The ITO, Ward-1(1), Surat V. M/s. Clair Diamond Pvt.Ltd., Surat

ITA 2569/AHD/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9675 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Additional evidence; Corroborative evidences; Revenue expenditure
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I R.P. TOLANI , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO, WARD 1(1), ROOM NO.111, AAYAKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) VS M/S. CLAIR DIAMOND PVT. LTD., 204, NISHIT DIAMOND COMPLEX, HAT FALIA, HARIPURA, SURAT - 395301 PAN:AACCC8065E (RESPONDENT) REVENUE BY : MS. SONIA KUMAR , SR. D . R. ASSESSEE BY: NONE DATE OF HEARING : 22 - 11 - 2 016 DATE OF PRONOUNCEMENT : 23 - 12 - 2 016 / ORDER P ER : AMARJIT SINGH, ACCOUN TANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2008 - 09 , AR IS ES FROM ORDER OF THE CIT(A) - 9, MUMBAI DATED 29 - 06 - 2011 IN APPEAL NO. CIT(A) - 9 / 5(1)(3)/196/2010 - 11 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2569 / A HD/20 11 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 2 2. THE ASS ESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - [1] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - 9, MUMBAI HAS ERRED IN DELETING THE ADDITION OF R S.47,18,456/ - ON ACCOUNT OF OUT STANDING FOREIGN BANK INTEREST WHICH WAS DEBITED I N P & L A/C. WITHOUT GIVING ANY OPPORTUNITY TO EXAMINE THE ADDITIONAL EVIDENCE OR DOCUMENT OR TO CROSS EXAMINE THE WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLATE, AS REQUIRED U/S. 46A(1) OF THE IT. ACT. [2] ON THE FACTS AND C IRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - 9, MUMBAI HAS ERRED IN RESTRICTED THE ADDITION ON ACCOUNT OF DISALLOWANCE OF VARIOUS EXPENSES FROM 50% TO 20% A WITHOUT APPRECIATING THE FACT THAT ALL THE EXPENSES ARE MADE IN CA SH AND NO CORROBORATIVE BI LL OR EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE. FURTHER, ASSESSEE FAILED TO DISCHARGE ONUS CASH UPON HIM TO PROVE TH E GENUINENESS OF THE EXPENSES AND WHETHER THE SAME HAD BEEN INCURRED FOR THE PURPOSE OF BUSINESS. [3] ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - 9, MUMBAI HAS ERRED IN DELETING THE ADDITION OF RS.4,08,758/ - , MADE U/S. 40(A)(IA) OF THE I.T. ACT, ON THE BASIS OF ADDITIONAL EVIDENCE, WITHOUT GIVING AN OPPORTUNITY TO THE A.O. OR CALLING FOR REMAND REPORT AS REQUIR ED U/S. 46A(1) OF THE I.T. ACT. 3. IN THIS CASE, THE RETURN OF INCOME DECLARING INCOME OF RS. 10 , 41 , 085/ - WAS FILED ON 30 TH SEPTEMBER, 2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAD DEBITED THE P & L A/C. AT RS. 1 , 28 , 22 , 996/ - UNDER THE HEAD OUTSTANDING INTE REST. IN THIS CONNECTION, THE ASSESSING O FFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS OF WORKING OF OUTSTANDING INTEREST DEBITED IN THE P & L A/C ALONG WITH THE RATE OF INTEREST CHARGED ON TH E BUYERS CREDIT BY THE FOREIGN BANKS. IN SPITE OF TH E REPETITIVE QUER IES MADE BY THE ASSESSING O FFICER, THE ASSESSEE FAILED TO FURNISH THE REQUIRED INFORMATION CALLED F OR TO VERIFY THE GENUINENESS OF TH E OUTSTANDING INTEREST EXPENDITURE. T HE ASSESSEE FAI LED TO I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 3 FURNISH THE DETAILS OF PARTIES TO WHOM THIS INTEREST WAS PAYABLE AND WHEN THE SAME TO BE PAID. THE ASSESSEE EXPLAINED THE ASSESSING OFFICER THAT THIS INTEREST PERTAINS TO THE BUYERS CREDIT LOAN FINANCED BY FOREIGN BANKS THROUGH AXIS BANK AND I NTEREST WAS PAYABLE TO THE FOREIGN BANKS. IN THIS CONNECTION, THE ASSESSEE HAS SUBMITTED CERTIFICATE ISSUED BY THE AXIS BANK ALONG WITH LIST OF BUYERS CREDIT TRANSACTIONS FUNDED BY THE FOREIGN BANKS AND INTEREST PAID ON THESE TRANSACTIONS. HOWEVER, THE ASSESSEE FAILED TO FURNISH THE WORKING OF OUTSTANDING INTEREST DEBITED TO THE P & L A/C AND THE RATE OF INTEREST CHARGED ON BUYERS CREDIT BY THE FOREIGN BANKS. AS A RESULT, THE ASSESSING O FFICER HAD HIMSELF MADE WORKING OF INTEREST PAYABLE AS ON 31 ST MAR CH, 2008 AND WORKED OUT THE TOTAL INTEREST PAYABLE ON THE BUYERS CREDIT TRANSACTION TO THE AMOUNT OF RS. 8 , 10 ,04,540/ - . THE ASSESSING O FFICER STATED THAT ASSESSEE HAD CLAIMED OUTSTANDING INTEREST OF RS. 1 , 28 , 22 , 996/ - S O , THE EXCESS AMOUNT OF INTEREST AFT ER DEDUCTING RS. 8 , 10 ,04,54 0/ - WHICH COMES TO RS. 47 , 18 , 456/ - WAS DISALLOWED ON ACCOUNT OF EXCESS CLAIM AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED AGAINST THIS ADDITION, ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX( A). LD. COMMISSIONER OF INCOME TAX(A) HAS ALLOWED THE APPEAL O F THE ASSESSEE BY STATING THAT ASSESSING O FFICER WAS NOT JUSTIFIED IN DISALLOWING THE INTEREST EXPENDITURE WHICH ARISES DUE TO FLUCTUATION OF FOREIGN EXCHANGE. THE DECISION OF THE LD. COMMISS IONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 4 3.2 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE APPELLANT. I HAVE ALSO GONE THROUGH THE CASE LAWS RELIED UPON BY THE APPELLANT. THE INTEREST DISALLOWED BY THE ASS ESSING OFFICER IS RELATED DUE TO FLUCTUATION IN FOREIGN EXCHANGE. THE FACTS OF THIS CASE ARE SQUARELY COVERED BY THE FACTS OF THE SUPREME COURT DECISION IN THE CASE OF CIT VS WOODWARD GOVERNOR INDIA PRIVATE LIMITED WHEREIN THE HON'BLE APEX COURT HAS HELD T HAT 'LOSS' SUFFERED BY THE ASSESSEE ON ACCOUNT OF FLUCTUATION IN THE RATE OF FOREIGN EXCHANGE AS ON THE DATE OF THE BALANCE SHEET IS AN ITEM EXPENDITURE UNDER SECTION 37(1) OF THE INCOME - TAX ACT, 1961. IN THIS DECISION THE HON'BLE SUPREME COURT HAS CONFI RMED THE DECISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. WOODWARD GOVERNOR INDIA PRIVATE LIMITED 294 ITR 451. THE PRINCIPLE CITED IN THE BOMBAY HIGH COURT IN THE CASE OF PADAMJEE PULP AND PAPER MILLS LTD VS CIT 210 ITR WHICH ALSO SUPPORTS THE CLAIM OF THE APPELLANT. FURTHER MORE, THE APPELLANT HAS FURNISHED FULL WORKING OF INTEREST AND CERTIFICATE ISSUED BY THE AXIS BANK LTD IN SUPPORT OF THIS CLAIM. THEREAFTER CONSIDERING THE ENTIRE FACTS AND CASE LAWS, I AM OF THE VIEW THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING THE INTEREST EXPENDITURE WHICH ARISES DUE TO FLUCTUATION IN FOREIGN EXCHANGE. SINCE THIS LOAN DEDUCTION WAS TAKEN FOR PURCHASE AND SALE OF DIAMONDS; THEREFORE THE INTEREST EXPENDITURE IS ALLOWABLE AS REVENUE EXPENDITURE U/ S.37(1) OF THE ACT. THIS GROUND OF APPEAL IS ALLOWABLE . 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE CONTENDED THAT LD. COMMISSIONER OF INCOME TAX(A) HAD DECIDED THIS ISSUE WITHOUT PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE ADDITIONAL DOCUMENTS AND EVIDENCES AND ALSO NOT PROVIDED OPPORTUNITY FOR REBUTTAL OF ADDITIONAL EVIDENCES UNDER RULE 4 6A OF THE I.T. RULE. HE FURTHER CONTENDED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSES SEE FAILED TO PROVIDE THE NECESSARY WORKING OF OUTSTANDING INTEREST PAYABLE ALONG WITH SUPPORTING EVIDENCES BEFORE THE ASSESSING OFFICER. HE FURTHER STATED THAT THE ASSESSEE PROVIDED ADDITIONAL EVIDENCES BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) AND THE CASE HAS BEEN DECIDED I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 5 IN VIOLATION OF RULE 46A OF THE ACT. NOBODY ATTENDED THE HEARING FROM THE SIDE OF ASSESSEE. HOWEVER, THERE IS WRITTEN SUBMISSION FILED BY THE LD. COUNSEL OF ASSESSEE VIDE DATED 1 ST JUNE, 2016 RELATING TO BANK TRANSACTIONS IN FORMATION BUT WITHOUT PROVIDING COMPLETE DETAIL AND EXPLANATION OF ALL THE ISSUES OF THIS CASE . 6. WE HAVE PERUSED THE MATERIAL AS PER RECORD. WE NOTICED THAT IN THIS CASE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS ASKE D THE ASSESSEE TO FURNISH THE WORKING OF OUTSTANDING INTEREST DEBITED IN THE P & L A/C ALONG WITH RATE OF INTEREST CHARGED ON THE BUYERS CREDIT BY THE FOREIGN BANKS. THE ASSESSEE FAILED TO FURNISH THIS INFORMATION WHICH RESULTED IN WORKING OF THE INTERE ST MADE BY THE ASSESSING OFFICER ON THE BASIS OF AVAILABLE INFORMATION. WE FIND THAT BEFORE THE LD. COMMISSIONER OF INCOME TAX(A), THE ASSESSEE HAS FILED PAPER BOOK SHOWING THE WORKING OF INTEREST ALONG WITH CERTIFICATE ISSUED BY THE AXIS BANK BUT THE L D. COMMISSIONER OF INCOME TAX(A) HAS NOT PROVIDED ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE EVIDENCES OR DOCUMENTS SUBMITTED BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) ACCORDING TO THE PROVISION OF RULE 46A(3). IN THIS CONNECTION, WE REPRO DUCE HEREWITH THE PROVISION OF RULE 46A. '(I) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS), ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PR ODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE ASSESSING OFFICER, EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY: - (A) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 6 (B) WHERE THE APPELLANT WAS PRE VENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT V.' OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB - RULE (I ) UNLESS THE DEPUTY COMMISSIONER (APPEALS) OR AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) RECORDS IN WRITING THE REASONS FOR ITS ADMISSION, (3)THE DEPUTY COMMISSIONER(APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCOUN T ANY EVIDENCE PRODUCED UNDER SUB - RULE (I) UNLESS THE INCOME - TAX OFFICER HAS BEEN ALLOWED A REASONABLE 7 ITA NO.6O4/DEL./2OIA OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS - EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) TO D IRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE A SSESSING OFFICER) UNDER CLAUSE (A) OF SUB SECTION (I) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271.' 6.1 IN VIEW OF THE ABOVE FACTS AND LEGAL FINDINGS, WE FIND IT APPROPRIATE TO SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER T O DECIDE THE MATTER AFRESH AFTER PROVIDING PROPER OPPORTUNITY TO THE ASSESSEE GROUND NO. 2 I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 7 7. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NO TICED THAT ASSESSEE HAS DEBITED VARIOUS EXPENSES UNDER THE HEAD SALARY, EMPLOYEE FOOD A ND BEVERAGE EXPENSES, TRAVELLING EXPENSES, REGISTRY & POSTAGE, TELEPHONE & PRINTING EXPENSES AND ASSORTMENT CHARGES . IN THIS CONNECTION, THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE NAMES AND ADDRESSES OF THE EMPLOYEES ALONG WITH THE DETAILS OF SALARIES PAID TO THEM. HE WAS ALSO ASKED TO PRODUCE THE SALARY REGISTER FOR VERIFICATION. THE ASSESSEE FAILED TO FURNISH THE INFORMATION BEFORE THE ASSESSING OFFICER. AS A RESULT, THE ASSESSING OFFICER DISALLOWED 50% OF THESE EXPENSES FOR WANT OF SUPPO RTING DOCUMENTARY EVIDENCES. 8. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A). THE LD. COMMISSIONER OF INCOME TAX(A) HAS DECIDED THAT IT WOULD BE APPROPRIATE AND JUSTIFIED TO DISALLOW 20% OF THE VARIOUS EXPENSES AS AGAINST 50% DISALLOWANCES MADE BY THE ASSESSING OFFICER. THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - 4.1 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE APPELL ANT. THUS THE FACT THAT TRUE DOCUMENTARY EVIDENCE WAS NOT FURNISHED TO THE SATISFACTION OF THE ASSESSING OFFICER AND ONLY SELF MADE VOUCHER WERE PRODUCED BEFORE HIM. HOWEVER, ONE SHOULD APPRECIATE THE FACT IT THERE CANNOT BE EVIDENCES REGARDING SMALL CASH PAYMENTS WHICH WERE MADE TO UNSKILLED LABOURERS AND STAFF. HOWEVER, THE TURNOVER OF THE APPELLANT HAS INCREASED MANIFOLD AND THERE IS NO INCREASE IN EXPENSES IN THAT RATIO. IT IS A MATTER OF COMMON SENSE THAT NO BUSINESS CAN RUN WITHOUT INCURRING EXPENSES ON LABOUR WORKERS, EMPLOYEES THEIR WELFARE AND OTHER THINGS INVOLVED IN THIS CASE. IT IS CLAIM BEFORE ME THAT PAYMENTS MORE THAN RS.20,000/ - WERE MADE BY ACCOUNT PAYEE CHEQUE AND SAME ARE VERIFIABLE. HOWEVER, EACH AND EVERY SMALL I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 8 PAYMENT CANNOT BE MADE BY CHEQUE AND THE APPELLANT MAY BE FORCED TO MAKE CASH PAYMENTS ACCORDING TO THE SITUATIONS AND NECESSITY IN THE CASE OF BUSINESS. THEREFORE, THE EXPLANATION OF THE APPELLANT CANNOT BE SET ASIDE IN TOTO. ON THE OTHER HAND, FINDINGS OF THE ASSESSING OFFICER C ANNOT BE IGNORED. AFTER CONSIDERING THE ENTIRE FACTS AND NATURE OF EXPENSES AS WELL AS EVIDENCES BROUGHT ON THE RECORD, I AM OF THE VIEW THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS HIGHLY EXCESSIVE AND UNREASONABLE. LOOKING TO THE FACTS OF THE C ASE AND NATURE OF EXPENDITURE IT WOULD BE PROPERLY JUSTIFIED TO DISALLOW 20% OF THE EXPENSES UNDER EACH HEAD WHICH WILL MEET THE END OF JUSTICE. THEREFORE THE ASSESSING OFFICER IS DIRECTED TO RETAIN 20% OF DISALLOWANCE OF TOTAL EXPENSES AND ALLOW 80% IN EA CH HEAD OF THE EXPENSES INCURRED. THIS DISALLOWANCE IS PARTLY ALLOWED. 8.1 THE DECISION OF THE LD. CIT(A) ON THE ASSORTMENT CHARGES IS REPRODUCED AS UNDER: - 5.2 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE A PPELLANT. I HAVE ALSO GONE THROUGH THE DOCUMENTS FURNISHED BEFORE ME. THE SCRUTINY OF VOUCHER INDICATES THAT SOME VOUCHERS ARE HAVING REVENUE STAMP AND SIGNATURE OF THE RECIPIENTS AND OTHERS ARE WITHOUT REVENUE STAMP AND HAVING ONLY SIGNATURE OF THE RECIPI ENT. THE NAME AND PLACE IS MENTIONED BUT NO FULL ADDRESS IS GIVEN. THE DIRECTOR OF THE APPELLANT HAS ALSO SIGNED THESE RECEIPTS ALONG WITH THE RECIPIENTS. IN ADDITION THE DATES OF THE PAYMENT ARE ALSO MENTIONED IN THE VOUCHERS. SO, IN LIGHT OF THE FACTS, O NE THING IS CLEAR THAT THE EXPENDITURE IS NOT CROSS VERIFIABLE IN THE ABSENCE OF FULL ADDRESS. HOWEVER, CONSIDERING THE NATURE OF DOCUMENTS FILED AND THE FACT THAT 'ASSORTMENT CHARGES 1 ' IS ESSENTIAL EXPENDITURE AND EXERCISE IN THE DIAMOND BUSINESS; IT CANN OT BE PRESUMED THAT NO SUCH EXPENSES WAS INCURRED AT ALL. THEREFORE, AFTER CONSIDERING THE ENTIRE FACTS, I AM OF THE VIEW THAT THE ASSORTMENT CHARGES ARE APPEARING TO BE INFLATED BY THE APPELLANT. HOWEVER, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS EXCESSIVE AND UNREASONABLE. THEREFORE, I CONSIDER IT FIT AND REASONABLE TO RESTRICT DISALLOWANCE @ 20% OF TOTAL EXPENSES CLAIMED BY THE APPELLANT WHICH WILL MEET THE END OF JUSTICE. THIS GROUND OF APPEAL IS PARTLY ALLOWED. I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 9 9. DURING THE COURSE OF APPELLA TE PROCEEDINGS, THE LD. D.R. CONTENDED THAT IN THIS CASE THE ASSESSEE FAILED TO FURNISH THE INFORMATION AND SUPPORTING EVIDENCES OF THESE EXPENSES. HE FURTHER CONTENDED THAT THE COMMISSIONER OF INCOME TAX(A) HAS ADMITTED THE ADDITIONAL EVIDENCES WITHOUT AN Y OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE AND VERIFY THE SAID ADDITIONAL EVIDENCES BEFORE DECIDING THE APPEAL OF THE APPEAL. NEITHER ANYBODY ATTENDED ON BEHALF OF THE ASSESSEE NOR ANY WRITTEN SUBMISSION WAS MADE DURING THE COURSE OF APPELLATE PROC EEDINGS. 10. WE HAVE PERUSED THE SUBMISSION AND MATERIAL ON RECORD. WE FIND THAT ON THIS ISSUE ALSO THE LD. COMMISSIONER OF INCOME TAX(A) HAD DECIDED THE CASE AFTER CONSIDERING THE ADDITIONAL EVIDENCES WITHOUT PROVIDING ANY OPPORTUNITY TO THE ASSESSING O FFICER TO VERIFY AND EXAMINE THE ADDITIONAL EVIDENCES BEFORE DECIDING THE APPEAL . IN VIEW OF THE ABOVE FACTS AND LEGAL FINDINGS ,T HEREFORE , WE FIND IT APPROPRIATE TO SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE MATTER AFRESH AF TER PROVIDING PROPER OPPORTUNITY TO THE ASSESSEE GROUND NO . 3 11 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING O FFICER NOTICED THAT ASSESSEE HAS SHOWN AN AMOUNT OF RS. 4 , 08 , 758/ - AS INTEREST PAYABLE T O ARJAY GEMS WHICH WAS NOT AVAILABLE AG AINST THE AGREED INTEREST OF RS. 1 , 47 , 22 ,994/ - . IN THIS CONNECTION, THE ASSESSING O FFICER QUESTIONED THE ASSESSEE TO EXPLAIN WHY THIS INTEREST I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 10 PAYABLE TO ARJAY GEMS ALONG WITH DOCUMENTARY EVIDENCES. THE ASSESSING O FFICER ALSO ASKED THE ASSESSEE WHY TDS W AS NOT DEDUCTED ON THE ABOVE INTEREST PAYMENT OF RS. 4 , 08 , 758/ - MADE TO M/S. ARJAY GEMS. IN THIS CONNECTION, THE ASSESSEE HAS NOT P ROVIDED ANY INFORMATION TO THE ASSESSING OFFICER. AS A RESULT, THE ASSESSING O FFICER HAS DISALLOWED THE INTEREST AMOUNT OF RS. 4 , 08 , 758/ - U/S. 40(A)(IA) FOR NON - DEDUCTION OF TDS. AGGRIEVED AGAINST THE DECISION OF THE ASSESSING O FFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A). THE LD. COMMISSIONER OF INCOME TAX(A) HAS ALLOWED THE DISAL LOWANCE M ADE BY THE ASSESSING O FFICER ON THE GROUND THAT ASSESSEE HAD FURNISHED CERTIFICATE OF TDS AT NIL RATE BEFORE HIM. THE DECISION OF LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - 7.2 THE APPELLANT HAS ALSO FURNISHED CERTIFICATES FROM ITO WD (1) , GANDHIDHAM, KUTCH ACCORDING TO WHICH MADANLAL JAIN WHO HAS ISSUED CERTIFICATE FOR IDS AT NIL RATE. THE APPELLANT ON THIS ISSUE HAS ARGUED THAT IT CANNOT BE PENALIZED WHEN NO DEDUCTION CERTIFICATE WAS RECEIVED BY THE RECIPIENT AND FURNISHED BY THE APPELLA NT. THUS, CONSIDERING THE AFORESAID SUBMISSIONS AND DOCUMENTS, I FEEL THAT THE ASSESSING OFFICER, WAS NOT JUSTIFIED IN MAKING DISALLOWANCE U/S.40(A)(IA) OF THE ACT. THIS GROUND OF APPEAL IS ALLOWED. 12 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE U S, LD. D.R. STATED THAT THE ASSESSEE HAS FURNISHED ADDITIONAL EVIDENCE BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) WHICH H E FAILED TO PRODUCE BEFORE THE ASSESSING O FFICER AT THE TIME OF ASSESSMENT PROCEEDINGS . LD. COMMISSIONER OF INCOME TAX(A) HAS DECIDE D THIS MATTER ON THE BASIS OF ADDITIONAL EVIDENCES WITHOUT PR OVIDING ANY OPPORTUNITY TO THE ASSESSING O FFICER UNDER RULE 46A TO VERIFY AND EXAMINE THE ADDITIONAL I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 11 EVIDENCES BEFORE DECIDING THE APPEAL. NO - BODY ATTENDED FROM THE SIDE OF THE ASSESSEE. 13. W E HAVE PERUSED THE SUBMISSION AND MATERIAL ON RECORD. WE FIND THAT ON THIS ISSUE ALSO THE LD. COMMISSIONER OF INCOME TAX(A) HAD DECIDED THE CASE AFTER CONSIDERING THE ADDITIONAL EVIDENCES WITHOUT PROVIDING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIF Y AND EXAMINE THE ADDITIONAL EVIDENCES BEFORE DECIDING THE APPEAL IN VIEW ABOVE FACTS AND LEGAL FINDINGS, T HEREFORE, WE CONSIDERED IT APPROPRIATE AS MEN T IONED SUPRA IN THIS ORDER TO SET A SIDE THIS CASE TO THE ASSESSING OFFICER TO DECIDE IT A S FRESH AFTER PROVIDING OPPORTUNITIES TO THE ASSESSEE. 14 . IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STAT I STICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN C OURT ON 23 - 12 - 201 6 SD/ - SD/ - ( R.P. TOLANI ) ( AMARJIT SINGH ) JUDICIAL MEM BER ACCOUNTANT MEMBER AHMEDABAD : DATED 23 /12 /2016 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD I.T.A NO. 2569/AHD/2011 A.Y. 2008 - 09 PAGE NO ITO VS. M/S. CLAIR DIAMOND PVT. LTD. 12 6. GUARD FILE. BY ORDER/ , / ,