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TMI Blog2016 (5) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the said initiation of proceedings under sec. 153A of the Act are held as void and the same are accordingly quashed. - Decided in favour of assessee Denial of deduction under sec. 80IB - activities not amounting to manufacturing - Held that:- There is no dispute that activities of the assessee on the films purchased by it from Jindal Polyester Ltd. go through different activities like anti-static/corona treatment/quoting; slitting/cutting/rebinding of treated films; packing of finished products, finished goods (corona treatment films) and then dispatch. Thus, the films used as raw-material is converted into entirely a new product useful for its customer for printing the same useable as wrappers for the products of its customers like uncle chips/lays. The packets containing the products of its customers are made of the same films produced by the assessee after putting its activities discussed above on the said raw-films purchased from Jindal Polyester Ltd. It has not been rebutted by the Revenue that the raw-material is of such quality that no printing can be done on the same and it is possible only after the output made by the assessee through the above discussed process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at different forums are having statutory force under sec. 268A of the Income-tax Act, 1961. We thus dismiss the said appeal as such as not maintainable. 2. In the appeals for the assessment years 2003-04, 2004-05, 2005-06, 2006-07 and 2007-08, the Revenue has raised common issue questioning the validity of action of the Learned CIT(Appeals) in deleting the addition made by the Assessing Officer on account of denial of deduction claimed by the assessee under sec. 80IB of the Act. 3. The submissions of the Learned AR remained that these appeals are also not maintainable since the assessment year 2001-02, the benefit of the claimed deduction under sec. 80IB of the Act was being allowed to the assessee. He submitted that in the assessment year 2001-02, the assessment was ultimately framed under sec. 147/143(3) of the Act and the claim was allowed. He pointed out that even otherwise, the assessments framed in all these years including assessment year 2008-09 under sec. 153A read with section 143(3) of the Income-tax Act, 1961 in absence of incriminating material found during the course of search and in absence of pendency of the assessment on the date of search, are void ab-initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and revive only when order under sec. 153A/153C is annulled. He placed reliance on the following decisions: i) CIT vs. Kabul Chawla [2016] 380 ITR 573 (Delhi); 28.8.2015 (Delhi HC); ii) Principal CIT vs. Mureje Paper Mills Ltd. [2016] 380 ITR 571 (Del.). 6. The Learned CIT(DR) on the other hand placed reliance on the orders of the authorities below. He submitted that the assessee was not eligible for the deduction claimed under sec. 80IB of the Act as it was not manufacturing and not producing any goods different from the raw-material purchased and used by it. 7. After having gone through the decisions relied upon by the Learned AR, we find that the Hon'ble jurisdictional High Court of Delhi in the case of Kabul Chawla (supra) has been pleased to summarize the following requirements for the validity of invocation of the provisions laid down under sec. 153A of the Act: 37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d invocation of section 153A of the Act, fulfillment of two requirements are mandatory, firstly during the course of search, some incriminating material has been found and secondly on the date of search, the assessment based on the return of income originally filed for the year is not pending. Fulfillment of both these two requirements in the present case for initiation of proceedings under sec. 153A of the Act are absent. For the assessment year 2003-04, the assessee has filed its original return of income on 27.11.2003. The Assessing Officer selected the case for scrutiny and called for specific details in respect of deduction under sec. 80IB of the Act and after examination and investigation, he has allowed the claimed deduction vide order dated 30.3.2006. Similar deduction has been allowed in the assessment framed under sec. 143(3) of the Act on 22.12.2006 in the assessment year 2004-05. For the remaining assessment years, the return filed under sec. 143(1) of the Act has been accepted and no notice under sec. 143(2) of the Act was issued within the prescribed time limit, thus, there was no pendency of the assessment on the date of the search. Besides, in the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment years 2003-04 to 2007-08. 11. In support of the grounds involving the issues regarding eligibility of the assessee for claiming deduction under section 80IB of the Act, the Learned CIT(DR) tried to justify the assessment order with the submission that the assessee was not engaged in the manufacturing or production of an article or thing and as per the show-cause notice issued by Custom and Central Excise Department, the activity was not manufacturing and thus the Assessing Officer was right in disallowing the claimed deduction under sec. 80IB of the Act. The Learned CIT(DR) submitted that no new product is made out by the activities of the assessee on the films after purchasing it from Jindal. The Learned AR on the other hand submitted that the case of the assessee of treating the raw-material in such a way that characteristic and use of the raw-material completely changes and the input and output are totally different character has been accepted by the Department itself in the assessment years 2001-02 and 2002-03 as well. In the assessment year 2001- 02, the assessments under sec. 143(3) of the Act were framed accepting the claimed deduction under sec. 80IB of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such manufacturing process is involved. The Learned AR submitted that the Assessing Officer in the present case has made his own belief which is against the facts of the case and is wholly based on the so-cause notice issued by the Excise Department which was duly responded and the explanation of the assessee has been accepted by the excise authorities. The decision relied upon by the Assessing Officer for disallowing the claim having distinguishable facts are also not relevant and discussing the same the Learned CIT(Appeals) has rightly come to the conclusion that the assessee was eligible for the claimed deduction under sec. 80IB of the Act being involved in the manufacturing. The Learned CIT(Appeals) had also issued a letter to the Excise Department on 23.11.2012 to ascertain the final outcome of the show-cause notice issued by them to the assessee but they did not bother to respond the same. 12. Considering the above submissions, we find that the first appellate order on the issue is comprehensive and reasoned one and it is also based upon the ratios laid down in several decisions followed by him. There is no dispute that activities of the assessee on the films purchased by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 21.8.2015 in ITA Nos. 365/2015 Ors. 15. The Learned CIT(DR) placed reliance on the assessment order. He submitted that the Assessing Officer had made additions on account of receipts from the bank account of Shri Ravinder Yadav. The department had made an investigation in respect of bank account of Mr. Ravinder Yadav, wherein it was transpired that he was depositing huge amount of cash in the bank account and got demand draft and pay order issued in the name of different parties. The Learned CIT(Appeals) without appreciating this material aspect of the issue has deleted the addition made by the Assessing Officer on account of unexplained receipts. 16. On having gone through the orders of the authorities below, we find that on being asked by the investigating agency, Mr. Yadav stated that he used to work for M/s. Swastik Pipes Ltd., he was getting the cash from the employees of this group companies and deposited the same in the bank account for getting the demand draft/pay orders issued. In this activity, Mr. Yadav used to get a commission @ ₹ 250 per one lac rupees. As per his statement, he was carrying out this activity for three companies i.e. assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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