Veena Industries Ltd.,, Pune vs Department Of Income Tax

Asstt. Commissioner of Income Tax, Circle- 10, Pune. .... Appellant

Vs.

Veena Industries Ltd., S-145, MIDC, Bhosari, Pune - 411 026. PAN : AAACV9329E .... Respondent

ITA Nos.1368 & 1369/PN/2012 (Assessment Years : 2005-06 & 2008-09)

Veena Industries Ltd., 103/104, Stellar Enclave, New D.P. Road, Aundh, Pune - 411 007. PAN : AAACV9329E .... Appellant

Vs.

Income Tax Officer, Ward- 10(1), Pune. .... Respondent

Department by : Mr. A. K. Modi Assessee by : Mr. Ved Jain & Mr. Ajit Tolani

Date of hearing : 20-02-2015 Date of pronouncement : 27-02-2015

ORDER

PER G. S. PANNU, AM

The captioned four appeals, two each by the Revenue and assessee

involve certain common issues, therefore they have been clubbed and heard

together and a consolidated order is being passed for the sake of convenience

and brevity.

2. ITA No.283/PN/2010 and ITA No.1344/PN/2010 for assessment years

2006-07 and 2007-08 are appeals of the Revenue, which are directed against 2 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

the order of the Commissioner of Income Tax (Appeals)-V, Pune dated

10.11.2009 and 31.08.2010 which, in turn, has arisen from different

assessment orders dated 30.12.2008 and 31.12.2009 respectively passed by

the Assessing Officer u/s 143(3) of the Income-tax Act, 1961 (in short "the

Act").

3. ITA No.1368/PN/2010 and ITA No.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 80-IB of the

Act but the same was allowed by the CIT(A) and hence the appeals of the

Revenue before us.

5. At the time of hearing, at the outset, it was pointed out that so far as the

impugned assessment made for assessment year 2005-06 is concerned, the 3 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

same was finalized on 31.12.2010 after the original assessment made u/s

143(3) of the Act dated 28.12.2007 was set-aside by the Commissioner of

Income Tax - V, Pune by invoking section 263(1) of the Act dated 22.03.2010.

Notably, for assessment year 2005-06 in the original assessment made u/s

143(3) dated 28.12.2007, the total income of the assessee was assessed at

Rs.23,96,480/- which, inter-alia, contained an allowance of deduction u/s 80-

IB(4) of the Act of Rs.53,23,307/- relating to the Silvassa unit. The aforesaid

assessment was set-aside by the Commissioner of Income Tax - V, Pune u/s

263(1) of the Act dated 22.03.2010 with directions to make the assessment de

novo. In the course of the such set-aside assessment, the Assessing Officer

had made further verification and enquiries relating to assessee's claim for

deduction u/s 80-IB(4) of the Act with respect to the profits from the Silvassa

unit. In this context, the rival counsels had converged that the appeal for

assessment year 2005-06 be taken as the lead case.

6. In assessment year 2005-06, assessee had claimed deduction u/s 80-

IB(4) of the Act in respect of Silvassa unit to the extent of Rs.53,23,307/-. The

appellant is a company incorporated under the provisions of the Companies

Act, 1956 and is, inter-alia, engaged in the business of Fabrication,

Manufacturing and assembling of Canopy and Manufacturing/assembling of

Electrical Gensets. The activities of the assessee are carried out at three

units, namely, Bhosari Unit wherein cutting, bending and painting of fabricated

parts, assembling of fabricated parts of Atalas Copco is carried out. The

second unit is Chakan Unit wherein cutting, bending, welding related to

fabrication manufacturing and assembling of canopy takes place. The third

unit is Silvassa Unit wherein assessee claims to manufacture and assemble

electrical generators. The dispute before us is in relation to the third unit i.e.

Silvassa Unit which assessee claims to be carrying on the activities of the

manufacturing and assembling of electrical generators. 4 ITA Nos.283 & 1344/PN/2010

ITA Nos.1368 & 1369/PN/2012

7. The Assessing Officer has denied 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

electrical generators, namely, Engines, Alternators, Canopy, Control Panel,

Batteries and Electrical Items, etc.. The assessee also pointed out before the

lower authorities the process involved in the aforesaid manufacture or

production of generators is as follows -- (i) Inspection/ Testing of every empty

canopy; (ii) Inspection/ Testing of every Engine; (iii) Inspection/ Testing of

every Alternator or coupling; (iv) Assembling and coupling of the Alternator to

the Engine; (v) Placing of the Engine and Alternator in an empty canopy; (vi)

Affixing the cladding to the Silencer Box; (vii) Affixing canopy Roof and

cladded silencer to Engine and Alternator; (viii) Inspection and testing of

Control Panel; (ix) Assembling the Control Panel to the Engine coupled with

Alternator; (x) Inspection and testing of Exhaust Line items; (xi) Assembling of

the Exhaust Line to the Engine and Alternator; (xii) Inspection and testing of 5 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

Air Cleaner Line items; (xiii) Assembling of Air Lines to Engine and Alternator;

(xiv) Inspection and assembling of Fuel Line items; (xv) Inspection and

assembling of Electrical items; (xvi) Final Dimensional and Visual Inspection of

the Genset manufactured; and, (xvii) Functional testing of each Genset. On

the aforesaid basis, the claim of the assessee is that the activity undertaken by

the assessee tantamounts to 'manufacture' or 'production' of generators and

therefore it is eligible for the section 80-IB(4) benefits. At the time of hearing,

the Ld. Representative for the assessee has relied upon the following

judgements : (i) Aspinwall and Co. Ltd. vs. CIT, (2001) 251 ITR 323 (SC); (ii)

S.S.M. Brothers (P.) Ltd. vs. CIT, 243 ITR 418; (iii) Computer Graphic Ltd. vs.

ACIT, (2009) 318 ITR 96 (Mad.); and (iv) CIT vs. Tata Locomotive And

Engineering Company Limited, 68 ITR 325 (Bom.) to contend that the activity

of the assessee amounts to manufacture or production. Apart from the

aforesaid, it was also submitted that a similar activity was considered by the

Hon'ble Delhi High Court in the case of CIT vs. Jackson Engineers Ltd. vide

ITA No.251 of 2008 dated 23.12.2009 and held to be a manufacturing activity,

a copy of the said judgement has also been placed on record.

9. On this aspect, the Ld. CIT-DR has relied upon the order of the

authorities below to say that an activity involving assembling of various

components would not amount to 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 6 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

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 deduction u/s 80-IB(4) of the

Act. Thus, on this aspect assessee succeeds.

11. The second objection raised by the Assessing Officer is that the

Silvassa unit of the assessee did not begin to manufacture or produce the

Generators before 31.03.2004. The aforesaid objection of the Assessing

Officer is on account of the proviso to section 80-IB(4) of the Act which

prescribes outer limit for beginning manufacture or production so as to entitle

assessee's undertaking for the benefits of section 80-IB(4) of the Act. As per

the proviso to section 80-IB(4) of the Act, the industrial undertaking of the

assessee ought to begin to manufacture or produce article or things before

31.03.2004. In-fact, the effective date i.e. 31.03.2004 does not fall within the

previous year relevant to the assessment year under consideration which is

from 01.04.2004 to 31.03.2005. The claim of the assessee was that the

Silvassa unit of the assessee had started manufacturing before 31.03.2004

and in-fact assessment year 2004-05 is first of the ten consecutive

assessment years for which the benefits of section 80-IB(4) of the Act are

available to it. Notably, the deduction u/s 80-IB(4) of the Act is available to an

industrial undertaking for ten consecutive assessment years beginning with

the initial assessment year which is understood to mean the assessment year

relevant to the previous year in which the industrial undertaking begins to 7 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

manufacture or produce articles or things. The claim of the assessee is that

the Silvassa unit began to manufacture and assemble Generators in the

previous year relevant to the assessment year 2004-05 and therefore the

preceding assessment year 2004-05 was the initial assessment year. So

however, it was noticed that so far as the assessment year 2004-05 is

concerned, the assessee did not stake its claim for deduction u/s 80-IB(4) of

the Act and therefore, there was no occasion for the Revenue to have

examined the condition that the industrial undertaking of the assessee started

manufacturing or producing article or things before 31.03.2004; therefore, it is

in assessment year 2005-06 wherein assessee made a claim for deduction u/s

80-IB(4) of the Act of Rs.53,23,307/- that the Assessing Officer has carried out

a verification exercise to examine compliance with the condition of beginning

of production on or before 31.03.2004.

12. In the course of assessment proceedings, the Assessing Officer show-

caused 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 8 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

assessee who claimed to have dealt with the Silvassa unit of the assessee

before 31.03.2004. Presently, the claim of the assessee was that the Silvassa

unit had manufactured certain Gensets, and one unit was sold to its sister

concern M/s SNA Industries, Chakan, Pune before 31.03.2004. The assessee

had also claimed before the Assessing Officer that M/s Kavita Industries Pvt.

Ltd. had supplied raw material to the Silvassa unit before 31.03.2004 apart

from the supplies received from Mahindra & Mahindra Ltd.. The Assessing

Officer notes that in response to requisition issued to M/s Kavita Industries

Pvt. Ltd. and M/s SNA Industries, the following was furnished :-

i) Purchase Invoice and Delivery Challan. ii) Transport Bill Numbers 130 & 132 pertaining to Kavita Industries

Pvt. Ltd. and SNA Industries respectively issued by Padwal Transport, Telco Road, Bhosari, Pune bearing details as under :

ii-a) Bill No.130 dated 28.03.2004 - Vehicle No.MH 14 F 3444 to consignor Kavita Industries Pvt. Ltd. issued by Padwal Transport.

ii-b) Bill No.132 dated 30.03.2004 - Vehicle No.MH 14 F 3444 to consignor Veena Industries, Silvassa issued by Padwal Transport.

13. On the basis of the aforesaid information, the Assessing Officer issued

a requisition u/s 133(6) of the Act to M/s Padwal Transport who was stated to

have transported raw material from M/s Kavita Industries Pvt. Ltd., Chakan,

Pune, to assessee's premises at Silvassa and also transported the finished

goods back to M/s SNA Industries, Chakan. The Assessing Officer notes that

in response to his requisition, Shri Manik Sopan Padwal, Proprietor of M/s

Padwal Transport furnished a reply dated 10.12.2010 wherein he denied

transporting raw materials from M/s Kavita Industries Pvt. Ltd., Chakan, Pune

to assessee's Silvassa unit as also the transportation of the goods from

assessee's Silvassa unit to M/s SNA Industries, Chakan, Pune. The

statement of Shri Manik Sopan Padwal was also recorded by the Assessing

Officer on 10.12.2010, whose relevant portion has been reproduced by the 9 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

Assessing Officer in the assessment order itself. In one of the questions put to

him the transporter submitted that Bill No.132 of M/s Padwal Transport

claimed to be issued by him was fabricated by the other party i.e. assessee.

Similarly, with regard to the Bill No.130 of M/s Padwal Transport claimed to

have been issued by him the transporter stated 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 Padwal is absolutely false. It may be stated here that either Shri Padwal has made the aforesaid false statement for the reasons best known to him or he has made the aforesaid statement under duress and coercion from the officials of the IT Department. The following facts will clearly establish the falsity of the above statement of Shri Padwal :

1. We have got a lorry receipt (LR) or a goods consignment note No.130, dated 28.03.2004, issued by Padwal Transport, Gawalimatha, Telco Road, Bhosari, Pune-411 026. As per the aforesaid LR, Padwal Transport through its vehicle No.MH14 F3444, had transported one engine, one alternator and one base frame from Kavita Industries Pvt. Ltd, Pune, to Veena Industries Ltd, Silvassa. On the aforesaid LR, there is a stamp of Veena Industries Ltd and on the aforesaid LR, it is also stated that the 10 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

aforesaid items were received by Veena Industries Ltd. on 29.03.2004.

Besides, on the aforesaid LR No.130, Invoice No.004, raised by Kavita Industries Pvt. Ltd, on Veena Industries Ltd, dated 28.03.2004, has also been mentioned.

2. We have got LR No.131, dated 28.03.2004, issued by Padwal Transport. As per the aforesaid LR, Padwal Transport through its Vehicle No.MH14 F3444, had transported a consignment from SNA Industries, Chakan, Pune, to Automech India Pvt. Ltd, Silvassa, on 28.03.2004. On the aforesaid LR, there is a stamp of Automech India Pvt. Ltd., acknowledging the receipt of their consignment on 29.03.2004. Besides, on the aforesaid LR No.131, Bill No.27 raised by SNA Industries on Automech India Pvt. Ltd., dated 28.03.2004, has also been mentioned.

It may be emphatically stated here that there is absolutely no dispute, as regards the genuineness of the aforesaid LR No.131.

3. We have got Bill No.246, dated 28.03.2004, issued by Padwal Transport. The aforesaid Bill has raised transport charges of Rs.1820 on Kavita Industries Pvt.Ltd. On the same Bill No.246, 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. 130 has also been mentioned.

4. We have got Bill No.247, dated 28.03.2004, issued by Padwal Transport. The aforesaid Bill has raised transport charges of Rs.1,820, on SNA Industries, 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, Chakan, Pune.

6. We have got in our possession LR No.133, dated 30.03.2004, which has been signed by Shri Padwal, himself. As per the aforesaid LR No.133, dated 30.03.2004, one consignment has been transported from Automech India Pvt. Ltd., Silvassa to Kavita Industries Pvt. Ltd., 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 Automech India Pvt. Ltd, Silvass on Kavita Industries Pvt. Ltd, Pune, has 11 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

also been stated. Further on the LR No.133, there is a stamp of Kavita Industries Pvt. Ltd, acknowledging the receipt of the aforesaid consignment.

It may be emphatically stated here that there is absolutely no dispute, as regards the genuineness of the aforesaid LR Nc.133.

7. We have got Bill No.249, dated 30.03.2004 issued by Padwal Transport and signed by Shri Padwal himself. The aforesaid Bill has raised transport charges of Rs.1820 on SNA Industries, Chakan, Pune. On the same Bill No.249, Shri Padwal has signed on 31.03.2004 and stated therein 'Cash received'. In addition, on the aforesaid Bill, the LR No.132 has also been mentioned.

8. We have got Bill No.248, dated 30.03.2004, issued by Padwal Transport and signed by Shri Padwal, himself. The aforesaid Bill has raised transport charges of Rs.1,820 on Kavita Industries Pvt. Ltd, Pune. On the same Bill No.248, Shri Padwal has signed on 30.03.2004 and stated therein 'Cash received'. In addition, on the aforesaid Bill, LR No.133, 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.248.

9. From the aforesaid factual position, it is clearly established that the aforesaid Vehicle No.MH14 F3444, belonging to Padwal Transport had carried two consignments from Pune to Silvassa on 28.03.2004, one belonging to Kavita Industries Pvt. Ltd and the other belonging to SNA Industries. Further, the same Vehicle had brought back two consignments from Silvassa to Pune on 30.03.2004, one belonging to Automech Industries Pvt. Ltd and the other belonging to Veena Industries Ltd., Silvassa.

It may be further stated in this regard that there is absolutely no dispute, as regards the genuineness of the aforesaid LR Nos.131 and 133 and Bill Nos.247 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 Rs.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 Rs.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 Rs.5,000. This statement of Shri Padwal is also proved to be false, because Shri Padwal has earned as much as Rs.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 Transport. Further, both the aforesaid Lorry Receipts, Sr.Nos. are printed and the 12 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

same are not written in hand. Obviously, the assessee-Company could not have got the aforesaid LRs printed on its own. Further, on the aforesaid LRs, the Lorry No.MH14 F3444 has also been mentioned and the aforesaid Lorry is still owned and being used by Shri Padwai, This is quite clear from the reply of Shri Padwai to question No.4 of the statement of Shri Padwal, recorded by the AO on 10.12.2010.

11. Similarly, on the other LR No.131, dated 28.03.2004 and LR No.133, dated 30.03.2004, all the details printed are the same, as the present details of Padwal Transport and there is absolutely no dispute in respect of the genuineness of the aforesaid LRs and the details printed thereon.

In view of the aforesaid reasons, when the aforesaid undisputed LR Nos.131 and 133 are genuine, as a corollary, the impugned LR Nos.130 and 132 are also genuine.

12. Further, the aforesaid Bill Nos.246 and 249 also very clearly belong to Padwal Transport. In both the aforesaid Bills, the correct address of Padwal Transport has been printed. Further, the Bill Numbers have also been printed and not written in hand on both the aforesaid Bills. In addition, on both the aforesaid Bills, mobile No.9822423314 has been printed and this mobile number is still in the name of Shri M.S.Padwal and the same is being used by him. Obviously, the assessee-Company could not have got the aforesaid Bills printed on its own.

13. Similarly, on the other Bill Nos.247 and 248, belonging to Padwal Transport, all the details printed thereon are the same as the present details of Padwal Transport and there is absolutely no dispute, in respect of the genuineness of the aforesaid Bills and the details printed thereon.

In view of the aforesaid reasons, when the aforesaid undisputed Bill Nos.247 and 248 are genuine, as a corollary, the impugned Bill Nos.246 and 249, will also be genuine.

14. The most important and significant fact is that on the aforesaid two LRs, there are four signatures of Shri M.S.Padwal, one on each. Further, on the aforesaid Bills, there are eight signatures of Shri Padwal, being two on each of the aforesaid Bills. Thus, we have got twelve (12) signatures of Shri M.S.Padwal in our possession, which relate to the contemporaneous period.

All the aforesaid signatures 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.

13 ITA Nos.283 & 1344/PN/2010

ITA Nos.1368 & 1369/PN/2012

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 Paper- Book - B, for the AYs 2005-06 and 2008-09.

From the aforesaid facts, it is clearly established that the impugned LR Nos.130 and 132, as well as the Bill Nos.246 and 249 are absolutely genuine and the statement of Shri Padwal that he had never transporter any goods for Kavita Industries Pvt. Ltd. to Veena Industries Ltd, Silvassa and also for Veena Industries Ltd., Silvassa to SNA Industries, Chakan, Pune, is totally false.

In this connection, we would also like to very emphatically state that we will prove to the hilt that aforesaid statement of Shri Padwal is not only unsubstantiated but also false and for this purpose, if necessary, we will obtain a report of a Hand Writing Expert and besides, we would also cross- examine Shri Padwal, in the light of the aforesaid facts."

15. It transpires that the Assessing Officer again confronted the transporter,

Shri M.S. Padwal whose statement was again recorded on 28.12.2010, copy

of which has been placed in the Paper Book at pages 102 to 104. The

relevant portion of the said statement reads as uner :-

"Question No. 1:- Please introduce yourself. Answer:- I am Manik Sopan Padwal, Proprietor of PADWAL TRANSPORT. Question No. 2:- Veena Industries Ltd. vide its letter dated 21-12-2010

received in this office on 27-12-2010 has enclosed L.R. Number (Lorrie Receipt Number) 131 and 133 dated 28-03-2004 and 30-03-2004 issued and signed by you for the consigner SNA Industries, Chakan, and Auto Mech India Pvt. Ltd., Silvassa respectively. It has also furnished Bill No.247 and Bill No.248 issued by you for cash received against the transportation of goods. I am showing you the above L.Rs. and 'Bills. Please go through them and state as to whether these L.Rs. have been issued by you or not and also confirm whether they have been signed by you or not. Also confirm whether the goods have been transported by you from Chakan, Pune to Silvassa and Silvassa to Chakan, Pune or not for these parties.

Answer:- Yes, The above referred L.Rs. and Bills Number have been issued to and signed by me for the parties whose names are appearing on the L.Rs. and the Bills. I also confirm that the payments have been received by me. But in this connection I want to state that I had transported the goods for those parties for Local Trips only and not for outside of Maharashtra State. I have mentioned the address of Silvassa for Auto Mech India Pvt. Ltd, because the said party had told me to mention such address on the 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, 14 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

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 transportation of goods from Chakan, Pune to Silvassa and from Silvassa to Chakan, Pune, keeping in view the statement given by you on 10-12-2010 on this issue. Answer:- In this connection I want to make reference to my statement given on 10-12-2010 wherein I denied to have issued L.Rs.

Number 130 & 132 on the ground that I had not transported any goods for those parities whose names appearing on those two L.Rs., from Chakan, Pune to Silvassa and Silvassa to Chakan, Pune and also on the ground that Invoices Number 01 and 04 (reference of which are in my statement given on 10-12-2010) do not mention vehicle number which has been mentioned on those two L.Rs. i.e. MH 14 F 3444 which is owned by me. I further want to state that the said vehicle is not having National Permit Passing by the R.T.O. and under this circumstance; the said vehicle cannot be used for transportation of goods, outside of Maharashtra, unless I take temporary permit at the Border/ of any two states. Since, even the temporary permit is not taken by me for transportation of goods outside of Maharashtra I could not furnish proof in respect of R.T.O. tax paid if any by me, as required-by you vide your letter dated 10-12-2010 mentioned at para 3.1 therein because I did not transport any goods for these parties outside the Maharashtra States. Therefore, those two L.Rs. were issued by me for Local Trips only.

I want to state that you have misunderstood my statement given on 10-12-2010. What I meant to state on 10-12-2010 is that these two L.Rs. were not issued by me for transportation of goods from Chakan, Pune to Silvassa and Silvassa to Chakan, Pune. These parties had told me to mention that address of Silvassa Unit and therefore I did the same without understanding the implication/gravity that mentioning of address of Silvassa Unit would mean transportation of goods to Silvassa or from Silvassa. Therefore, these two L.Rs. and Bills were issued by me for Local Trips only. I still maintain that the statement given by me on 10-12-2010 on this issue is correct in the sense that these two L.Rs. were not issued for transportation of goods from Chakan, Pune to Silvassa and from Silvassa to Chakan, Pune but issued for Local Trips only and accordingly, I issued Bills for cash received against transportation of goods from Chakan, Pune to Bhosari, Pune and Bhosari, Pune to Chakan, Pune only.

Question No.4:- Please state 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."

15 ITA Nos.283 & 1344/PN/2010

ITA Nos.1368 & 1369/PN/2012

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 purchased raw materials from

Mahindra & Mahindra Ltd. in the shape of engines but it had failed to prove the

commencement of manufacturing activity on or before 31.03.2004. For all the

aforesaid reasons, the Assessing Officer denied the assessee's claim for

deduction u/s 80-IB(4) of the Act.

17. Assessee carried the matter in appeal before the CIT(A). The CIT(A)

has also affirmed the order of the Assessing Officer. It is noticed that the

CIT(A) has based his decision on the basis of the material on record and in the

absence of any submissions of the assessee on merits. Assessee had sought

adjournment from the CIT(A) on the ground that for assessment years 2006-

07 and 2007-08, the Departmental appeals on the same issue were pending

before the Tribunal. The CIT(A) did not accede to assessee's request for

adjournment beyond a period and therefore he proceeded to decide the

appeal on the basis of the available facts on record and ex-parte qua the

assessee. Be that as it may, in this background, we have heard the rival

counsels.

16 ITA Nos.283 & 1344/PN/2010

ITA Nos.1368 & 1369/PN/2012

18. Before us, the Ld. Representative for the assessee vehemently pointed

out that before the Assessing Officer, assessee had produced various

evidences in support, namely, (i) lease deed dated 09.03.2004 substantiating

the occupation of the factory premises at Silvassa; (ii) registration of the

Silvassa unit with the Excise Authority dated 24.03.2004, a copy of which has

been placed in the Paper Book at page 120; (iii) a certificate of registration

issued by the Sales-tax Authorities of the Union Territory of Dadra and Nagar

Haveli relating to the Silvassa unit w.e.f. 24.03.2004, a copy of which has been

placed in the Paper Book at pages 121 to 122; (iv) the invoice raised by the

M/s Kavita Industries Pvt. Ltd. dated 28.03.2004 evidencing purchase of raw

materials, a copy of which has been placed in the Paper Book at page 104; (v)

evidence of purchase of components, i.e. Engines Mahindra & Mahindra Ltd.

vide invoice dated 29.03.2004 which was also received at the Silvassa unit

prior to 31.03.2004, copy of which has been placed at pages 125 to 129 of the

Paper Book; (vi) a copy of the excise register RG-23 showing entries for the

duty credit pertaining to transactions prior to 31.03.2004, copy of which has

been placed in the Paper Book at pages 130 to 132; and, (vii) a copy of the

excise return filed on 05.04.2004 by 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.

17 ITA Nos.283 & 1344/PN/2010

ITA Nos.1368 & 1369/PN/2012

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 commenced on or

before 31.03.2004 is a matter of factual appreciation. The letter of the

transporter dated 10.12.2010, and his statement of even date which have

been heavily relied upon by the Assessing Officer, have been placed at pages

152 to 155 and 156 to 161 of the Paper Book. It is noticeable that on

10.12.2010 when the transporter was put to question, he denied of any

business transaction or relation with the assessee of M/s Kavita Industries Pvt.

Ltd.. Further, when the bills purported to have been issued by him to M/s

Kavita Industries Pvt. Ltd. and assessee were put to him, it was stated that

those bills i.e. Bill Nos.130 and 132 respectively were not issued by him.

Though, he confirmed the vehicle number mentioned in the bills but it was

claimed by him that the said vehicle was not sent by him from Chakan, Pune

(i.e. the premises of M/s Kavita Industries Pvt. Ltd.) to Silvassa unit of the

assessee. After noticing the denial of the transporter, he was also asked to

produce a Log Book, if any, maintained by him showing movement of the

vehicle in question. In response, it was stated that though the vehicle was

owned by him but no Log Book was maintained for its movement. On being

asked to produce the bill book for the relevant period, the said transporter

replied that it was not available and it was kept in the godown in his residential

house which he had since shifted out. The transporter also confirmed that the

Bill Nos. 130 and 132 purported to have been issued by him were not even 18 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

signed by him and nor were issued by him. When all these were put to the

assessee, a detailed written communication was furnished, which we have

already reproduced in the earlier part of this order. The claim of the assessee

was that the relevant transport bills were issued by the transporter himself and

were duly signed by him. The reply furnished by the assessee clarified the

position that the vehicle in question belonged to the M/s Padwal Transport,

who carried two consignments from Pune to Silvassa on 28.03.2004 one

belonging to M/s Kavita Industries Pvt. Ltd. and the other belonging to M/s

SNA Industries. Further, the same vehicle brought back two consignments

from Silvassa to Pune on 30.03.2004 one belonging to M/s Auto Mech

Industries Pvt. Ltd. and other belonging to assessee's Silvassa unit. It was

pointed out that not only two Bill Nos. 130 and 132 were issued 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

Rs.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

Rs.1,820/- was only half-truth because the transporter had earned much more

than the figure of Rs.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 Rs.5,000/-, a statement made in the context of the amount of Rs.1,820/-

stated in the bill shown to him. The assessee pointed out that the transporter

had earned Rs.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 Industries Pvt. Ltd. and M/s SNA Industries, Chakan,

respectively were genuine, there was no reason for the transporter to have 19 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

denied the authenticity of the other two bills, namely, 130 and 132. It was

pointed out that on the basis of other bills of the transporter also that the

signatures on all the bills are identical and similar. We find that when the

transporter was again put to examination by the Assessing Officer, he

rescinded from his earlier stand of the bills having been fabricated. A copy of

the said statement recorded on 28.12.2010 is placed at pages 20 to 24 of the

Paper Book. The relevant portion of the same is already reproduced in the

earlier part of this order. Nevertheless, when the Assessing Officer put across

to the transporter Bill Nos. 246 and 249 issued by him as also the contents of

assessee's submissions it was admitted that the LR and bills were indeed

issued and signed by him. The transporter explained that the bills related to

the local transportation and not for transportation outside Maharashtra and

that in the bills he had mentioned the address of Silvassa merely for the

purposes of billing. According to the transporter, though the LRs and bills

were issued by him but they were for local transportation only and there was

no transportation of goods from Chakan, Pune to Silvassa or from Silvassa to

Chakan, Pune.

21. Ostensibly, there are apparent contradictions in the statements

furnished by the transporter at the different points of time. In such a situation,

one of the course available was for a cross-examination of the transporter by

the assessee. On this aspect, we find that the Assessing Officer did allow an

opportunity to the assessee of cross-examining the transporter. We find that

in this context, the Assessing Officer required the assessee to cross-examine

the transporter on 29.12.2010. The said opportunity was allowed by the

Assessing Officer through a communication dated 28.12.2010, a copy of which

has been placed on record. The assessee did not avail of this opportunity for

the reason explained in its explanation dated 28.12.2010 to the Assessing

Officer, a copy of which has been placed at pages 95-96 of the Paper Book. 20 ITA Nos.283 & 1344/PN/2010

ITA Nos.1368 & 1369/PN/2012

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 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 income is dated 05.04.2004 and at the time of hearing, the original

copies of the said were also called for and perused. The said return

corresponded to the quarter ending on 31.03.2004. The reflection of quantity

of goods manufactured and liability of excise duty thereof in the said return

has not been disapproved by the Revenue at any stage. There is also no

reason for us to disregard the same. Nevertheless, it is also emerging that so

far as the evidence of transportation is concerned it does not clinchingly

establish the case either way. Under these circumstances, in our view, it was

not only imperative but also prudent that the cross-examination of the

transporter was undertaken so as to enable the Assessing Officer to come to

appropriate findings. In our considered opinion, it would meet the ends of 21 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

justice if the matter is restored back to the file of the Assessing Officer who

shall certainly confronted the assessee with the material with him but also

ensure that an appropriate and adequate opportunity of cross-examination is

allowed to the assessee. It is also relevant to say that in response to the

denials by the transporter, initially the assessee had made a detailed

submission attempting to demolish the version of the transporter. The initial

burden on the assessee stood discharged in view of its submissions dated

21.12.2010 and therefore it was in fitness of things that cross-examination was

carried out so as to enable the Assessing Officer to come to an appropriate

and credible findings thereof. Thus, we set-aside the order of the CIT(A) and

restore the matter back to the file of the Assessing Officer who shall make an

order afresh after allowing the necessary opportunity to the assessee of being

heard and keeping in mind out above directions. Thus, for assessment year

2005-06, assessee partly succeeds for statistical purposes.

22. Since it was a common point between the parties that the issue in the

other three appeals are identical, our decision in assessee's appeal for

assessment year 2005-06 (supra) in the above paras would apply mutatis-

mutandis in the other three appeals also.

23. As a consequence, the appeals of the assessee as well as of the

Revenue are partly allowed, as above.

Order pronounced on 27 th February, 2015.

Sd/- Sd/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER

Pune, Dated: 27 th February, 2015. Sujeet 22 ITA Nos.283 & 1344/PN/2010 ITA Nos.1368 & 1369/PN/2012

Copy of the order is forwarded to: - 1) The Assessee; 2) The Department; 3) The CIT(A)-V, Pune; 4) The CIT-V, Pune; 5) The DR "B" Bench, I.T.A.T., Pune; 6) Guard File.

By Order //True Copy//

Assistant Registrar I.T.A.T., Pune