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TMI Blog2012 (3) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, the ld. CIT(A) is right in deleting the addition made u/s 145(3) at Rs.2,10,97,492/- by ignoring the fact that invoking of provisions of Section 145(3) were validly invoked as the assessee did not maintain inventory of opening and closing stock without which it is not possible to determine the correct income of the assessee for the year under consideration. 2. Whether on the facts and circumstances of the case, the ld. CIT(A) is right in holding that deduction u/s 80IB amounting toRs.22,95,197/- in respect of new unit was admissible notwithstanding that the conditions laid down u/s 80IB are not satisfied and no deduction has been allowed in the assessment year 2003-04 ? 3. It is prayed that the order of ld. CIT(A) be set aside and that of the AO be restored. 4. The appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off . 3. In the course of present appellate proceedings, it was stated by the ld. 'AR' and ld. 'DR' that the issues in question are covered by the decision of the Hon'ble ITAT in assessee's own case, as decided in ITA No. 537/Chd/2009, assessment year 2006-07, dated 24.06.2009. 4. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd my predecessor had deleted the addition vide his order in Appeal No.59/AMB/08-09 dated 11.03.2009. Since no new facts have been brought on record by the AO, respectfully following the Hon'ble ITAT order for the assessment year 2003-04, the addition of Rs.2,10,97,492/- made by the AO is ordered to be deleted. This ground of appeal is allowed. 5. In Ground No. 1 2, both the parties stated that the issues are covered by the decision of the Hon'ble ITAT, Chandigarh in assessee's own case in ITA No. 537/Chd/2009, assessment year 2006-07, dated 24.06.2009. A perusal of the said decision in assessee's own case, wherein another order in assessee's own case for the assessment year 2004-05 and 2005-06 (ITA No. 1049 1050/Chd/2008) has been fol lowed, covers both the issues raised by the revenue in the grounds of appeal. The relevant part of the said decision is reproduced hereunder : These appeals are filed by the Revenue against the order of the learned CIT(A) dated 22.9.2008 on the ground whether the learned CIT(A) was right in holding that deduction under section 80 IB amounting to Rs. 6,41,175/- and Rs.16,88,816/- respectively in respect of new unit was admissible notwithstand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 2003-04, allowed the claim of the assessee, therefore, we are reproducing herewith the relevant portion of the aforesaid order:- 2. The appellant is a partnership firm which is engaged in the business of manufacturing electric motors, electric fans and sales thereof. For the assessment year under consideration it filed a return of income declaring an income of Rs.86,21,400/- which included a claim of deduction under section 80IB of the Income Tax Act,1961 (in short the Act ) in respect of Unit II amounting to Rs.16,22,661/-. The return of the assessee was subject to scrutiny assessment under section 143(3) of the Act and the Assessing Officer has passed an order thereof whereby the total income of the assessee has been assessed at Rs.1,21,66,830/-. In the said assessment, the Assessing Officer has inter-alia denied the claim of deduction under section 80IB, rejected the trading results, made disallowances out of depreciation, expenses on foreign travel, interest, car running telephone, etc. All the additions made were challenged in appeal before the CIT(A) unsuccessfully. The CIT(A) has dismissed the appeal of the assessee and the order of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted that for the assessment year 2001-02, the claim was examined in the course of assessment proceedings under section 143(3) of the Act and allowed. It was submitted that once the relief under section 80IB has been allowed to the assessee in the initial year, then it is not open for the Assessing Officer to examine such question again and decide to deny the relief, especially in a situation whereby the relief allowed in the initial year is not disturbed. It was explained that the initial assessment year for the claim of 80IB relief in question was assessment year 2001-02 wherein such relief stood allowed. For the said proposition the assessee has relied upon the following decisions:- i) Saurashtra Cement Chemical Industries Ltd. vs. CIT 123 ITR 669 (Guj) ii) CIT vs. Paul Brothers 216 ITR 548 (Nag.) iii) CIT vs. P. Muncherji Co. (1987) 167 ITR 671 (Bom.) iv) Russel Properties (P) Ltd. vs. A. Chowdhury, Addl. CIT (1977) 109 ITR 229 (Cal) v) K. N. Agarwal vs. CIT (1991) 189 ITR 769 (All) 6. Apart from the aforesaid the Ld. Representative has relied upon the submissions made before the CIT(A) with regard to the claim of deduction under section 80IB to the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section. Thereafter it is not open for the Assessing Officer to re-examine the issue all over again and come to a different conclusion in a subsequent year without justifying such departure. In the assessment order, we do not find any discussion by the Assessing Officer on this aspect inspite of the fact that the appellant assessee had taken a specific position based on the relief allowed in the past. Further, the claim accepted by the Assessing Officer in the assessment years 2001-02 and thereafter in 2002-03 have not been disturbed. Clearly in a such a situation the onus which was on the Revenue has not been discharged. We are conscious of the legal position that in so far as the justification for the claims of exemption/tax reliefs are concerned the onus is on the assessee to establish and justify the claims. So however in a situation like the present situation what we are trying to say is that the Assessing Office ought to have justified his departure from the earlier accepted position whereby similar claim has been accepted in the past. It is in this background that we are of the opinion that the onus was on the Assessing Officer to justify the denial of deduction under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by applying a G. P. rate of 30% on the sales as declared by the assessee and the difference amounting to Rs.14,75,940/- was added to the income returned by the assessee. In appeal before the CIT(A) the assessee made varied submissions. According to the assessee its books of account are audited and all purchases/sales are fully vouched; that the decline in G. P. rate was on account of reduction in sale price due to supplies from China and increase in generator expenses, manufacturing expenses and job work charges; that the product of the assessee is subject to excise and complete record in this regard was maintained and inspected by the excise authorities. The aforesaid submissions of the assessee have not found favour with the CIT(A) and the addition made by the Assessing Officer has since been sustained. Against such sustenance of addition the assessee is in appeal before us. 10. Before us the Ld. Representative for the appellant firm submitted that the lower authorities were not justified in rejecting the trading results declared in the books of account. The Ld. Representative pointed out that the declined in G. P. rate was fully explained in the course of assessment proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross profit. 11. On the other hand Ld. D. R., apart from relying on the orders of the lower authorities pointed out that the assessee could not furnish the requisite quantitative stock details and therefore the Assessing Officer was justified in rejecting the trading results declared by the assessee. 12. In reply the Ld. Representative for the assessee pointed out that the assessee was maintaining complete quantitative records as prescribed by the excise authorities and the stand of the Revenue on this aspect was untenable. 13. We have considered the rival submissions carefully. Section 145(3) of the Act empowers an Assessing Officer to reject the trading results declared by an assessee. If the Assessing Officer is not satisfied about the correctness of completeness of the accounts maintained by the assessee or where the method of accounting as notified is not followed by the assessee, the Assessing Officer is empowered to reject the results so declared and make an assessment to the best of his judgement. In the present case, the Assessing Officer noted that the GP rate declared was low in comparison to the two preceding assessment years. The second objection relates to the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if the job work was got done from other parties. We find that there is no negation to the fact position that the work has been indeed been undertaken for the assessee by the sister concern M/s Micro Instruments Pvt.Ltd. The assessee has explained even before the lower authorities the circumstances in which the payments have been made. There is nothing unreasonable in this regard. In any case, even for applying the provisions of Section 40A(2)(b), it is for the Assessing Officer to make out a case that the expenditure incurred is excessive or unreasonable having regard to the fair market value of such services. No effort in this regard has been made by the Assessing Officer. Therefore, considering the aforesaid, we do not find any justification for the Assessing Officer to invoke the provisions of Section 145(3) of the Act and reject the reliability of the account books maintained by the assessee. Thus, the addition made by computing the gross profit on estimate basis is hereby set aside. Accordingly, the assessee succeeds on this Ground If the facts of the aforesaid order are kept in juxtapositon with the facts of the present appeal, the same were argued by the respective c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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