Shri R.C. Goel, New Delhi V. ACIT, New Delhi

ITA 109/DEL/2012

• Counselvise Citation: 10920114 RSA 2012
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 11-07-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 09-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VEENA JOSHI
• Assessee Lawyers: T R TALWAR
• Keywords: Additional evidence; Permanent establishment
• Section: 40A(3); 143(3); 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.109/DEL/2012 ASSESSMENT YEAR : 2008-09 SHRI R.C. GOEL, ACIT, 7787-88, RAM NAGAR, CIRCLE-39(1), PAHARGANJ, NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AETPG AETPG AETPG AETPG- -- -0967 0967 0967 0967- -- -R RR R APPELLANT BY : SHRI T.R. TALWAR, ADVOCATE. RESPONDENT BY : SMT. VEENA JOSHI, SR. DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 02.11.2011. THE GROUNDS RAISED BY THE A SSESSEE ARE AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CI T(A) HAS ERRED:- A) IN CONFIRMING THE DISALLOWANCE OF EXPENDITURE AMOUNT ING TO ` .27,48,860/- MADE BY THE ASSESSING OFFICER U/S 40A(3) R/W/RULE 6DD IGNORING THE ASSESSEES PLEA THAT THE SAME I S COVERED UNDER THE EXCLUSION CLAUSE (K) OF RULE 6DD OF THE IT RULES, 1962. ITA NO109/DEL/2012 2 B) IN CONFIRMING THE ABOVE DISALLOWANCE OF EXPENDITURE WITHOUT DECIDING THE ASSESSEES PLEA THAT THE SAID EXPENDITURE I S COVERED UNDER THE EXCLUSION CLAUSE (K) OF RULE 6DD OF THE IT RULES, 1962. II) IN CONFIRMING THE DISALLOWANCE OF AN EXPENDITURE OF ` ,7,76,928/- ( ` .5,78,508/- + ` .1,98,420/-) MADE BY THE ASSESSING OFFICER ON AD HOC BASIS UNDER THE HEAD COMMISSION PAID TO THE CAB DRIVERS, AUTO RICKSHAW DRIVERS, BROKERS AND AGENTS F OR BRINGING CUSTOMERS TO THE ASSESSEES TWO HOTELS. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, SUB STITUTE OR DELETE ANY OF THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS DRAWING INCOME FROM CONTRACTS FROM IRCTC LTD. FOR CATERING SERVICES ABOARD TRAINS AND INCOME FROM TWO HOTELS NAMEL Y BAWA DELUXE AND HOTEL KRISHNA. THE RETURN OF INCOME WAS FI LED ON 26.9.2008 DECLARING A TOTAL INCOME OF ` .13,10,566/-. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAD MADE PURCHASES OF ` .3,22,25,343/- FOR CATERING SERVICES ON TRAINS. ON BEING ASKED BY ASSESSING OFFICER TO FILE LIST OF CASH PURCHASES THE ASSESSEE FILED THE SAME. THE ASSESSIN G OFFICER OBSERVED THAT CASH PURCHASES FROM A SINGLE PART Y NAMELY M/S SHRUTI ENTERPRISES WAS MADE AMOUNTING TO ` .27,48,860/-. M/S SHRUTI ENTERPRISES IS BASED IN MUMBAI AND THE ASSESSEE HAD BEEN MA KING PURCHASES FROM M/S SHRUTI ENTERPRISES FOR TRAINS NAMELY PUNJAB MAIL & PUSHPAK EXPRESS RUNNING BETWEEN FEROZPUR & MUMBAI AND BETWEEN LUCKNOW & MUMBAI. THE ASSESSEE SUBMITTED THAT PURCHASES FR OM ITA NO109/DEL/2012 3 MUMBAI WERE NECESSITATED BECAUSE ONE OF THE TRAINS NEVE R TOUCHED DELHI AND THE OTHER TRAINS WHICH USED TO TOUCH DELHI DID STOP AT DELHI FOR A VERY LIMITED TIME AND IT WAS NOT POSSIBLE TO LOA D THE STOCKS WITHIN SUCH A SHORT PERIOD. THE SUPPLIER AT MUMBAI INSISTED FOR PAYMENTS IN CASH AGAINST DELIVERY OF ITEMS AND THE ASSESSEE BEING ENGA GED IN CATERING SERVICES IN TRAINS AND WAS TIME BOUND TO SUPPLY THE GOODS AND HAD TO MAKE PAYMENTS CASH IN ORDER TO MAINTAIN SUPPLY. THE ASSESSEE ALSO SUBMITTED THAT GENUINE AND BONA FIDE TRANSACTION S CAN BE TAKEN OUT OF SCOPE OF SECTION 40A(3) OF THE ACT AND IT WAS OPEN TO ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFFICER TH E CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED U/S 40A(3) WAS NOT PRACTICABLE. RELIANCE WAS PLACED IN THE CASE OF ATTAR SINGH GURMUKH SINGH V. ITO (1991) 191 ITR 667 (SC). RELIANCE WAS A LSO PLACED UPON THE FOLLOWING JUDGMENTS OF VARIOUS COURTS:- 1. PAUL BROS. V. CIT (1990) 186 ITR 356,359-60 (GAUHATI ). 2. CIT V. CHOUDHARY & CO. (1996) 217 ITR 431 (ALL.). 3. KANTI LAL PURSHOTTAM AND CO. V. CIT (1985) 155 ITR 5 19. 4. CIT V. SWARAN SINGH BALBIR SINGH (1982) 136 ITR 595 . 5. GIRSHARILAL GONEKA V. CIT (1989) 179 ITR 122. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTIONS OF ASSESSEE AND DISTINGUISHED THE CASES RELIED UPON BY THE ASSESSEE WITH TH E FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND ADDED BACK THE CA SH PURCHASES AMOUNTING TO ` .27,48,860/- TO THE INCOME OF THE ASSESSEE. 3. THE ASSESSING OFFICER ALSO NOTED THAT ASSESSEE HAD PAID COMMISSION TO TAXI DRIVERS, AUTO RICKSHAW DRIVER FOR BR INGING CUSTOMERS TO HIS HOTELS. ON THE BASIS OF COMPARISON OF ROOM RENT INCOME OF TWO HOTELS AND COMMISSION PAID THEREON THE ASSESSING OFFICER ARRIVED AT ITA NO109/DEL/2012 4 THE CONCLUSION THAT AVERAGE RATE OF COMMISSION PAID BY THE ASSESSEE WAS 12.73%. ON BEING QUESTIONED BY ASSESSING OFFICER, TH E ASSESSEE REPLIED THAT IT IS IMPOSSIBLE TO SELL THE ROOMS WITHOUT ANY PAYMENT TO INTERMEDIARIES I.E. TAXI DRIVERS & AUTO DRIVERS AND T RAVEL AGENT. THE ASSESSEE FURTHER SUBMITTED THAT IN THE LOCALITY OF PAHAR GANJ, WHERE THE ASSESSEE HAS HIS HOTELS, THERE ARE 100 OF GUEST HOUSES AND FE W OF WHICH ARE SUPERIOR TO ASSESSEES GUEST HOUSE WHICH GIVES TOU GH COMPETITION TO THE ASSESSEE. THE ASSESSEE WAS ASKED TO FILE CONFIRMATION FROM THE PERSONS TO WHOM COMMISSION WAS PAI D AND HE WAS ALSO CONFRONTED ON THE REPORT OF AN INSPECTOR STATI NG THAT IN PAHARGANJ AREA PERCENTAGE OF COMMISSION PAID WAS 5 TO 7%. IN REPLY TO THAT THE ASSESSEE EXPLAINED THAT 12.73% COMMISSION IS QUIT E REASONABLE AND COMMISSION RATE VARIES FROM CIRCUMSTANCES TO CIRCUMSTANCES DEPENDING UPON AS TO WHETHER REGULAR CUST OMER IS CHECKING IN OR A NEW CUSTOMER IS BROUGHT IN BY THE AG ENT. HE ALSO SUBMITTED THAT COMMISSION ALSO DEPENDS UPON DURATION OF STAY OF RESPECTIVE GUEST AND IF THE STAY IS LONGER, THE COMMISSIO N IS HIGHER, THEREFORE, IN VIEW OF THE ABOVE, THE AVERAGE COMMISSI ON PAID BY THE ASSESSEE AT 12.73% WAS QUITE JUSTIFIED. 4. AS REGARDS CONFIRMATION, THE ASSESSEE SUBMITTED THAT PA RTY-WISE DETAILS ARE NOT POSSIBLE AS THE RECORD OF THE AUTO DRIV ER OR RICKSHAW DRIVER ARE NOT MAINTAINED ON REGULAR BASIS. THE ASSESSING OFFICER ARRIVED AT THE VIEW THAT IN THE ABSENCE OF PARTY-WISE DETAILS, IT WAS NOT POSSIBLE TO EXAMINE OR VERIFY THE GENUINENESS OF THE EX PENSES AND MOREOVER IT WAS QUITE POSSIBLE THAT A PERSON MAY BE GET TING COMMISSION EXCEEDING ` .2500/- PER YEAR AND THEREFORE HE HARBORED A BELIEF THAT THERE WAS EVERY POSSIBILITY THAT A PART OF COMMISSION MIGHT HAVE BEEN SUBJECTED TO TAX DEDUCTION AT SOURCE. THER EFORE, IN VIEW OF THE ABOVE CIRCUMSTANCES, THE ASSESSING OFFICER RESTRICTED THE CLAIM OF ITA NO109/DEL/2012 5 ASSESSEE REGARDING COMMISSION PAYMENT TO 5% OF GROSS RENT A ND MADE AN ADDITION OF ` .7,76,928/- AS EXCESS COMMISSION. 5. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD CIT( A) AGAINST BOTH ADDITIONS AND SUBMITTED AS UNDER:- A) THAT THE ASSESSEE IS A MOBILE CONTRACTOR AND IS REQUIRED TO MAKE UNINTERRUPTED AND QUALITY SERVICE TO THE PASSENGERS DUR ING THE RUNNING OF THE TRAINS FROM THE ORIGINATING STATION TO ITS END DESTINATION AND IN THE EVENT OF ANY LAPSE IN SUPPLY OF AN ITEM OR QUALITY OF THE SERVICE, HIS SECURITY DEPOSIT WAS LIKELY TO BE FORFEITED AND PENALTY WAS ALSO LEVIABLE. B) THAT THIS MADE THE ASSESSEE TO APPOINT AUTHORIZED PERSONS/AGENT ON THE RUNNING TRAINS TO MAINTAIN ITS BUSI NESS ACTIVITY ON HIS BEHALF AGAINST FIXED COMPENSATION WITH FREE MEALS TO EACH AGENT. C) THAT ASSESSEES BUSINESS ACTIVITY IS ENTIRELY DIFFERENT FRO M HOSPITALITY ESTABLISHMENT IN THE CITY WHERE THE ASSESSEE H AS PERMANENT ESTABLISHMENT, BANK OPERATIONS, CREDITABILI TY WITH THE SUPPLIERS WHEREAS IN THE PRESENT CASE HE HAS TO MAINTAIN CATERING ON RUNNING TRAINS OUTSIDE HIS HEADQUARTERS IN DELHI AND HAS TO DEPEND UPON THE AUTHORIZED PERSONS/AGENT APPOIN TED FOR THE PURPOSE OF COLLECTING CASH SALE PROCEEDS ON RUNNING TRAINS AND ARRANGING SUPPLIES FROM THE ORIGINATING STATION A ND PAYING OUT OF THOSE CASH SALES PROCEEDS. D) THAT ONE OF THE TRAIN UNDER CONTRACT ON WHICH CATER ING WAS DONE BY THE ASSESSEE NAMELY PUSHPAK EXPRESS DOES NOT TOUCH DELHI AT ALL. SIMILARLY, PUNJAB MAIL WHICH RUNS BETWEEN MU MBAI AND FEROZPUR HAD A VERY SHORT HALT AT DELHI AND THERE WA S VERY LITTLE TIME TO LOAD THE ITEMS. THEREFORE, THE SUPPLIES IN THE NATURE OF ITA NO109/DEL/2012 6 COLD DRINK, TEA, SNACKS, FRUITY LAYS ETC. HAD TO BE A RRANGED FROM ORIGINATING STATION I.E. MUMBAI THROUGH SUPPLY FROM M /S SHRUTI ENTERPRISES WHO INSISTED ON CASH PAYMENT ON DAY TODAY BASIS WHICH THE AGENTS USED TO PAY OUT OF CASH SALE PROCEED S OF THE PREVIOUS DAY. E) THAT ASSESSING OFFICER HAS ACCEPTED THE TRADING RESULTS W HICH INCLUDES CASH PURCHASES AND SALES AND HAS FOUND NO DISCREPA NCY IN THE TRADING RESULTS. F) THAT ASSESSEES CASE FALLS UNDER THE EXCEPTION CLAUSE (K) O F RULE 6DD WHICH READS AS UNDER:- WHERE THE PAYMENT IS MADE BY ANY PERSON TO HIS AGENT WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR SERVICES ON BEHALF OF SUCH PERSONS RELIANCE WAS PLACED IN THE CASES OF DCIT V. HIND INDUST RIES LTD. (2008) 26 SOT 196 (DEL) & SRI RENUKESWARA RICE MILLS V. ITO (2005) 93 ITD 263. (BANG) 6. THE LD AR ALSO FILED COPIES OF APPOINTMENT LETTERS OF AUTHORIZED PERSONS ALONG WITH INDEMNITY BOND AS ADDITIONAL EVIDEN CE UNDER RULE 46A. THE LD CIT(A) CALLED FOR REMAND REPORT AND TH E ASSESSING OFFICER IN HIS REMAND REPORT EXTENSIVELY DEALT WITH THE SUBMIS SIONS OF THE ASSESSEE AND SUBMITTED THAT ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE DURING APPELLATE PROCEEDINGS WERE NOT SUBMITTED DURING COURSE OF ASSESSMENT PROCEEDINGS IN SPITE OF REPEATED OPP ORTUNITIES PROVIDED TO THE ASSESSEE TO PROVE HIS CLAIM. FURTHER TH E ASSESSING OFFICER OBSERVED THAT THE PAYMENTS WERE NOT MADE TO T HE AGENTS FOR FURTHER PAYMENT TO M/S SHRUTI ENTERPRISES BUT THESE WE RE DIRECTLY MADE FROM CASH COLLECTIONS OF SALE. THEREFORE CLAUSE (K) M ENTIONED ABOVE OF ITA NO109/DEL/2012 7 RULE 6DD WAS NOT RELEVANT. THE ASSESSING OFFICER IN HIS REMAND REPORT ALSO DISTINGUISHED THE CASE LAWS RELIED UPON BY THE LD A R AS UNDER:- THE FIRST CASE IN THE CASE OF M/S HIND INDUSTRIES LTD. TH E ASSESSEE WAS ENGAGED IN THE BUSINESS OF PROCESSING AND EXPORT OF M EAT AND MEAT PRODUCTS WHICH WAS SPECIFICALLY COVERED UNDER EXCEPTION TO SECTION 40A(3)(E) (II) OF THE ACT. IN THE SECOND CASE IN THE CASE OF M/S SRI RENUKESWARA RI CE MILLS (SUPRA) THE PAYMENTS WERE MADE FOR PURCHASE OF AGRICUL TURAL PRODUCE WHICH WAS SPECIFICALLY EXEMPT AS PER CLAUSE (E ) OF RULE 6DD WHICH PROVIDES FOR EXEMPTION IF THE PAYMENT IS M ADE FOR THE PURCHASE OF AGRICULTURAL PRODUCE TO THE CULTIVATOR. 7. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASS ESSEE, REMAND REPORT AND REJOINDER REPORT ARRIVED AT THE C ONCLUSION THAT THERE WAS CLEAR CUT VIOLATION OF SECTION 40A(3) AND THEREFO RE THE DISALLOWANCE MADE TO THE TUNE OF ` .27,48,860/- WAS JUSTIFIED. 8. AS REGARDS OTHER ADDITION OF ` .7,76,928/- ON ACCOUNT OF EXCESS COMMISSION PAID, THE LD CIT(A) ARRIVED AT THE CONCLUSI ON THAT TAKING CONFIRMATION FROM FEW OF THE DRIVERS WAS NOT A TOUGH TASK AND HE AGREED WITH THE ASSESSING OFFICER THAT COMMISSION TO AN I NDIVIDUAL MAY HAVE EXCEEDED ` .2500/- IN A YEAR FOR WHICH THE ASSESSEE WAS LIABLE TO DEDUCT TDS. THE LD CIT(A) DID NOT ACCEPT THE CONTENTION OF ASSESSEE THAT DURING LAST THREE YEARS, THE COMMISSION PAID WAS 13% TO 14% OF TOTAL RENT RECEIVED. THE LD CIT(A) ALSO IGNOR ED THE ASSESSMENT OF ASSESSEE FOR THE YEAR 1995-96 WHEREIN 25% COMMISSION W AS FOUND REASONABLE AND ONLY A DISALLOWANCE OF 2% WAS MADE OUT OF 27% OF COMMISSION CLAIMED. THE LD CIT(A) ALSO DID NOT ACCEPT THE DULY SIGNED ITA NO109/DEL/2012 8 VOUCHERS SIGNED BY THE DRIVER WHICH ACCORDING TO LD A R WERE SHOWN TO THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS . 9. THE LD AR SUBMITTED BEFORE USTHAT ASSESSEE IS A RAILWAY CONTRACTOR FOR COLD DRINKS, CHIPS, TEA ETC. AND CONTR ACT WAS FOR TWO TRAINS NAMELY PUSHPAK EXPRESS & PUNJAB MAIL AND BO TH OF THE TRAINS ORIGINATES FROM MUMBAI. ONE OF THE TRAINS DOES NOT TOUCH DELHI AT ALL AND THE OTHER TRAIN MAKES HALT AT DELHI FOR A SHORT TIME THEREFORE IT WAS NECESSARY FOR ASSESSEE TO PURCHASE THE GOODS FROM BOM BAY ITSELF AND LOAD THEM FROM THERE ONLY. HE FURTHER ARG UED THAT THE ASSESSEE RESIDES IN DELHI AND THE PECULIAR NATURE OF ACTI VITY UNDERTAKEN BY THE ASSESSEE IS TO SUPPLY THESE GOODS ON RUN NING TRAINS WHICH RUN ON 365 DAYS IN A YEAR. THEREFORE, THE ASSESSEE HAD TO MAKE ARRANGEMENT FOR PURCHASE OF SUCH GOODS FROM MUMBAI FRO M M/S SHRUTI ENTERPRISES WHO INSISTED FOR CASH PAYMENT AND ASSESSEE HAD NO OTHER OPTION BUT TO PAY CASH THROUGH HIS AUTHORIZED AGENTS WHICH WERE SPECIFICALLY APPOINTED TO LOOK AFTER THE COLLECTION OF SALE PROCEEDS AND PAYMENT THEREOF TO M/S SHRUTI ENTERPRISES AGAINST PURCH ASES. HE FURTHER ARGUED THAT CLAUSE (K) OF RULE 6DD IS IN FAVO UR OF ASSESSEE WHICH PROVIDED EXCEPTION TO THE PROVISION OF SECTION 40A(3). THE LD AR ALSO ARGUED THAT LD CIT(A) IN HER ORDER HAS NOT ELABO RATED AS TO HOW CLAUSE (K) WAS NOT APPLICABLE WHEREAS IT WAS NECESSARY FO R HER TO ELABORATE FIRST AND THEN DECIDE WHETHER CLAUSE (K) WA S APPLICABLE OR NOT. 10. LD AR ALSO TOOK US TO PAGE 29 OF THE PAPER BOOK W HEREIN DETAIL OF PAYMENTS OF ` .7,23,819/- MADE ON VARIOUS DATES WAS PLACED WHICH WERE MADE ON SUNDAYS AND PUBLIC HOLIDAYS AND ARGUED T HAT AT LEAST THESE PAYMENTS WERE SQUARELY COVERED BY CLAUSE (J) OF R ULE 6DD OF SECTION 40A(3). ITA NO109/DEL/2012 9 11. AS REGARDS SECOND GROUND OF APPEAL THE LD AR SUBMIT TED THAT COMMISSION WAS PAID TO AUTO DRIVERS AND RICKSHAW PULLER AND OTHER AGENTS AS BOTH HOTELS ARE SITUATED IN PAHARGANJ AREA W HEREIN A NUMBER GUEST HOUSES ARE LOCATED. HE FURTHER ARGUED THAT THER E WAS 100 OF COMMISSION AGENTS FROM WHOM OBTAINING OF CONFIRMATION WAS NOT POSSIBLE. HE FURTHER ARGUED THAT VOUCHERS FOR PAYMENT S WERE AVAILABLE WITH THE ASSESSEE WHICH THE ASSESSING OFFICER AND LD CIT(A ) HAS IGNORED. THE INSPECTORS REPORT REGARDING PREVALENCE OF COMMISSION OF 5 TO 7% WAS NOT CONFRONTED TO THE ASSESSEE AND THE ASSESSING OFFICER HAS ACCEPTED VAGUE REPORT OF INSPECTOR. THE LD AR T OOK U/S TO PAGE 22 OF PAPER BOOK WHERE CHARTS OF COMMISSION PAID AGAINST R OOM RENT FOR LAST THREE YEARS WERE PLACED AND AVERAGE RATE OF COMM ISSION WAS 13.22% TO 14.72%. SIMILARLY HE TOOK US TO PAGE 23 W HEREIN THE ORDER OF THE ASSESSING OFFICER FOR ASSESSMENT YEAR 1995-96 WAS PL ACED WHEREON ON PAGE 24 COMMISSION OF 25% WAS CONSIDERED TO BE GENUINE. THEREFORE, IN VIEW OF THE CONSISTENCY, HE A RGUED THAT COMMISSION RATES PAID WERE NOT EXCESSIVE WHEN COMPARED WITH THE PREVIOUS YEARS. 12. THE LD DR, ON THE OTHER HAND, ARGUED THAT PURCH ASES OF ASSESSEE ARE RECURRING TRANSACTIONS AND ASSESSEE COULD HAVE MADE PAYMENTS THROUGH BANK TRANSFERS. HE FURTHER MAINTAINED THAT I N THESE YEARS OF TECHNOLOGY DEVELOPMENT THERE IS NO NEED TO OPEN A BA NK ACCOUNT IN MUMBAI AND PAYMENT CAN BE MADE THROUGH BANK TRANSFER S WHILE SITTING IN DELHI. IN THE ALTERNATIVE, SOME ADVANCE C OULD HAVE BEEN GIVEN TO AVOID THE PROVISION OF SECTION 40A(3). 13. AS REGARDS PAYMENT THROUGH AGENTS, THE LD DR ARGUE D THAT IT WAS A STORY WHICH WAS MADE BEFORE LD CIT(A) AND THIS PO INT WAS NOT TAKEN UP DURING ASSESSMENT PROCEEDINGS AND FURTHER ARG UED THAT ITA NO109/DEL/2012 10 THESE WERE EMPLOYEES OF THE ASSESSEE AND NOT AGENTS AND TH E ASSESSEE HAS MADE STORY OF AGENT ONLY TO TAKE THE BENEFIT OF CLAUSE (K). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PA RTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT ASSESSEES BUSINESS IS SURELY OF A PECULIAR NATURE OF SUPPLYI NG GOODS ON RUNNING TRAINS ORIGINATING FROM MUMBAI WHILE ASSESSE E HIMSELF SITTING IN DELHI. IN THE MODERN AGE THERE ARE NUMBER OF METHODS AVAILABLE FOR MAKING PAYMENTS THROUGH OUT THE COUNT RY WHILE SITTING ANYWHERE IN INDIA. THE ARGUMENT TAKEN BY THE LD AR BEFORE US AND BEFORE LD CIT(A) REGARDING APPLICABILITY OF CLAUSE ( K) OF RULE 6DD DO NOT FIND MERIT IN VIEW OF THE FACT THAT THE APPOINT MENT OF AUTHORIZED PERSON SEEMS TO BE AN AFTER THOUGHT WHICH IS APPARENT F ROM THE FACT THAT ON PAGE 30 IN RESPECT OF APPOINTMENT OF MR. ANO OP KUMAR THE COMPENSATION IN FIGURE IS ` .5500/- WHEREAS IN WORDS IT IS ` .7000/- WHICH SHOWS THE NEGLIGENCE IN PREPARATION OF APPOINTMENT LE TTERS. MOREOVER, THE STAMP PAPER ON WHICH INDEMNITY BOND IS EXECUTED D O NOT CONTAIN THE BACK SIDE SO AS TO VERIFY THE DATE OF PURCHASE OF ST AMP PAPER. MOREOVER, THESE WERE FILED BEFORE LD CIT(A). HAD THE RE BEEN ANY TRUTH ABOUT THESE APPOINTMENTS, THESE COULD HAVE BEEN EASILY FILED BEFORE THE ASSESSING OFFICER AS SUFFICIENT OPPORTUNITIES WERE GIV EN TO ASSESSEE. THEREFORE, IN OUR VIEW, THESE DOCUMENTS DO NOT CONTAIN ANY FORCE AND THEREFORE THE CASE OF ASSESSEE IS NOT COVERED B Y CLAUSE (K) OF RULE 6DD. HOWEVER, AS REGARDS PAYMENTS MADE ON SUNDAYS AND OTHER PUBLIC HOLIDAYS AS PER DETAIL AT PAGE 29, WE ARE OF T HE OPINION THAT THIS ASPECT MAY BE CHECKED BY THE ASSESSING OFFICER AND IF FO UND CORRECT, THE DISALLOWANCE MAY BE REDUCED BY THIS AMOUNT OF ` .7,23,819/-. 15. IN RESPECT OF SECOND GROUND OF APPEAL, WE HAVE OB SERVED THAT DURING 1995-96 IN ASSESSEES OWN CASE THE ASSESSMENT WAS FINAL IZED ITA NO109/DEL/2012 11 U/S 143(3) AND COMMISSION OF 25% WAS CONSIDERED GENUINE. MOREOVER, DURING ASSESSMENT YEARS 2005-06 TO 2007-08, THE RANGE OF COMMISSION PAID WAS 13.22% TO 14.04%. MOREOVER, THE ASSESSEE HAD VO UCHERS FOR PAYMENT OF COMMISSION WHICH IS IN FACT A CONFIRMATION BY PAYEE. THUS, KEEPING IN VIEW THE CONSISTENCY, WE ARE OF THE OPINIO N THAT COMMISSION CLAIMED BY THE ASSESSEE WAS CORRECT AND THEREFORE WE REV ERSE THE ORDER OF LD CIT(A) IN RESPECT OF COMMISSION PAID AND H ENCE GROUND NO.2 SUCCEEDS. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PA RTLY ALLOWED. 17. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DAY O F AUGUST, 2012. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 31.8.2012. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 11.7.2012 DATE OF DICTATION 23.8.2012 DATE OF TYPING 23.8.2012 DATE OF ORDER SIGNED BY 31.8.2012 BOTH THE MEMBERS & PRONOUNCEMENT. ITA NO109/DEL/2012 12 DATE OF ORDER UPLOADED ON NET 31.8.2012 & SENT TO THE BENCH CONCERNED.