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TMI Blog2015 (2) TMI 1317X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer relied upon the statement of the transporter to infer that there was neither transportation of raw material to Silvassa unit and nor the manufactured generator set was transported from Silvassa unit to M/s SNA Industries, Chakan Pune - need for cross-examination - HELD THAT: Ostensibly, there are apparent contradictions in the statements furnished by the transporter at the different points of time. The assessee pointed out that earlier it had contended that due to the contradictory position taken by the transporter a report of the handwriting expert be called for to establish as to whether the signature on the transport bills were that of Shri Padwal or not. It was also asserted by the assessee that the cross-examination would not serve any purpose when the appropriate preparation was not possible at a short notice. No doubt, technically speaking, an opportunity was allowed to the assessee to cross-examine the transporter. The assessment order has been passed on 31.12.2010 and obviously the cross-examination opportunity was allowed at the fagend of the proceedings. Of-course, one of the reasons for the cross-examination to be allowed at the fagend was that the investigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1369/PN/2012 for assessment years 2005-06 and 2008-09 are appeals of the assessee, which are directed against the order of the Commissioner of Income Tax (Appeals)-V, Pune dated 13.04.2012 which, in turn, has arisen from orders dated 31.12.2010 passed by the Assessing Officer u/s 143(3) of the Act. 4. Although the assessee and the Revenue have raised multiple Grounds of Appeal in their respective appeals but the issue relates to the claim made by the assessee for deduction u/s 80-IB(4) of the Act with respect to the profits relating to Silvassa unit. The appeal of the assessee in ITA No.1368/PN/2012 pertaining to assessment year 2005-06 is taken as the lead case. In so far as the appeals of the assessee for assessment years 2005-06 and 2008-09 are concerned, the Assessing Officer and thereafter the CIT(A) have denied assessee s claim for deduction u/s 80-IB(4) of the Act in relation to the Silvassa unit. The appeals of the Revenue pertaining to the assessment year 2006-07 and 2007-08 vide ITA No.283/PN/2010 and ITA No.1344/PN/2010 respectively also involve similar issue. In the said two assessment years, the Assessing Officer had denied assessee s claim for deduction u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enied the deduction u/s 80-IB(4) of the Act primarily on two counts. Firstly, as per the Assessing Officer, the activity undertaken by the assessee at the Silvassa unit is neither manufacture and nor production of any goods or articles as envisaged in section 80-IB(4) of the Act and therefore the profits derived from the Silvassa unit are not eligible for the benefits of section 80-IB(4) of the Act. Secondly and more substantively the objection of the Assessing Officer is that the assessee has not started its manufacturing activity in the Silvassa unit on or before 31.03.2004 and therefore the Silvassa unit is ineligible for the claim of deduction u/s 80-IB(4) of the Act, even if it is accepted that the unit is engaged in the manufacture or production of an article or thing. On both the two counts, the CIT(A) in assessment year 2005-06 has affirmed the stand of the Assessing Officer. 8. In so far as the first objection is concerned, the relevant facts are as follows. In Silvassa unit the activity claimed by the assessee is for manufacturing or production of electrical generators. It was explained that various components or raw materials are required for the manufacture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture or production within the meaning of section 80-IB of the Act. 10. We have carefully considered the rival submissions with respect to the objection of the Assessing Officer that the activity undertaken by the assessee at Silvassa unit relating to the generators does not amount to manufacture or production of any article or thing. In our considered opinion, the aforesaid issue is directly covered by the judgement of the Hon ble Delhi High Court in the case of Jackson Engineers Ltd. (supra). As per the Hon ble Delhi High Court, the activity involving assembling of various components and achieving a final product of a generator amounts to manufacture or production of an article or thing within the meaning of section 80-IB of the Act. Moreover, the Hon ble Bombay High Court in the case of Tata Locomotive And Engineering Company Limited (supra) has also held that assembling of various components which results into a different product which is distinct then the individual components, such an activity amounts to manufacture or production. As a consequence, we therefore do not agree with the first objection of the Assessing Officer to deny assessee s claim for deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of assessment proceedings, the Assessing Officer showcaused the assessee to justify the deduction claimed u/s 80-IB(4) of the Act as to whether Silvassa unit had started manufacturing activity on or before 31.03.2004. The Assessing Officer had required the assessee to produce evidences in the shape of labour charges paid with receipts, installation certificate in respect of first electricity bill, first sale tax return, rental agreement of Silvassa unit, machinery installed at Silvassa unit, copy of registration under Excise Act, Sales Tax, Industries Act as manufacturer, Proof in respect of excise duty paid on the products, copies of transport bills, purchase bills, octroi bills, invoices in respect of various components such as engine, alternators, etc. required to make Gensets, details of TDS made on labour charges paid with TDS ledger and copy of TDS return filed, if any to demonstrate that the manufacture and production had began on or before 31.03.2004. During the assessment proceedings, the Assessing Officer also issued requisitions to M/s Kavita Industries Pvt. Ltd. and M/s SNA Industries, both sister concerns of the assessee who claimed to have dealt with the Silvassa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that it was fabricated by the other party i.e. assessee. The said transporter also pointed out that the transportation charges from Chakan, Pune to Silvassa unit would have been higher than the amount reported by the assessee and that in any case the vehicle number provided by the assessee could not have been used for transportation from Chakan, Pune to Silvassa as it did not have a National Permit. 14. When assessee was confronted with the aforesaid evidence, it filed a detailed submission dated 21.12.2010 before the Assessing Officer on 27.12.2010. A copy of the said reply is also placed before us at pages 75 to 93 of the Paper Book. Apart from repudiating the stand of the transporter assessee also attempted to point out the falsity in the statement deposed by the transporter. The following portion of the assessee s communication is relevant :- Now coming to the merits of the statement of Shri Padwal, in substance Shri Padwal has stated that he had never transported any goods from Kavita Industries Pvt. Ltd, Pune, to Veena Industries Ltd, Silvassa and also from Veena Industries Ltd, Silvassa to SNA Industries, Chakan, Pune. The aforesaid statement of Shri P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries, Chakan, Pune. On the same Bill No.247, Shri Padwal has signed on 30.03.2004 and stated therein 'Cash received'. It may be further stated that the aforesaid Bill, dated 28.03.2004, has also been signed by Shri M.S.Padwal. In addition, on the aforesaid Bill, the LR No. 131 has also been mentioned. It may be emphatically stated here that there is absolutely no dispute, as regards the genuineness of the aforesaid Bill No.247. 5. We have got in our possession LR No.132, dated 30.03.2004, which has been signed by Shri Padwal, himself. As per the aforesaid LR No.132, dated 30.03.2004, engine, alternator set on base frame (Genset), has been transported from Veena Industries Ltd, Silvassa, to SNA Industries, Chakan, Pune. For the aforesaid purpose, Vehicle No.MH14 F3444, belonging to Padwal Transport has been used. In the aforesaid LR, Invoice No.001, raised by Veena Industries Ltd, Silvassa, on SNA Industries, Pune, has also been stated. Further, on the back side of the aforesaid Invoice, the date of the transport of the aforesaid items and vehicle No.MH14 F3444 has been stated as per the inward material stamp signed by the security of SNA Industries, Chak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 248. Therefore, as a corollary, there cannot be any dispute, as regards the genuineness of the impugned LR Nos.130 and 132 and Bill Nos.246 and 249. In addition, it may also be stated that through the transport of the aforesaid two consignments from Pune to Silvassa and two consignments from Silvassa to Pune, by the same Vehicle, Padwal Transport had received transport charges to the extent of ₹ 7,280. Therefore, the statement of Shri M.S.Padwal at the end of his letter, dated 10.12.2010, that it was quite impossible to make a trip from Pune to Silvassa for a sum of ₹ 1,820, because the distance between Pune to Silvassa and back is 750 kms; is not correct. Shri Padwal has further stated that the transport charges for the aforesaid trip should have been ₹ 5,000. This statement of Shri Padwal is also proved to be false, because Shri Padwal has earned as much as ₹ 7,280, through the aforesaid trip from Pune to Silvassa and back. 10. It may be further stated that on both the aforesaid LR No.130, dated 28.03.2004 and LR No.132, dated 30.03.2004, all the details printed are absolutely correct, vis-a-vis the present details of Padvval Transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are exactly the same and all of them fully tally with the four signatures of Shri M.S.Padwal on his letter, dated 10.12.2010, addressed to the AO. Further, Shir Padwal has made seven signatures on his statement recorded by the AO on 10.12.2010 and all the aforesaid signatures are also fully tallying with his signatures on the aforesaid LRs and Bills. In the fact of the aforesaid facts, how can Shri Padwal deny the genuineness of the impugned two LRs and two Bills. 15. As per para 10 of the letter of Shri Padwal to the AO, dated 10.12.2010, Shri Padwal has stated that the Bill Books for the period from 01.03.2004 to 31.03.2004, were not available with him. In this regard, it is to be stated that if the Bill Books or the LR Books are not available with him, then on what basis has he made a statement that the impugned LRs and Bills do not belong to him. It is very difficult to believe that Shri Padwal has got such a selective memory. Copies of the aforesaid LRs and invoices are enclosed herewith, vide PaperBook - B, for the AYs 2005-06 and 2008-09. From the aforesaid facts, it is clearly established that the impugned LR Nos.130 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bills. I could not understand that mentioning of address would mean that the goods have been transported to Silvassa or from Silvassa. In this connection, I further wart to state that I have never transported the goods for those parties from Chakan, Pune to Silvassa and from Silvasss to Chakan, Pune and for any other outside places other than local. I further want to state that I have not done any transportation work for those parties in subsequent years. Question No.3:- Veena Industries Ltd. has enclosed Bill Number 246 and Bill No.249 for L.R. Numbers 130 and 132, in support of cash payment received by you as per these Bill issued by you on 28-03-2004 and 30-03- 2004 respectively. Here it is important to give reference to the statement given by you on oath on 10-12-2010 wherein you have stated that L.R.s Numbers 130 132 were not issued by you to the concerned parties and these two L.Rs. are fabricated by those parties for their personal benefits. I am showing you Bill No.246 249 and also L.R. Numbers 130 132. Please go through these L.Rs. and Bills and state whether you have received cash payments as per those Bills issued by you to the concerned parties for transportatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te whether you have done any transportation work for Veena Industries Ltd., Kavita Industries Ltd. and SNA Industries in subsequent year also? Answer:- No, I have not done any transportation work for these parties in subsequent years for Local Trips. 16. In nutshell, the Assessing Officer relied upon the statement of the transporter to infer that there was neither transportation of raw material to Silvassa unit and nor the manufactured generator set was transported from Silvassa unit to M/s SNA Industries, Chakan Pune. The Assessing Officer was also not satisfied with the replies of the assessee with regard to the electricity consumption during the period. The Assessing Officer was also not satisfied that assessee had purchased the raw material from M/s Kavita Industries Pvt. Ltd. and utilized the same for assembling a generator set which was claimed to have been sold to M/s SNA Industries before 31.03.2004. Nevertheless, the purchase of raw material i.e. Engines from Mahindra Mahindra Ltd. was not doubted in terms of which assessee had explained that the said raw material had reached its factory on 29.03.2004. According to the Assessing Officer, though assessee had p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for the period ending 31.03.2004 was also furnished, a copy of which has been placed in the Paper Book at pages 133 to 138. Further, assessee also furnished the evidence of transportation of goods of raw material to Silvassa and the remittance of finished goods to M/s SNA Industries. The Ld. Representative pointed out that the statement of the transporter of M/s Padwal Transport was unreliable as well as that the two statements were inherent by contradictory. Moreover, it is submitted that the records of the assessee, namely, excise records, etc. substantiate the plea of the assessee that the manufacturing activity had taken before 31.03.2004. 19. On the other hand, the Ld. CIT-DR appearing for the Revenue has in detail referred to the order of the Assessing Officer in support of the case of the Revenue. 20. We have carefully considered the rival submissions. After having considered the orders of the authorities below and the rival submissions, one issue which comes out is that major plank of the Revenue is based on the enquiries conducted with the transporter. In-fact, whether or not the manufacturing activity of the assessee at Silvassa unit had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the transporter but also Bill Nos. 246 and 249 which related to M/s Padwal Transport for carrying of two consignments from Pune to Silvassa on 28.03.2004 and bringing back the consignment to Pune on 30.03.2004. It was pointed out that total transportation charges covering the four bills totalled to ₹ 7,280/- and therefore the case setup by the transporter in his statement that it was impossible to make him trip from Pune to Silvassa for a sum of ₹ 1,820/- was only half-truth because the transporter had earned much more than the figure of ₹ 1,820/- which related to only one of the four bills raised. It was also pointed out that the transporter had himself stated that the transportation charges for one trip between Pune and Silvassa should have been ₹ 5,000/-, a statement made in the context of the amount of ₹ 1,820/- stated in the bill shown to him. The assessee pointed out that the transporter had earned ₹ 7,280/- which showed that the charges were commensurate to what was the expectation of the transporter. Since assessee pointed out that Bill Nos. 246 and 249 dated 30.03.2004 which were issued by the M/s Padwal Transport on M/s Kavita Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the signature on the transport bills were that of Shri Padwal or not. It was also asserted by the assessee that the cross-examination would not serve any purpose when the appropriate preparation was not possible at a short notice. No doubt, technically speaking, an opportunity was allowed to the assessee to cross-examine the transporter. The assessment order has been passed on 31.12.2010 and obviously the cross-examination opportunity was allowed at the fagend of the proceedings. Of-course, one of the reasons for the cross-examination to be allowed at the fagend was that the investigation itself were started late by the Assessing Officer. But the moot question is that can it be conclusively established on the basis of the apparently inconsistent stand of the transporter that there was no transaction effected with M/s Kavita Industries Pvt. Ltd. or M/s SNA Industries prior to 31.03.2004. In-fact, in the Excise return furnished by the assessee, a copy of which has been placed at pages 131 to 132 of the Paper Book, it is revealed that assessee returned the quantity manufactured and also showed its liability for excise duty on the quantity manufactured and sold. The said return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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