Commissioner Of Income Tax v. Deepak Mittal

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No. 523 of 2009Date of decision 18 .2.2010 Commissioner of Income Tax ... Appellant Versus Deepak Mittal ... Respondents CORAM:HON'BLE MR. JUSTICE M.M. KUMARHON'BLE MR. JUSTICE JITENDRA CHAUHAN Present:Mr.Vivek Sethi ,Advocate for the appellant 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The Revenue has approached this Court under Section 260A ofthe Income Tax Act, 1961 (for brevity 'the Act') challenging order dated27.5.2009 passed by the Income Tax Appellate Tribunal, Amritsar Bench(for brevity 'the Tribunal') in ITA No. 340(ASR)/2008 in respect of theassessment year 2003-04. The Tribunal has set aside the order dated28.8.2003 passed by the CIT Jalandhar (1) by exercising jurisdiction underSection 263 of the Act holding that on the basis of survey report conductedunder Section 133 A of the Act the assessment completed under Section 143(3) of the Act on 14.11.2005 by the Assessing Officer cannot be set aside bythe CIT by exercising revisional jurisdiction. In that regard, the Tribunal hasplaced reliance on the views taken by the Hyderbad Bench in the case ofShri Hari Shankar Cashew Manufacturing Company v. ITO42 ITD 466and the views of the Amritsar Bench in the case of Jolly Contractors Pvt.Ltd.v. ITO 1982 (2) ITD ASR 92. The aforesaid order of the Tribunal had ITA 523 of 2009 attained finality as it is not pointed out that any appeal was filed or if filedthe orders have been reversed. The Tribunal has also adversely commentedon the order of the CIT because he did not point out that any loss to therevenue would arise and the order passed by the Assessing Officer isessential to the interest of the Revenue. He has simply asked the AssessingOfficer to re-examine the documents produced by the assessee whereas theAssessing Officer itself made detailed enquiry and had come to theconclusion on the basis of the evidence on record. In these circumstances,the Tribunal has opined that power of revision could not have beenexercised. The Tribunal has also examined the merits of the issue raisedbefore the Assessing Officer and the CIT(A). In an answer to the querygiven by the assessee it was claimed that he is fully eligible for deductionsunder Section 801B(4) of the Act. He further stated that definition of smallscale industries have been expanded under section 80IB(14)(g) of the Act.The question considered by the Assessing Officer was whether it isindulging in manufacturing process or not. The assessee has been engagedin the production or manufacture of article or thing i.e. Components oftractors like differential Housing, Get Box Housing and Rear CoverHousing. To the allegation that assessee was engaged only in job work, thefollowing question- answer proforma have been cited: “ Q. Please explain the process of the components receivedafter maching from auto Component Indl. Corpn. Baddi,District Solan in details. Ans. Ist operation, on the vertical Machining centre on CNCMachines. On this CNC Machine drilling, reaming chamfering, padmilling operations are being done, with respect to dowel holeon next machine boring machine/ and taping. After the above operation, Rear Cover will be ready for furtherassembly. In assembly few important parts like Ram cylinder, responseball, rock Shaft etc.are fitted to complete this sub assembly. Itis in respect of two type of rear Covers received after reachingmachine from Baddi. Q. From the above it is clear that at Baddi very Smallmachining/ grinding of components is done, whereas majorprocess is completed at ITL Hoshiarpur, please explain. Ans. All critical machinery operation of chassis parts i.e. Rearcover, Differential housing and reduction unit are being done atM/s ITL Hoshiarpur on precision sophisticated CNC and otherspecial purpose machines. After the above operation, Rear Cover will be ready for furtherassembly. In assembly few important parts like Ram cylinder, responseball, rock Shaft etc.are fitted to complete this sub assembly. Itis in respect of two type of rear Covers received after reachingmachine from Baddi. Q. From the above it is clear that at Baddi very Smallmachining/ grinding of components is done, whereas majorprocess is completed at ITL Hoshiarpur, please explain. Ans. All critical machinery operation of chassis parts i.e. Rearcover, Differential housing and reduction unit are being done atM/s ITL Hoshiarpur on precision sophisticated CNC and otherspecial purpose machines. Q. Do you send the similar components for maching andgrinding to other concern except Baddi ? Ans. We do not send these three components for Machining/grinding to any other concern/ place expect Baddi. Q. I am showing you one of twenty six photographs of thecom,ponents and machinery and assembly Process taken inyour presence, please give the description of the same. Ans. I have given the description at the back side of eachphotograph under my signatures.” The Assessing Officer has given categorical finding that assessee is ITA 523 of 2009 engaged in the process of manufacturing of products and accordingly he hasgranted concession under section 80 IB of the Act. The Tribunal has placedreliance on a judgement of Hon'ble the Supreme Court in the case ofTextile Machinery Corporation Ltdv. CIT107 ITR 195. In that case theassessee was engaged in the machining of raw-casting, heat treatment ofraw-crank shaft and polishing of raw casting etc. and is therefore it has beenheld that the assessee is engaged in manufacturing or production of articles. Similar view was taken by the Madras High Court in the case of CITv.Perfect Liners 142 ITR 654. The claim of the assessee has been found tobe genuine as the assessee has explained the various processes after thecomponents are received from M/s Auto Components Indl. CorporationBaddi (Solan). It shows that after the receipt of components, the firstoperation undertaken by the assessee- respondent is the vertical machiningcentre on CNC machine which has been explained as under: “One this CNC Machine drilling, reaming, chamfering,pad milling operation are being done, with respect to dowelhole on next machine boring machine/ and tapping. After the above operation, Rear Cover will be ready forfurther assembly. In assembly, few important parts like Ram cylinder,Response ball, Rock Shaft etc. are fitted to complete the subassembly. It is in respect of two type of Rear Covers receivedafter reaching machine from Baddi. In respect of differential housing and reduction unit,different sets of machines are there for further operation tomake the component ready for assembly. As at present, these two components are not in stock, as such the working of the same cannot be shown.” Likewise major process is completed by the assessee- respondent andthe same has been explained in answer to various questions. “ All critical machinery operation of chassis parts i.e. Rearcover, Differential housing and reduction unit are being done atM/s ITL, Hoshiarpur on precision sophisticated CNC and otherspecial purpose machines” The Assessing Officer has also examined the various workers of theassessee and have then recorded the finding which answer the provisions ofSection 81 IB(4) of the Act. Having heard the learned counsel at a considerable length, weare of the view that the order of the Tribunal does not suffer from any legalinfirmity or give rise to any such substantive question of law which maywarrant admission of the appeal. The exercise of revisional jurisdiction bythe CIT is wholly without any justification . It has rightly been held thatchange of opinion by re-appraising the evidence is not within the parameterof revisional jurisdiction of CIT under Section 263 of the Act. Therefore,the appeal fails and the same is dismissed. (M.M.Kumar) Judge 17.2.2010 The Assessing Officer has also examined the various workers of theassessee and have then recorded the finding which answer the provisions ofSection 81 IB(4) of the Act. Having heard the learned counsel at a considerable length, weare of the view that the order of the Tribunal does not suffer from any legalinfirmity or give rise to any such substantive question of law which maywarrant admission of the appeal. The exercise of revisional jurisdiction bythe CIT is wholly without any justification . It has rightly been held thatchange of opinion by re-appraising the evidence is not within the parameterof revisional jurisdiction of CIT under Section 263 of the Act. Therefore,the appeal fails and the same is dismissed. (M.M.Kumar) Judge 17.2.2010 (Jitendra Chauhan)Judge okg