IN INCOME TAX APPELLATE TRIBUNAL E Bench, Mumbai Before Shri B.R. Baskaran (AM)& Ramlal Negi (JM) I.T.A. No. 2347/Mum/2012 (Assessment Year 2008-09) M/s. Talreja Infotech Pvt. DCIT Circle 4(3) Ltd. Vs. Aayakar Bhavan 599, J.S.S. Road 6 t h Floor 1 s t Floor, Kapadia Chambers M.K. Road Chira Bazar Mumbai-400 020. Mumbai-400 002. (Appellant) (Respondent) PAN No.AABCT2851Q Assessee by Shri Snehal Shah Department by Suman Kumar Date of Hearing 6.10.2016 Date of Pronouncement 6.10.2016 ORDER Per B.R. Baskaran (AM) :- assessee has filed this appeal challenging order dated 02-01-2012 passed by Ld CIT(A)-8, Mumbai for assessment year 2008-09, wherein Ld CIT(A) has confirmed disallowance of claim for deduction u/s 80IB of Act. 2. We heard parties and perused record. assessee is engaged in business of manufacturing, processing and coating of cotton fabrics. It has got two undertakings at Sarigam and Daman. undertaking located at Daman was eligible for deduction u/s 80IB of Act and accordingly it claimed deduction of Rs.53,66,892/- under that section. AO noticed that expenses claimed in Daman unit were very much lower when compared with expenses claimed in Sarigam unit. He further deputed his Inspector to ascertain factual details and in report submitted, Inspector reported that 2 Talreja Infotech Pvt. Ltd. enquiries made by him on 01-12-2010 with Bidi shop owner and persons who were occupying factory building at that point of time revealed that assessee had shifted its undertaking to Sarigam about two years back. assessee submitted letters filed with Pollution Control Board, Primary Health Centre and VAT officer before AO, but AO noticed that those letters did not mention date of stoppage of commercial activities at Daman unit. enquiries made by AO with above said Government officials also revealed that assessee did not mention date of stoppage of commercial activities at Daman unit. In sales tax return filed with VAT authorities, sale for FY 2007-08 was reported at Rs.19,34,022/-, where as assessee had reported sales of Rss.2,25,46,109/- in Profit and loss account. With these details, AO came to conclusion that assessee has stopped manufacturing activity at Daman unit in Feb., 2007 itself and existing stock as on 31.3.2007 was sold in April, 2007. AO further drew inference that remaining amount of sale shown in Daman unit should be of production done at Sarigam plant. It is pertinent to note that assessee has also could not produce details that were called for by AO, like sales tax records etc., before AO. entries made in inward register did not tally with purchase bills. assessing officer also noticed that major portion of expenses have been accounted through self made vouchers. In view of above, AO came to conclusion that entire production and sales of Daman unit were carried out from Sarigam. Accordingly he held that deduction u/s 80IB could not be allowed, since there was no manufacturing activity in Daman Unit. Ld CIT(A) also confirmed same. 3. Ld A.R submitted that AO has drawn adverse inferences on basis of available records without confronting same with assessee. He submitted that Inspector has carried out field visit in year 2010 and he 3 Talreja Infotech Pvt. Ltd. has reported that unit was closed about 2 years back. He submitted that assessee has transferred unit after 31.3.2008 and hence report of Inspector did say same only. He submitted that assessee has carried out production activities from Daman unit in FY 2007-08. He submitted that assessee was required to report taxable sales only in VAT return and hence there was difference in sales amount found in VAT returns and Profit and Loss account. He submitted that sales tax department has since completed assessment of FY 2007-08 and sales certified by them did tally with Profit and Loss account. He submitted that sales tax assessment order is placed in Paper book. 4. He further submitted that assessing officer did not confront report of Inspector with assessee. He submitted that it is not clear as to whether enquiries were made by Inspector with Bidi shop owner and occupants of building by taking statements from them or by way of oral enquiries. He submitted that AO should have given opportunity to cross examine those persons. He submitted that, in any case, nothing against assessee could be inferred out of report of Inspector and hence AO should not have placed reliance on same. He submitted that non- confronting of report of Inspector and non-allowing opportunity to cross examination would render assessment order illegal. He submitted that assessing officer has compared expenses incurred in Daman unit and Sarigam unit and came to conclusion that expenses incurred in Daman unit were very much less. He submitted that Sarigam unit is having turnover many times more than turnover of Daman unit. Hence AO was not justified in comparing expenses of both units without considering their respective turnover. Accordingly he submitted that tax authorities have rejected claim for deduction u/s 80IB of Act on incorrect appreciation of 4 Talreja Infotech Pvt. Ltd. facts. Accordingly he contended that deduction u/s 80IB should be allowed to assessee. 5. On contrary, Ld D.R submitted that assessee is furnishing additional evidences in form of Sales tax assessment order, which was not available with AO. He further submitted that AO was constrained to take adverse inference, since assessee could not furnish certain vital information/record. He submitted that matter may be set aside to file of AO, since assessee is raising many new contentions and producing additional evidences. 6. When submission made by Ld D.R was put to Ld A.R, he also agreed that matter may be restored to file of AO. We have also earlier noticed that assessee could not furnish certain specific details that were called for by AO. Further, Ld A.R is now presenting certain additional evidences and new contentions. Hence we are of view that this issue requires fresh examination in light of various contentions and evidences. Accordingly, we set aside order passed by Ld CIT(A) on this issue and restore same to file of AO with direction to examine this issue afresh by duly considering information and explanations that may be furnished by assessee. After providing adequate opportunity of being heard, AO may take appropriate decision in accordance with law. 7. In result, appeal filed by assessee is treated as allowed for statistical purposes. Order has been pronounced in Court on 6.10.2016 Sd/- Sd/- (RAMLAL NEGI) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 6/10/2016 5 Talreja Infotech Pvt. Ltd. Copy of Order forwarded to : 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Dy./Asstt. Registrar) PS ITAT, Mumbai M/s. Talreja Infotech Pvt. Ltd. v. DCIT, Circle-4(3), Mumbai