RAJ KUMAR Vs. UNION OF INDIA

JUDGEMENT

(1.) COMMISSIONER of Income Tax Jandk, Jammu, had issued notice No. CIT/tech/2008-09/1935 of June 5, 2008 to Raj kumar alias Raju Chowdhary proprietor M/s Tawi chemicals Industries, K. C. Market Jammu, hereinafter to be referred as, the petitioner, to show cause as to why assistant Commissioner, Circle 2 Jammu's order of 14. 12. 2007 passed under Section 143 (3) of the Income Tax act, 1961, for the assessment year 2005-06 be not cancelled and a fresh assessment ordered.

(2.) THE Commissioner had issued this notice in exercise of his power under Section 263 of the Income Tax Act, 1961 (hereinafter to be referred as "the Act" ). The notice had been issued on the basis of the information and evidence which had come to light during the course of Survey Action under Section 133-A of the Act, carried at the factory premises of the petitioner on March 14, 2008. Perusal of the documents impounded, and the statements made by the employees of the company, during the Survey operation, revealed that the petitioner had made false claims of deduction under Section 80-IB (4) of the Act to the tune of Rs. 18,80,365/- in respect of the IInd furnace, in that, it was merely an extension of existing undertaking and no new undertaking, as projected, had infact come into being. The material collected during the course of Survey had revealed that the petitioner was not eligible to claim deductions under Section 80-1b of the Act in respect of IInd furnace at 100% because the said furnace was only an extension of the existing undertaking and no new industrial undertaking had been established.

(3.) THE notice further revealed that M/s Tawi Chemical industries, ( Unit-II), of the petitioner was engaged in the business of manufacturing of M. S. Ingots, and a separate manufacturing cum Trading account, and balance sheet had been filed on its behalf in which deduction of Rs. 3,42,46,999/- had been claimed under Section 80-1b of the act on the profits of the Unit, which had been allowed after reducing the amount of discount received from its profits as the same had not been derived from industry's activity. Petitioner's counsel is stated to have denied receipt of any refund by the petitioner from Central Excise department in respect of this unit during the relevant assessment year 2005-06. It was in these circumstances that deductions under Section 80-1b of the Act had been allowed without reducing any Central Excise Refund from the profits claimed as deductible under Section 80-1b of the Act. During the course of the Survey Action carried out at the factory premises, and information received from Central excise Department, it had come to light that during the period relevant to the assessment year 2005-06 an amount of rs. 169. 93 lacs had, infact, been received by the petitioner on account of refund of the Central Excise Duty.