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TMI Blog2015 (2) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favour of assessee. Disallowance u/s 69A - ITAT deleted the addition - Held that:- The ITAT while upholding the order of CIT (A) observed that it was very clear that the Assessing Officer had not pointed out any defect or discrepancies in the books and that even the availability of cash of ₹ 25,000/- with each member of the family was also considered to be reasonable, therefore, in the circumstances, there was no justification in partly accepting the entries made in the memoranda books and partly rejecting the same. According, the finding of CIT (A) in respect of deletion of addition of ₹ 6,55,270/- was upheld by the ITAT by dismissing the appeal of the revenue.- Decided in favour of assessee. - ITA No. 770 of 2010 (O&M), ITA No. 771 of 2010 (O&M), ITA No. 772 of 2010 (O&M), ITA No. 773 of 2010 (O&M), ITA No. 774 of 2010 (O&M), ITA No. 776 of 2010 (O&M), ITA No. 837 of 2010 (O&M) - - - Dated:- 10-12-2014 - Rajive Bhalla And B. S. Walia,JJ. For the Appellant : Sh Rajesh Sethi, Adv. For the Respondent : None JUDGMENT B. S. Walia,J. Vide this judgment we propose to dispose of ITA Nos. 770 to 774, 776 and 837 of 2010 filed by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 143(2) and 142(1) the case was taken up for scrutiny. During the course of search at the respondent's residence, cash amounting to ₹ 20,73,470/- was found from different rooms of the family members. However, from Smt. Bimla Rani's room alone, i.e. the respondent, cash of ₹ 17,74,765/- was found. During the course of assessment proceedings, the respondent could not explain cash to the tune of ₹ 6,55,270/-, therefore, the Assessing Officer made an addition of ₹ 6,55,270/- under Section 69A on account of unexplained cash found during the search operation. During the course of assessment proceedings, it was also noticed that the respondent had claimed deduction under Section 80 IB of the Act and that as per the provisions of Section 80 IB (2) (iv) of the Act, one of the basic conditions for entitlement of deduction under Section 80 IB was that the industrial undertaking employs ten or more workers in a manufacturing process carried on with the aid of power. Section 80 IB (2) (iv) is reproduced as under :- In a case where the industrial undertaking manufactures or produces articles or things, the undertaking employs ten or more workers i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , thereby clearly indicating the over all intention to claim deduction under section 80 IB of the Act and that the said two employees i.e. Supervisor and Manager, apart from not being directly involved with the manufacturing process, were also active working partners in sister concerns viz. M/s Euro Containers and M/s Plastic Sales India, devoting their time and full energies therein and getting salary in lieu of the same from the sister concerns. Therefore, they could not be stated to be actively involved in the manufacturing process and thus could not be covered under the term workers as given under Section 80 IB (2) (iv) of the Act, that reliance placed on the orders of the jurisdictional High Court in the case of CIT vs. M/s Ansysco (ITA 344-2004) (2006) (P H), was not applicable in the facts of the case and was distinguishable since in Ansysco's case (Supra), the debate was with regard to workers involved in packing and despatch being not actively involved in manufacturing, whereas in the instant case the alleged employees managing and supervising the overall activity of the manufacturing undertaking of the respondent were simultaneously working partners in the sister co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten or more workers in a manufacturing process normally would cover the entire process carried on by the industrial undertaking for converting the raw material into finished goods. For the aforesaid proposition, reference can be made to CIT vs. Sultan and Sons Rice Mill (272 ITR 181) (All), CIT vs. Hanuman Rice Mills (275 ITR 79) ( All) and CIT vs. Ajmani Industries (153 Taxman 43) (All). We are of the considered opinion that the view of the ITAT that normally owner could not be counted as a worker but in the instant case, the dispute revolved around works manager and supervisor, therefore substantial compliance about the number of workers would satisfy the requirement under the Act and the position during abnormal situations could not be counted is absolutely justified. Likewise reliance by the ITAT on the decision of the jurisdictional High Court in M/s Ansysco's case (Supra), is also well placed. In M/s Ansysco's case (Supra), the issue was whether the Tribunal was justified in upholding the order of the first Appellate Authority in allowing deduction under Section 80 IA of the Act on the ground that manufacturing process includes packing, stitching, mounting and dispat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of cash with the firms and various members as per details given in the assessment order were as under :- Name of the person Amount (in Rs.) Narinder Mohan Mittal 40,875/- Surinder Mohan Mittal 52,500/- Jatinder Mohan Mittal 70,680/- O.P. Mittal 2,40,000/- Bimla Rani Mittal 11,09,289/- Saroj Mittal 1,74,025/- Meenakshi Mittal 1,11,600/- Narinder Mohan (HUF) 41,119/- Surinder Mohan (HUF) 37,440/- Jatinder mohan (HUF) 42,176/- Sadhna Mittal 45,000/- Cash balance of children who are separately assessed 1,50,000/- Sub-Total 21,14,686/- Euro Containers Rs.40,000/- out of total of ₹ 58,527/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the assessee as per which the cash availability was explained could not be admitted as evidence and the evidence as above was unreliable and self serving but that the said stand of the Assessing Officer was held to be not justified by the CIT (A), besides the Assessing Officer had not brought out the sources of cash explained in the said memoranda books were not acceptable or if the assessee's family was found to have spent / invested some amount over and above the amount mentioned in the memoranda books, that the evidence in the shape of memoranda books might not be admissible as evidence as per the Evidence Act as brought in the assessment order by the Assessing Officer, however, the evidence for the purpose of issue in hand could not be dismissed straightway on that ground alone, the said evidence might not be relevant in a civil case, but in a field like income tax, such evidence was very much relevant, as without proving that entries recorded in the so called memoranda books were not correct, the same could not be construed against the assessee and since the Assessing Officer had not pointed any defect or discrepancies in the books, therefore the inference drawn by ..... 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