REGISTER . WORKSHOP KARIGAR REGISTER . INVOICE FOR RECEIPT OF GOLD AND RAW MATERIAL. SALE INVOICES FOR SALE OF GOODS . EXPENSES AND OTHER VOUCHERS . LABOUR ATTENDANCE REGISTER . WHENEVER ANY METAL IS REC EIVED IN THE UNIT WITHIN 48 HOURS A DECLARATION IN FORM F IS SUBMITTED WITH VAT AUTHORITIES AND QUARTERLY SALES TAX RETURN ARE FILED WITH VAT AUTHORITIES. EVEN ASSESSEE FIRM IS SUBJECT TO ANNUAL VAT AUDIT ALSO. 5 I.T.A .NO. - 932 /DEL/201 3 THE ABOVE REGISTERS MAINTAINS A COMPLETE RECORD OF RECEIPTS OF RAW MATERIAL ITS MOVEMENT FOR MANUFACTURING ITS SALE AND THE LEFTOVER STOCK OF RAW MATERIAL AS WELL AS FOR FINISHED GOODS. ALL THESE RECORDS WERE PRODUCED FOR YOUR KIND PERUSAL. THESE RECORD S SUFFICIENTLY PROVE THE MANUFACTURING ACTIVITY BEING CARRIED OUT AT THE PREMISES DURING THE RELEVANT PERIOD. THE LD. AO DULY EXAMINED ALL THESE RECORDS. NO DISCREPANCY HAS BEEN NOTICED. THE PURCHASES OF MATERIAL MANUFACTURING OF JEWELLERY AND THEREAFTE R MOVEMENT OF GOODS STANDS FULLY PROVED. THESE RECORDS ALSO PROVE THAT THE COMPLETE MANUFACTURING HAS BEEN DONE ONLY IN HOUSE AND BY THE EMPLOYED KARIGARS/DESIG NERS/STAFF OF THE ASSESSEE .... 3.1. IT WAS FURTHER CONTENDED THAT THE AO AND THE ITI PERSO NALLY VISITED THE FACTORY ON 19.12.2011 AND FIRSTLY THE FACTS RELATABLE TO AN EVENT WHICH IS OCCURRING IN 2012 - 13 ASSESSMENT YEAR CANNOT BE APPLIED IN THE ASSESSMENT YEAR WHICH IS THE YEAR UNDER CONSIDERATION ; SECONDLY THE MANNER IN WHICH THE DOCUMENTATION HAS BEEN RECORDED AND EXPLAINED HAS NOT BEEN UNDERSTOOD BY THE AO . IT WAS FURTHER SUBMITTED THAT ON THE DATE THE A O VISITED THE PREMISES THERE WERE 50 WORKERS ENGAGED IN MANUFACTURING AND THE AO ALSO ON THE S AID DATE R ECORDED THE STATEMENTS OF THE FOLLOWING WORKERS NAMELY S H . SANDIP TYAGI MADHAV NATH RAJ KUMAR AND GAUTAM ADHIKARI AND NOTHING ADVERSE TO THE ASSESSEE S CLAIM HAS BEEN RECORDED BY HIM AS THE AO HAS NOT MADE ANY REFERENCE TO THE STATEMENTS BEING RECORDED IN THE ASSESSMENT ORDER. REFERRING TO LETTER DATED 28.12.2011 IT WAS SUBMITTED THAT THE ASSESSEE HAD OFFERED TO PRODUCE THESE PERSONS ONCE AGAIN BEFORE THE AO IF SO REQUIRED AND SINCE THERE WAS NO COMMUNICATION FROM THE AO THE ASSESSEE S REPLY WA S PRESUMED TO HAVE BEEN ACCEPTED AS SUCH HE DID NOT FURTHER REFER TO THE SAME. THE PRESUMPTION OF THE AO THAT ALL THE RAW MATERIALS RECEIVED SHOULD IMMEDIATELY BE CONVERTED INTO FINISHED GOODS IT WAS SUBMITTED IS AN INCORRECT ASSUMPTION BASED ON NO FACTS. THE SE SUBMISSIONS EXTRACTED AT PAGES 2 - 4 OF THE IMPUGNED ORDER HAVE BEEN SUMMED UP BY THE CIT(A) IN THE FOLLOWING MANNER: - 1.1.3. IT IS NOT NECESSARY THAT THERE SHOULD BE A CORRESPONDENCE BETWEEN RAW - MATERIAL RECE IVED BY THE ASSESSEE AND FINISHED GOODS MANUFACTURED BY IT ON DAY - TO - DAY BASIS OR EVEN DURING A PARTICULAR PERIOD. ACCORDING TO THE ASSESSEE THE RAW MATERIAL AS WELL AS THE FINISHED GOODS WAS DULY ACCOUNTED FOR IN ITS BOOKS OF ACCOUNT BOTH IN TERMS OF Q UANTITY AND VALUE. THE A O HAS 6 I.T.A .NO. - 932 /DEL/201 3 NOT FOUND ANY DISCREPANCY IN THE BOOKS OF ACCOUNT. IF HE WANTED TO KNOW WHAT HAPPENED TO THE SURPLUS RAW - MATERIAL RECEIVED DURING ANY PARTICULAR PERIOD HE HAD ONLY TO HAVE A LOOK AT THE FIGURE OF CLOSING STOCK OF THE SAME AT THE END OF THAT PERIOD. IF THE QUANTITY OF GOODS MANUFACTURED BY THE ASSESSEE DURING THE PREVIOUS YEAR EXCEEDED THE GROSS QUANTITY OF RAW - MATERIAL BROUGHT FORWARD AS OPENING STOCK AND THAT RECEIVED BY IT DURING THE PREVIOUS YEAR A SUSPICION COULD ARISE AB OUT THE FACTUAL CORRECTNESS OF THE CLAIM OF MANUFACTURE. BUT IF THE LATTER EXCEEDED THE FORMER NO SUCH ADVERSE INFERENCE SHOULD NORMALLY BE DRAWN. BE THAT AS IT MAY IF THE A O FOUND ANY DISCREPANCY IN THE RAW MATERIAL - FINISHED GOODS EQUATION HE WAS RE QUIRED TO TAKE HIS ENQUIRY TO THE LOGICAL END. UNLESS THAT WERE DONE HIS ADVERSE INFERENCE ON THE BASIS OF LACK OF CORRESPONDENCE BETWEEN THE RAW MATERIAL RECEIVED AND THE GOODS MANUFACTURED DURING ANY PARTICULAR PERIOD IS MEANINGLESS PARTICULARLY CONSID ERING THE FACT THAT THE ASSESSEE HAD DULY ACCOUNTED FOR BOTH THE RAW MATERIAL AND THE FINISHED GOODS AND NO DISCREPANCY WAS FOUND IN THE BOOKS OF ACCOUNT. 3.2. THE ASSESSEE IS ALSO FOUND TO HAVE ASSAILED THE FINDING S OF THE AO WHO HAS DOUBTED THE SALE OF RS.1 52 29 475/ - ON THE REASONING THAT THE ASSESSEE ONLY HAD TWO DESIGNERS. I N REGARD TO THIS RELYING UPON THE EXPLANATION OFFERED BEFORE THE AO DATED 28.12.2011 IT WAS SUBMITTED THAT ALTHOUGH THE ASSESSEE HAD ONLY TWO DESIGNERS APART FROM THAT T HE ASSESSEE ALSO HAD SIX KARIGAR S AND THREE OTHER WORKERS AND NOT ONLY THE ST ATEMENT OF SH. SANDEEPT TYAGI M AHADEV NATH RAJ K UMAR & GAUTAM ADHIKARI SUPPORT THIS FACT BUT EVEN THE PAYMENT OF SALARY AND LABOUR PAYMENTS EVIDENCED BY THE LEDGERS AND ACCOUN TS FOR THE YEARS SUPPORT THE SAID CLAIM. IT WAS FURTHER SUBMITTED THAT THE MISCONCEPTION BASED ON THE FACT THAT THERE WERE ONLY TWO DESIGNERS WAS NOT SUSTAINABLE. IT WAS SUBMITTED THAT EVEN A KARIGAR IS A DESIGNER AND IN FACT A KARIGAR WITH A HIGH LEVEL OF EXPERTISE IS TERMED AS A DESIGNER . FURTHER THE DESIGN S IT WAS SUBMITTED ARE LARGELY COPIED FROM MAGAZINES BOOKS AND EVEN OTHER WISE A DESIGN ONCE MADE CAN BE REPLICATED AND VARIED AND THE BUSINESS CAN EXIST WITH ONLY ONE DESIGNER ALSO. THE ADVER SE IN FERENCE S DRAWN BY THE AO ON THESE FACTS WAS ASSAILED. 3.3. ADDRESSING THE PROCESS OF DISPATCH OF FINISHED GOODS QUESTIONED BY THE AO IT WAS SUBMITTED THAT APART FROM THE ARGUMENTS THAT THIS EVIDENCE DID NOT PERTAIN TO 7 I.T.A .NO. - 932 /DEL/201 3 2009 - 10 ASSESSMENT YEAR AND AT BEST PERTAINED TO 2012 - 13 ASSESSMENT YEAR. IT WAS ALSO SUBMITTED THAT THE FACT REMAINS THAT IN THE YEAR UNDER CONSIDERATION THE FINISHED GOODS WERE SOLD FROM THE FACTORY ITSELF AS SUCH THE REASONING OF THE AO ON FACTS WAS STATED TO BE INCORRECT. APART FROM THAT IT WAS SUBMITTED THAT EVEN OTHERWISE THE SYSTEM ADOPTED HAS NOT BEEN UNDERSTOOD BY THE AO AS EVERY DISPATCH HAS THREE COPIES OF SALE INVOICE - CUM - DELIVERY CHALLAN S AND TRIPLICATE COPY IS KEPT IN THE FACTORY AND ON THE DUPLICATE COPY ON DELIVERY O F GOODS AT DELHI THE RECIPIENT ACKNOWLEDGES THE RECEIPT OF GOODS BY PUTTING HIS INITIALS ON THE DUPLICATE COPY WHICH IS RETURNED TO THE SAID PERSON. THE ORIGINAL COPY IS RETAINED AT BRANCH OFFICE FOR THEIR RECORDS AND THE DUPLICATE COPY IS RETURNED BACK TO THE FACTORY WITH THE INITI ALS OF THE RECIPIENT AND THE TRIPLICATE COPY IS ALSO RETAINED IN THE FACTORY FOR RECORDS. THE ACKNOWLEDGEMENT BY SH. HIMANSHU ON THE DUPLICATE COPIES IT WAS SUBMITTED ACCORDINGLY STOOD EXPLAINED. 4. CONSIDERING THE SUBMISSIO NS THE CIT(A ) IN PARA 1.3.2 CONCLUDES THAT THE DISCREPANCY IN THE DISPATCH DOCUMENTS STOOD DULY EXPLAINED. THE SAME IS EXTRACTED FROM THE ORDER HEREUNDER FOR READY REFERENCE : - 1.3.2. THE APPARENT DISCREPANCY IN THE DISPATCH DOCUMENTS HAS BEEN DULY EXPLAINED BY THE ASSESSEE WITH REFERENCE TO THE DETAILS AND DOCUMENTS RELATING TO ITS SYSTEM OF DISPATCH AND DELIVERY OF FINISHED GOODS. AS MENTIONED BY THE ASSESSEE THREE COPIES OF THE DI SPATCH MEMO WERE MADE. TWO WERE GIVEN TO THE PERSON CARRYING THE GOODS. THE FIRST COPY WAS RETAINED AT THE DELIVERY POINT; THE SECOND COPY DULY ACKNOWLEDGED FOR RECEIPT OF THE GOODS WAS RETURNED TO THE ASSESSEE FOR ITS RECORDS. IF SOME GOODS HAD BEEN DISPATCHED THE ASSESSEE WOULD HAVE ONLY THE THIRD COPY OF THE DISPATCH MEMO; THE SECOND COPY WOULD COME BACK TO IT ONLY AFTER DELIVERY OF THE GOODS. THE GOODS SENT ON 10.12.2011 HAD BEEN DELIVERED. HENCE THE SECOND COPY CONTAINING THE SIGNATURE OF THE PERSON RECEIVING THE SAME WAS FOUND WITH THE ASSESSEE. THE GOODS SENT ON 18.12.2011 (THE DATE WRONGLY WRITTEN AS 16.12.2011 BY THE AO) HAD BEEN DELIVERED BUT THE RECEIPTED COPY HAD NOT COME BACK TO THE ASSESSEE TILL THE TIME THE AO VISITED ITS PREMISES ON 19.12.2011. HENCE ONLY THE THIRD COPY WITHOUT THE SIGNATURE OF THE RECEIVING PERSON WAS FOUND WITH IT THEN. THESE FACTS ALONG WITH THE EXPLANATION AND COPIES OF THE RELEVANT DOCUMENTS WERE SUBMITTED BY THE ASSESSEE BEFORE THE AO BUT THE LATTER DI D NOT GIVE DUE CREDENCE TO IT. 8 I.T.A .NO. - 932 /DEL/201 3 4. 1 SIMILARLY ON THE ISSUES OF DISPATCH OF EXCESS RAW - MATERIALS AND TWO DESIGNERS THE CIT(A) CAME TO THE FOLLOWING CONCLUSION: - 1.4. IF THE QUANTITY OF RAW MATERIAL RECEIVED EXCEEDED THE QUANTITY OF FINISHED GOODS IT IS NOT UNDERSTOOD HOW IT CAN BE SAID THAT IT WAS NOT POSSIBLE TO MANUFACTURE THE ARTICLES. SIMILARLY THE OBSERVATIONS THAT THERE WERE ONLY 2 DESIGNERS AND THERE WAS SOME DISCREPANCY IN THE DISPATCH OF THE ASSESSEE DOES NOT LEAD TO THE CONCLUSION THAT THE GOODS CLAIMED TO HAVE BEEN MANUFACTURED BY THE ASSESSEE COULD NOT IN FACT BE MANUFACTURED BUY IT. MOREOVER THESE APPARENT DISCREPANCIES HAVE BEEN DULY EXPLAINED BY THE ASSESSEE. HENCE THE CONCLUSION DRAWN BY THE AO ON THE BASIS OF THESE OBSERVATIONS IS NOT SUSTAINABLE. 4.2 . CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE THE CIT(A) CAME TO THE FOLLOWING CONCLUSION ON THE ACTION OF THE AO IN RELYING ON THE FACTS AS NOTED ON HIS VISIT ON 19.12.2 011 FOR THE YEAR UNDER CONSIDERATION : - 1.5.3. IT CANNOT BE SAID AS A RULE THAT THE FINDINGS OF A PARTICULAR PERIOD CANNOT BE APPLIED TO THE EARLIER PERIOD. IT CAN BE DONE PROVIDED ADEQUATE EVIDENCE IS BROUGHT ON RECORD TO SHOW THA T SUCH FINDINGS ARE ACTUALLY APPLICABLE TO THE PAST. FOR EXAMPLE IF THE ASSESSEE DID NOT HAVE THE NECESSARY WHEREWITHAL FOR MANUFACTURING THE GOODS OR WAS FOUND NOT BE MANUFACTURING THE GOODS AT THE TIME OF INSPECTION AND THE AVAILABLE INFORMATION SUGGES TS THAT THE SAME STATE OF AFFAIRS PREVAILED IN THE PAST IT COULD BE REASONABLY BELIEVED THAT GOODS HAD NOT BEEN MANUFACTURED IN THE PAST ALSO. THE OBSERVATIONS RELATING TO EQUATION OF RAW MATERIAL WITH FINISHED GOODS AND TO FINISHED GOODS DISPATCH MEMOS DISCUSSED ABOVE DO NOT FALL IN THIS CATEGORY. IN OTHER WORDS EVEN IF THESE DISCREPANCIES ACTUALLY EXISTED AT THE TIME OF INSPECTION IT WOULD BE DIFFICULT TO SAY THAT SIMILAR DISCREPANCIES WOULD HAVE EXISTED IN THE PAST. NORMALLY SUCH DISCREPANCY IN THE PAST COULD NOT BE READILY INFERRED; IT HAD TO BE DEMONSTRATED WITH REFERENCE TO THE CONTEMPORARY DOCUMENTATION. THE ONLY OBSERVATION RELATING TO THE PREVIOUS YEAR UNDER CONSIDERATION IS ALLEGEDLY SMALL NUMBER OF KARIGARS. THAT ASPECT OF THE MATTER HAS ALS O BEEN DULY EXPLAINED BY THE ASSESSEE. THIS SHOWS THAT THE OBSERVATIONS OF THE AO ARE NOT SUCH FROM WHICH IT COULD BE READILY BE INFERRED THAT THE ASSESSEE DID NOT MANUFACTURE JEWELLERY AS CLAIMED BY IT DURING THE PREVIOUS YEAR. MOREOVER THE AO'S CONCER NS HAVE BEEN ADDRESSED BY THE ASSESSEE B Y WAY OF SUITABLE EXPLANATIONS. 5 . THE ASSESSEE IS ALSO FOU ND TO HAVE SUPPORTED ITS CLAIM BEFORE THE CIT(A) ON THE FOLLOWING FACTS : - 1.7. THE ASSESSEE HAS SUBMITTED THAT THE AO EXAMINED ITS BOOKS OF ACCOUNT AND ALSO INSPECTED ITS FACTORY PREMISES. NOTHING AMISS WAS NOTED BY HIM. THE APPARENTLY ADVERSE OBSERVATIONS WHICH WERE MADE BY HIM ON 27.12.2011 9 I.T.A .NO. - 932 /DEL/201 3 HAVE ALSO BEEN EXPLAINED AWAY SATISFACTORILY BY THE A SSESSEE. IN THIS CONNECTION THE FOLLOWING SUBMISSION HAS ALSO BEEN MADE: 'THE VAT ASSESSMENT OF A.Y 2009 - 10 WITH RESPECT TO F.Y 2008 - 09 FOR UTTARAKHAND SALE HAS BEEN FRAMED ON 18.08.2010 (PAGE NO. 58 - 60) BY DEPUTY COMMISSIONER (TRADE TAX) IN WHICH IT HAS BEEN MENTIONED THAT A SURVEY ON 01.05.2009 WAS CARRIED OUT IN THE UNIT AND THERE WERE FOUND 18 KARIGARS WORKING. IT HAS ALSO BEEN MENTIONED IN THE ORDER THAT THE ASSESSEE HAS USED GOLD AS A RAW MATERIAL FOR MANUFACTURING OF JEWELLERY AND FROM SELF MANUFAC TURED JEWELLERY SALE HAS BEEN MADE. THE FINDING OF ANOTHER GOVERNMENT OFFICER I.E. DEPUTY COMMISSIONER (TRADE TAX) AUTHORITY PROVES THE MANUFACTURING AND SALE FROM RANIPOKHARI UNIT'. IN SUPPORT OF ITS CONTENTION THAT IT HAS ACTUALLY BEING CARRYING OUT TH E MANUFACTURING ACTIVITY FROM ITS FACTORY AT RANIPOKHRI IT REFERRED TO THE FOLLOWING FACTS: 'THE FACTORY IS IN THE NOTIFIED INDUSTRIAL AREA FOR WHICH EVIDENCE AND NOTIFICATION OF CBDT TO THIS EFFECT HAVE ALREADY BEEN FILED THE FACTORY PREMISES ARE OWNED BY THE ASSESSEE FOR WHOM THE COPY OF LEASE DEED HAS ALREADY BEEN FILED. THE ASSESSEE HAS BEEN REGISTERED AS AN INDUSTRIAL UNIT WITH DISTRICT INDUSTRY CENTRE DEHRADUN. COPY OF REGISTRATION CERTIFICATE HAS ALREADY BEEN FILED. VAT REGISTRATION CERTIFICATE HAS ALSO BEEN FILED. THE ASSESSEE IS REGISTERED WITH EPF. REGISTRATION CERTIFICATE HAS ALREADY BEEN FILED. COPY OF APPROVED MAP OF UNIT HAS ALREADY BEEN FILED. THE ELECTRICITY CONNECTION HAS BEEN INSTALLED FOR WHICH CERTIFI CATE FOR ELECTRICITY LOAD SANCTION HAS BEEN FILED POLLUTION CERTIFICATE WHICH IS MANDATORY HAS ALSO BEEN FILED. COPIES OF ALL MACHINERY PURCHASED BILLS USED FOR MANUFACTURING HAS BEEN ALREADY FILED. THE ACCOUNTS HAVE BEEN AUDITED AND AUDIT REPORT IN FOR M 10 CCB AS REQUIRED FOR CLAIM U/S. 80 IC ALSO ALREADY STANDS FILED. COPIES OF THE RELEVANT DOCUMENTS WERE CLAIMED TO HAVE BEEN FURNISHED BEFORE THE AO'. 5.1 . CONSIDERING THESE SUBMISSIONS AND FACTS THE CIT( A) CAME TO THE FOLLOWING CONCLUSION : - 1.8. T HE FOREGOING DISCUSSION SHOWS CLEARLY THAT THE AO ON THE BASIS OF INCOHERENT AND WEAK GROUNDS OF SUSPICION AGAINST THE ASSESSEE DREW THE CONCLUSION THAT IT WAS NOT MANUFACTURING ANY JEWELLERY AT ITS FACTORY PREMISES SITUATED IN UTTARAKHAND. THE ASSESS EE AT A VERY SHORT NOTICE FURNISHED COMPREHENSIVE REPLY TO EACH OF THE POINTS RAISED BY HIM. THE EXPLANATION WAS NOT CONSIDERED PROPERLY. IT IS CORRECT THAT A NUMBER OF ASSESSES ARE BELIEVED TO BE ABUSING THE INCENTIVE PROVISION AND CLAIMING THE DEDUCTI ON WITHOUT 10 I.T.A .NO. - 932 /DEL/201 3 SATISFYING THE CONDITIONS PRESCRIBED FOR THE SAME. THE AO MAY BE JUSTIFIED IN APPROACHING WITH SUSPICION EVERY CLAIM OF SUCH DEDUCTION. BUT IF HE IS NOT ABLE TO FIND ANYTHING REALLY ADVERSE AGAINST AN ASSESSEE IT WOULD BE APPROPRIATE TO ACCEPT THE CLAIM GRACEFULLY SUCH DRASTIC CONCLUSION ON THE BASIS OF SUCH WEAK EVIDENCE DOES NOT HELP THE CAUSE OF THE REVENUE. IN VIEW OF THE FOREGOING DISCUSSION IT IS HELD THAT THE AO WAS WRONG IN DENYING THE BENEFIT OF DEDUCTION U/S 80IC TO THE ASSESSEE. H E IS DIRECTED TO ALLOW THE SAME AND RE - COMPUTE THAT TOTAL INCOME ACCORDINGLY. IN THE RESULT THE APPEAL IS ALLOWED. 6. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7 . LD. SR. DR PLACED HEAVY RELIANCE UPON THE ASSESSMENT ORDER ON THE BASIS OF WHICH IT WAS HIS CONTENTION THAT THE ARGUMENTS OF THE ASSESSEE HAVE BEEN ACCEPTED BY THE CIT(A) WITHOUT ANY EVIDENCE. HEAVY RELIANCE WAS PLACED UPON THE SHOW - CAUSE NOTICE EXTRACTED IN THE ASSESSMENT ORDER . FOR THE RECORD IT HAS ALREADY BEEN REPRODUCED IN THE EARLIER PART OF THIS ORDER. IT WAS FURTHER SUBMITTED THAT THE ARGUMENTS OF THE ASSESSEE WHICH HA V E BEEN ACCEPTED BY THE CIT(A) NAMELY THAT FACTS RELATABLE TO 2012 - 13 ASSESSMENT YEAR HAD BEEN WRONGLY APPLIED TO 2009 - 10 ASSESSMENT YEAR HAS BEEN BLINDLY ACCEPTED IGNORING THE FACT THAT THERE IS NO REASON ON RECORD TO PRESUME THAT THE ASSESSEE IN THE EARLIER YEARS FUNCTIONED DIFFERENTLY. THE MODUS OPERINDI OF THE ASSESSEE S BUSINESS I N THE FIRST YEAR IS CON TINUED IN THE SUBSEQUENT YEARS. IT WAS HIS SUBMISSION THAT ON FACTS IT IS THE CIT(A) HIMSELF WHO HAS CONCLUDED THE ISSUE BASED ON NO EVIDENCE AND MERELY RELYING ON THE STATEMENT OF THE ASSESSEE . SPECIFIC ATTENTION WAS INVITED TO THE DISCUSSION MADE IN THE ASSESSMENT YEAR ON THE LETTER DATED 28.12.2011 RELIED UPON BEFORE THE CIT(A). THE SAME IS REPRODUCED HEREUNDER FOR R E A D Y - R E F E R E N C E : - THE ASSESSEE S REPRESENTATIVE ATTENDED THE PROCEEDINGS O N 28.12.2011 AND FURNISHED A WRITTEN REPLY. IN THE WRITTEN REPLY IN ADDITION TO MENTIONING BASIC CONDITIONS TO CLAIM DEDUCTION U/S 80IC FULFILLMENT OF REQUIREMENT OF DEDUCTION U/S 80IC THE ASSESSEE STRESSED UPON THE FACTS THAT THE EXAMPLES TAKEN BY TH E DEPARTMENT RELATES TO THE CURRENT FINANCIAL YEAR AND THE DOCUMENTS RELATED TO PURCHASE AND SALE OF GOODS ARE SELECTIVE AND THESE INCOMPLETE DETAILS OF BROKEN PERIOD CANNOT LEAD ANYWHERE. WITH REGARD TO THE DESIGNER (KARIGAR) IT HAS BEEN STATED THAT DUR ING THE PERIOD UNDER 11 I.T.A .NO. - 932 /DEL/201 3 CONSIDERATION THERE WERE EIGHT KARIGARS WHICH INCLUDED TWO PERSONS AS DESIGNER CUM KARIGAR AND REST 6 AS KARIGARS. IT HAS FURTHER STATED THAT APART FROM THIS THERE WERE 3 STAFF MEMBERS AND ALL THREE STAFF MEMBERS ARE AS ON DATE ALSO E MPLOYED. FOR THIS THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE. WITH REGARD TO DISPROPORTIONATE QUANTITY OF GOLD RECEIVED VIS - - VIS SALES IT HAS BEEN STATED THAT THE SAID INFERENCE HAS BEEN DRAWN ON THE BASIS OF BILLS WHICH RELATES TO F.Y. 201 1 - 12 AND THESE EVIDENCES ARE ABSOLUTELY IRRELEVANT FOR TAKING ANY VIEW FOR A.Y. 2009 - 10. 7.1 ACCORDINGLY IT WAS HIS PRAYER THAT THE ADDITION MADE BY THE AO MAY BE SUSTAINED. 8. LD. AR ON THE OTHER HAND HEAVILY RELIED UPON THE IMPUGNED ORDER . ATTENTION WAS INVITED TO THE FACTS THAT THE BOOK S OF ACCOUNT OF THE ASSESSEE HAD NOT BEEN REJECTED. OUR ATTENTION WAS ALSO INVITED TO PAGES 42 - 46 OF THE PAPER BOOK FILED WHICH CONTAINED THE COPY OF THE BALANCE SHEET ALONGWITH ANNEXURES SPECIFIC PAGE 43 OF THE SAME WAS REFERRED TO SO AS TO POINT OUT THAT THE ASSESSEE HAS CLAIMED THE PAYMENT OF SALARY OF RS. 1 17 676/ - AND NO DISALLOWANCE IN THE SAME HAS BEEN MADE. THE EXPLANATION OF THE ASSESSEE CONSISTENTLY MADE BEFORE THE AO AND THE CIT(A) IN REGARD TO MOVEMENT OF STOCK AND THE FACT THAT ALL THE RAW - MATERIAL WAS NOT CONVERTED INTO FINISHED GOODS AND SOME OF IT REMAINED AS UNFINISHED GOODS DULY REFLECTED IN THE VARIOUS REGISTERS HAVE DULY BEEN IGNORED BY THE AO WHO DESPITE BEING OFFERED THE DETAILED EXPLANATION THAT TOO WITHIN TWO DAYS WHERE THE MANNER IN WHICH THE SHOW CAUSE NOTICE WAS ISSUED IN THE LAST FEW DAYS WHICH WAS REPLIED WITHIN TWO DAYS BY THE ASSESSEE WOULD SHOW HOW THE PROCEEDINGS HAVE TAKEN PLACE DURING THE ASSESSMENT . I T WAS REITERATED THAT THE SHOW CAUSE NOTICE IS DATED 2 6.12.201 2 WHICH HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER ITSELF AND HAS BEEN REPLIED TO BY THE ASSESSEE ON 2 8 .12 .2011 WITHIN TWO DAYS BRINGING TO THE NOTICE OF THE AO THAT ALL THE REQUIREMENTS FOR MAKING THE ASSESS EE ELIGIBLE FOR DEDUCTION U/S 80IC WERE FULLY MET AS PER EVIDENCE AVAILABLE ON RECORD . THIS 12 I.T.A .NO. - 932 /DEL/201 3 EVIDENCE IT WAS ARGUED HAS NOT BEEN DOUBTED BY THE AO . THE SAME IS REPRODUCED HEREUNDER FOR READY - REFERENCE: - 1. THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IC WHI CH IS QUITE EVIDENT FROM THE FOLLOWING FACTS AND EVIDENCE: - THE FACTORY IS IN THE NOTIFIED INDUSTRIAL AREA FOR WHICH EVIDENCE AND NOTIFICATION OF CBDT TO THIS EFFECT HAVE ALREADY BEEN FILED. THE FACTORY PREMISES IS OWNED BY THE ASSESSEE FOR WHICH THE COPY OF LEASE DEED HAS ALREADY BEEN FILED. THE ASSESSEE HAS BEEN REGISTERED AS AN INDUSTRIAL UNIT WITH DISTT. INDUSTRY CENTRE DEHRADUN. COPY OF REGISTRATION CERTIFICATE HAS ALREADY BEEN FILED. VAT REGN. CERTIFICATE HAS ALSO BEEN FILED. THE ASSESSEE IS REGISTERED WITH EPF REGN CERTIFICATE HAS ALREADY BEEN FILED. COPY OF APPROVED MAP OF UNIT HAS ALREADY BEEN FILED. THE ELECTRICITY CONNECTION HAS BEEN INSTALLED FOR WHICH HAS BEEN FILED. POLLUTION CERTIFICATE WHICH IS MANDATORY HAS ALSO BEEN FILED. 8.1 SPECIFIC ATTENTION WAS INVITED TO THE FACT THAT IN THE YEAR UNDER CONSIDERATION THE GOODS WERE SOLD FROM THE FACTORY ITSELF AND THERE WERE NO GOODS DISPATCHED FOR SALE EITHER TO DELHI OR OTHERWISE . A CCORDINGLY IT WAS SUBMITTED THAT THE FACTS W RONGLY UNDERSTOOD DURING THE FACTORY VISIT ON 19.12.2011 EVEN OTHERWISE COULD NOT APPLY TO THE YEAR UNDER CONSIDERATION. THESE FACTS IT WAS POINTED OUT ARE FOUND RECORDED IN PAGE 7 OF THE PAPER BOOK (INTERNAL PAGE - 5) AND WERE ALSO SUBMITTED BEFORE THE AO . THE RELEVANT EXTRACT IS REPRODUCED HEREUNDER : - TWO WITHOUT PREJUDICE IN A.Y.2009 - 2010 THE MANUFACTURED GOODS WERE SOLD FROM FACTORY ITSELF. THERE WAS ONLY ONE SALE FROM BRANCH OFFICE AT THAT TIME THAT TOO OF JEWELLERY PURCHASED FROM DELHI. NO GOODS W ERE T.F.D EITHER TO DELHI OR ELSEWHERE. THUS THE INSTANCES OF TRANSFERS TAKEN BY YOU ARE AT ALL NOT RELEVANT FOR THE YEAR UNDER CONSIDERATION./ THUS THESE DOCUMENTS CANNOT BE THE BASIS FOR TAKING ANY VIEW FOR A.Y. 2009 - 2010. 8.2 IT WAS POINTED OUT TH AT ON THE DATE OF THE VISIT THEY WERE 50 KARIGAR S SEEN BY THE AO WHO TOOK PHOTOCOPIES AND WAS SATISFIED WITH THE MANUFACTURING PROCESS. SIMILARLY THE FACT THAT THE ASSESSEE S BUSINESS COULD HAVE CONTINUED WITH ONLY ONE DESIGN ER LET ALONE 2 DESIGN ERS AS L ARGELY THE DESIGNS ARE COPIED FROM MAGAZINES. 13 I.T.A .NO. - 932 /DEL/201 3 THE SE SUBMISSIONS ARE FOUND TO HAVE BEEN MADE BEFORE THE AO ALSO AND ARE AVAILABLE AT PAPER BOOK PAGE - 6 (INTERNAL PAGE - 4) . LD. AR PLACED RELIANCE THEREON ALSO : - TWO FOR DESIGNING 2 PERSONS ARE MORE THEN SUFFICIENT FOR THE BUSINESS OF THE ASSESSEE. MOST OF THE DESIGNS ARE AVAILABLE IN THE BOOKS MAGAZINES WEBSITES AND A LARGE NO. OF DESIGNS ARE COMMONLY USED DESIGNS FOR WHICH NO SPECIFIC DESIGNING IS NEEDED. APART FROM THIS AN ARTICLE DESIGNED IS PRODU CED IN LARGE NO OF QUANTITIES. FURTHER ONE DESIGN PRODUCED CAN BE MANUFACTURED BY MAKING A SLIGHT CHANGE FOR GIVING THE SHAPE OF A NEW DESIGN. EVEN ONE DESIGNER MAY BE SUFFICIENT AND EVEN WITHOUT DESIGNER ALSO THIS ACTIVITY CAN BE CARRIED OUT AS IN FAC T ALL KARIGARS ARE DESIGNERS TO A GREAT EXTENT. THUS THIS REASON IS ABSOLUTELY IRRELEVANT REASON AND NON - EXISTENT REASON FOR DECIDING THE ISSUE OF CLAIM U/S 80IC. THREE IT IS TO BE ADDED THAT IT WAS THE FIRST YEAR OF THE BUSINESS. IT WAS STARTED IN N OV. 2008. THEREFORE IN THE BEGINNING THE WORK WAS STARTED WITH 8 KARIGARS. AS ON DATE THERE ARE ABOUT 50 KARIGARS. IT IS TO BE SUBMITTED THAT YOUR GOODSELF MADE A PERSONAL SURPRISE VISIT TO THE FACTORY ON 19.12.2011 ALONGWITH YOUR ITI AND TOOK A COMPLE TE ROUND OF THE PREMISES ALSO TOOK THE PHOTOGRAPHS AND WAS FULLY SATISFIED THAT THE MANUFACTURING PROCESS HAS BEEN GOING ON FULL SWING. HAD IT NOT BEEN SO YOUR GOODSELF WOULD HAD DEFINITELY RAISED AS QUERY BASED UPON YOUR VISIT TO THE FACTORY ON 19.12.2 011. 8.3 THE LD. AR FURTHER REFERRING TO THE EXPLANATION OFFERED BEFORE THE AO AND THE CIT(A) TO SHOW THE MANNER IN WHICH RECORDS WERE MAINTAINED IN REGARD TO DISPATCH NOTICE D BY TH E AO ON HIS VISIT ON 19.12.2011. THESE IT WAS SUBMITTED THOUGH NOT APPL ICABLE TO THE FACTS OF THE PRESENT CASE WERE EVEN OTHERWISE WR ONGLY UNDERSTOOD BY THE AO . THE EXPLANATION QUA THE SALE INVOICE CUM DELIVERY CHALLAN WAS REITERATED AGAIN AT GREAT LENGTH . IT WAS FURTHER SUBMITTED THAT THERE IS NO DIS PUTE THAT AT THE RELEVANT POINT OF TIME THERE WERE TWO DESIGNERS AND 6 KARIGARS AND THREE WORKERS CONSIDERING THE FACT THAT THERE ARE AT LEAST TWENTY FIVE WORKING DAYS IN EACH MONTH AND DURING THE FIVE MONTHS AFTER THE COMMENCEMENT OF THE BUSINESS IN THE F INANCIAL YEAR THE MANUFACTURING WAS NOT EXCESSIVE. THE ONUS PLACED UPON THE ASSESSEE TO JUSTIFY ITS CLAIM IT WAS SUBMITTED HAD BEEN FULLY DISCHARGED. 14 I.T.A .NO. - 932 /DEL/201 3 9 . I N REPLY THE LD. SR. DR CONTENDED THAT THE ASSESSEE AS PER RECORD HAD ONLY TWO DESIGNERS AND 6 KARIGARS AS SUCH THESE CALCULATIONS SHOULD BE MADE BASED ON THESE FACT S . 10. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION OF THE ENTIRE FACTUAL MATRIX OF THE CASE W E ARE OF THE VIEW THAT IN THE PECUL IAR FACTS AND CIRCUMSTANCES OF THE CASE THE REVENUE HAS FAILED TO DISLODGE THE FINDING ARRIVED AT IN THE IMPUGNED ORDER. WE HAVE TAKEN OURSELVES THROUGH THE ASSESSMENT ORDER AND THE PLEADINGS OF THE LD. SR. DR AND ON CONSIDERATION OF THE SAME WE FIND THA T THE AO ON FACTS HAS PROCEEDED TO MAKE THE ADDITION I NCORRECTLY. NONE OF THE RELEVANT FACTS HAVE BEEN ASSAILED BY WAY OF ANY EVIDENCE NAMELY THE OCCASION TO DISPATCH THE GOODS TO DELHI DID NOT ARISE BECAUSE SALES WERE MADE LOCALLY APART FROM ONE S ALE IN D ELHI WHEREIN ALSO PROCUREMENT WAS MADE LOCALLY. SIMILARLY THE BELIEF THAT THE ASSESSEE N ECESSARILY NEEDED MORE THAN 2 DESIGNERS IS BASED ON NO FACT AND THE BELIEF THAT 6 KARIGARS COULD NOT SUPPLEMENT AS DESIGNERS CAPABLE OF REPLICATING A DESIGN OR COPYING DESIGNS FROM MAGAZINES ETC. IS ALSO BASED ON NO FACT. THE BELIEF THAT ALL RAW MATERIAL DISPATCHED NECESSARILY MUST BE CONVERTED WITHIN A FINANCIAL YEAR INTO FINISHED GOODS IS BASED AGAIN ONLY ON PERSONAL WHIMS AND ON NO FACTS AND WAS CONT RARY TO THE ACCEPTED FUNCTIONING OF HOW GOING CONCERNS EXIST . THE FACT THAT PART OF THE RAW MATERIAL STOOD DISCLOSED AS UNFINISHED GOODS DULY REFLECTED IN THE BOOKS OF ACCOUNTS STAND UNASSAILED ON RECORD. ALL OTHER RELATABLE AND RELEVANT EVIDENCES RELIED U PON BY THE ASSESSEE STAND UNASSAILED ON RECORD. IN THE AFOREMENTIONED PECULIAR FACTS AND CIRCUMSTANCES WE FIND NO GOOD REASON TO INTERFERE WITH THE FINDING ARRIVED AT IN THE IMPUGNED ORDER. BEING SATISFIED BY THE SAME WE REJECT THE DEPARTMENTAL GROUN DS. THE IMPUGNED ORDER IS ACCORDINGLY UPHELD. 15 I.T.A .NO. - 932 /DEL/201 3 11. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 1 T H OF N O V E M B E R 2014 . S D / - S D / - ( PRAMOD KUMAR ) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 1 /1 1 /2014 *AMIT KUMAR/SUBODH KUMAR COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI