ACIT, Chandigarh V. M/s Superb Agrovet Inds. (P) Ltd., Mohali

ITA 378/CHANDI/2006

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90142 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-05-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 19-05-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Business expenditure; Principle of natural justice; Opportunity of cross examination; Fair market value; Corroborative evidences; Commercial expediency; Retraction; Capital expenditure
• Section: 37(1); 131; 37; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 378/CHD/2006 (ASSESSMENT YEAR : 2001-02) THE A.C.I.T., VS. M/S SUPERB AGROVET INDS.(P) LTD., CIRCLE 6(1), 583, INDL.AREA, PHASE-IX, CHANDIGARH. MOHALI. PAN: AACCSO407Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 07.05.2015 DATE OF PRONOUNCEMENT : 19.05.2015 O R D E R PER BHAVNESH SAINI, J.M. : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DATED 3.3.2006, ON THE FOLLOW ING GROUND : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) VIDE APPELLATE ORDER NO. 42/P/04-05 DATED 03.03 .2006 HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,33,73,713/- WITH REGA RD TO INFLATED EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUN T OF TRANSPORTATION AND HANDLING OF MOLASSES. 2 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE COMPANY W AS INCORPORATED ON 11.10.1995. THE ASSESSEE COMPANY COMMENCING FROM THE ASSESSMENT YEAR 1997-98 HAD BEE N TRADING AS SUPPLIERS OF MOLASSES TO VARIOUS DISTILL ERIES IN PUNJAB FOR MANUFACTURE OF IMFL (INDIAN MADE FOREIGN LIQUOR). THE MOLASSES IS THE BYE-PRODUCT IN THE MANUFACTURE OF SUGAR FROM SUGARCANE AND IT IS A SEA SONAL PRODUCT WHOSE COST FLUCTUATES QUITE SUBSTANTIALLY. THE DISTILLERIES REQUIRE MOLASSES FOR MANUFACTURE OF IM FL (INDIAN MADE FOREIGN LIQUOR) AND PML (PUNJAB MEDIUM LIQUOR) ALL THROUGHOUT THE YEAR. THE MOLASSES IS A HIGHLY CONTROLLED COMMODITY, WHICH IS PROCURED FROM THE SU GAR MILLS AND TRANSPORTED TO THE DISTILLERIES UNDER PER MITS ISSUED BY THE EXCISE & TAXATION DEPARTMENTS OF THE CONCERNED STATES. 4. THE ASSESSEE COMPANY HAD FILED ITS RETURN FOR T HE ASSESSMENT YEAR UNDER APPEAL ON 31.10.2001 DECLARIN G AN INCOME OF RS.51,38,948/-. THE SAID RETURN WAS ACCOMPANIED BY THE AUDITED ACCOUNTS. THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION FOR THE FIRST AND LAST TIME WAS AWARDED A CONTRACT THROUGH AGREEM ENT DATED 26.04.2000, WHICH ENTERED INTO WITH THE EXCIS E & TAXATION COMMISSIONER, PUNJAB TO SUPPLY 10 LAKH QUI NTALS OF MOLASSES TO FOUR DISTILLERIES OF PUNJAB FOR THE MANUFACTURE OF PML AT THE FLAT F.O.R. (FREE ON RAIL ) RATE OF 3 RS.259.25 PER QUINTAL. THE FOUR DISTILLERIES ARE LOCATED AT BANUR, PATIALA, HAMIRA AND KHALSA I.E., AT VARYING DISTANCES FROM THE SUGAR MILLS SUPPLYING THE MOLASSES. THE E NTIRE SUPPLY OF THIS MASSIVE QUANTITY OF 10 LAKH QUINTALS OF MOLASSES WAS TO BE MADE BY THE ASSESSEE COMPANY BY FEBRUARY, 2001, I.E., WITHIN A PERIOD OF ABOUT 10 M ONTHS AND ANY FAILURE WAS FRAUGHT WITH GRAVE PENAL CONSEQ UENCES INCLUDING INVOCATION OF THE BANK GUARANTEE OF RS.3 CRORES, WHICH WAS REQUIRED TO BE FURNISHED BY THE ASSESSEE COMPANY UNDER THE SAID AGREEMENT. THE SYSTEM OF BILLING A S PER THE AGREEMENT WAS THAT THE BILLS IN RESPECT OF THE SUPP LIES OF MOLASSES WERE DIRECTLY TO BE RAISED BY THE SUGAR MI LLS ON THE DISTILLERIES AND THE DIFFERENTIAL BETWEEN THE CONTR ACTED FLAT RATE OF RS.259.25 PER QUINTAL AND THE BILLS RAISED BY THE SUGAR MILLS WERE TO BE PAID BY THE DISTILLERIES TO THE ASSESSEE COMPANY AS 'TRANSPORTATION & HANDLING' CHA RGES. 5. SINCE 10 LAKH QUINTALS OF MOLASSES COULD NOT BE SOURCED ENTIRELY FROM THE SUGAR MILLS OF PUNJAB, TH E ASSESSEE COMPANY PROCURED 4,57,515 QUINTALS OF MOLA SSES FROM THE SUGAR MILLS IN HARYANA AND WESTERN UTTAR P RADESH. THE TRANSPORTATION OF THE MOLASSES FROM THE SUGAR M ILLS LOCATED IN THE THREE STATES OF PUNJAB, HARYANA AND UP TO THE FOUR DISTILLERIES IN PUNJAB WAS CARRIED OUT BY THE ASSESSEE COMPANY THROUGH 16 TRANSPORTERS, PARTICULARS OF WHO M ARE MENTIONED ON PAGE-2 OF THE ASSESSMENT ORDER. OUT OF THESE TRANSPORTERS, TWELVE TRANSPORTERS WERE LOCATED IN MUZAFFARNAGAR (WESTERN UP), THREE TRANSPORTERS WERE IN 4 MOHALI & LUDHIANA (PUNJAB) AND ONE TRANSPORTER, NAM ELY, M/S GANPATI TRANSPORT CO. WAS FROM ROHTAK (HARYANA) . THE ASSESSEE COMPANY PAID FLAT RATE OF RS.82.50 PE R QUINTAL FOR TRANSPORTATION & HANDLING OF THE MOLASSES FROM THE UP SUGAR MILLS AND FLAT RATE OF RS.69/- PER QUINTAL FO R TRANSPORTATION & HANDLING OF THE MOLASSES FROM THE HARYANA SUGAR MILLS, IRRESPECTIVE OF THE DISTANCE BETWEEN T HE POINT OF ORIGIN AND THE POINT OF DESTINATION. THE ASSESSEE COMPANY FOR TRANSPORTATION WITHIN THE STATE OF PUNJAB, PAID DIFFERENT RATES BASED ON DISTANCES AND ON WHETHER OR NOT THE HANDLING OF THE MOLASSES WAS GOT DONE BY ANOTHER CONCERN, NAMELY, M/S SANTOKH RAM NARINDER NATH. 6. THE ASSESSING OFFICER EXAMINED THE CLAIM OF THE ASSESSEE FOR THE TRANSPORTATION & HANDLING CHAR GES AND WAS OF THE OPINION THAT THE FLAT RATES AS ALSO THE DISTANCE BASED RATES PAID BY THE ASSESSEE COMPANY WERE NOT COMMENSURATE WITH THE PREVAILING MARKET RATES. THE ASSESSING OFFICER WAS OF THE VIEW THAT NO PRUDENT BUSINESSMAN WOULD HAVE PAID SUCH HIGH RATES TO THE TRANSPORTERS AND CONCLUDED THAT THE OVER BILLED AMO UNTS MUST HAVE FOUND THEIR WAY BACK TO THE ASSESSEE COMP ANY. THE ASSESSING OFFICER HAS MADE A DETAILED ASSESSMEN T ORDER AND FOR THE SAKE OF BREVITY THE SAME IS NOT BEING R EITERATED HERE. IT WOULD BE ENOUGH TO MENTION THAT THE ASSES SING OFFICER HAD MADE TOTAL DISALLOWANCE OF RS.1,38,46,0 10/- OUT OF THE TRANSPORTATION & CHARGES AS UNDER : (A) AN AMOUNT OF RS.71,01,534/- WAS DISALLOWED ON THE 5 TRANSPORTATION OF MOLASSES FROM HARYANA TO THE DIS TILLERIES AT CHANDIGARH AND PATIALA BY UNIFORMLY APPLYING THE RAT E OF RS.38/- PER QUINTAL WHICH WAS PAID TO THE TRANSPORT ER M/S GANPATI TRANSPORT CO., ROHTAK (HARYANA). WHILE MAK ING THE DISALLOWANCE, THE ID. A.O. HAS ALSO COMPARED THE FLAT RATE PAID BY THE APPELLANT VIS-A-VIS THE DISTANCE RATES PAID BY M/S CHANDIGARH DISTILLERS & BOTTLERS LTD., CHAND IGARH AND M/S PATIALA DISTILLERS & MANUFACTURERS LTD., PATIAL A AND CONCLUDED THAT THE RATE PAID BY THE APPELLANT WAS EXCE SSIVE; (B) AN AMOUNT OF RS.25,16,218/- WAS DISALLOWED ON THE TRANSPORTATION OF MOLASSES FROM UP TO THE DISTILLERI ES AT CHANDIGARH AND PATIALA BY APPLYING THE FLAT RATE OF R S.64.50 PER QUINTAL WHICH WAS BASED ON THE DISTANCE RELATED RATES PAID BY M/S INDIA GLYCOLS LTD. AND M/S VAM ORGANIC CHEMICALS LTD. WHO ARE ALSO THE CONSUMERS OF MOLASSES, ALBEIT, ON A REGULAR BASIS UNLIKE THE APPELLANT AND IN MUCH LARGER QUANT ITIES OF THE ORDER OF 50 LAKH QUINTALS PER ANNUM; (C) AN AMOUNT OF RS.37.55,961/- WAS DISALLOWED ON THE TRANSPORTATION OF MOLASSES WITHIN PUNJAB BY UNIFORML Y APPLYING THE LOWEST RATE OF RS.33/- PER QUINTAL WHICH WAS PAID TO THE TRANSPORTER M/S DI NESH & CO. BY REJECTING THE ASSESSEES CONTENTION THAT THIS RA TE WAS LOWER BECAUSE OF THE SHORT DISTANCE INVOLVED AND AL SO BECAUSE THE SAID RATE DID NOT INCLUDE THE HANDLING CHARGES S EPARATELY PAID TO M/S SANTOKH RAM M/S NARINDER NATH. WHILE MAK ING THE DISALLOWANCE, THE ID. A.O. RELIED ON THE INCULP ATORY STATEMENTS OF SHRI DINESH BANSAL, PROP, M/S DINESH & CO., LUDHIANA AND SHRI HARPAL SINGH, BROTHER OF SHRI AMARJI T SINGH, PROP., M/S BEDI CARRIERS, LUDHIANA, WHICH ARE ANNEXED WITH THE IMPUGNED ASSESSMENT ORDER. SHRI DINESH HAD DEPOSED B EFORE THE A.O. THAT NO HANDLING OF THE MOLASSES TRANSP ORTED BY HIM HAD BEEN DONE BY M/S SANTOKH RAM NARINDER NATH. SHR I HARPAL SINGH HAD DEPOSITED THAT OVER BILLING IS ROUTINELY D ONE IN THE TRANSPORTATION BUSINESS AND HE HAD RETURNED BACK TH E OVER BILLED 6 AMOUNT TO THE APPELLANT COMPANY AFTER WITHDRAWING THE SAME IN CASH FROM HIS BANK ACCOUNT, ALTHOUGH HE DID NOT REME MBER WHAT EXACT AMOUNT WAS RETURNED BACK BY HIM. THE A SSESSING OFFICER HAS ADDITIONALLY HELD THAT OUT OF THE AFO RESAID AMOUNT OF RS.37,55,961/-, A SUM OF RS.L4 , 95,302/- (SHOULD HAVE BEEN RS, 19,34,533/-AS PER THE A.O.S FORMULA) IS ALSO HIT BY SECTION 40A(2)(B) BEING EXCESS PAYMENT MADE TO SHRI PRABAL MITTAL, PROP., M/S NEW JANTA TRANSPORT CO., MOHALI, SON OF SHRI A.K. MITTAL, MD OF THE APPELLANT COMPANY; (D) AN AMOUNT OF RS.4,72,297/- BEING THE HANDLING CHARG ES PAID TO M/S SANTOKH RAM NARINDER NATH WAS DISALLOWED REL YING ON THE AFORESAID INCULPATORY STATEMENT OF SHRI DINESH BANSAL. PROP. M/S DINESH & CO., LUDHIANA. 6. THE ASSESSEE CHALLENGED THE ABOVE ADDITION BEFO RE THE LEARNED CIT (APPEALS). THE QUESTION BEFORE THE LEARNED CIT (APPEALS) WAS WHETHER THE ASSESSEE HAD MADE AN INFLATED CLAIM FOR EXPENDITURE INCURRED ON TRANSPOR TATION AND HANDLING OF MOLASSES. THE ASSESSEE FILED WRIT TEN SUBMISSIONS WHICH ARE FORWARDED TO THE ASSESSING OF FICER FOR VERIFICATION AND COMMENTS. THE LEARNED COUNSEL FOR ASSESSEE HAS MADE FURTHER SUBMISSIONS AND ALSO FILE D PAPER BOOK. A SUPPLEMENTARY PAPER BOOK CONTAINING PAGES FROM 179 TO 183 WAS ALSO FILED BY THE LEARNED COUNSEL FO R ASSESSEE. BESIDES OTHER DOCUMENTS, THESE PAPER BO OKS CONTAINED THE SWORN DEPOSITION OF SHRI DINESH BANSA L RETRACTING FROM HIS STATEMENT BEFORE THE ASSESSING OFFICER AND AFFIRMING THAT HE HAD AGREED TO THE RATE OF RS. 33/- PER QUINTAL KEEPING IN VIEW THE SHORT DISTANCES INVOLVE D AND ALSO CONFIRMING THAT THE HANDLING OF MOLASSES TRANS PORTED 7 BY HIS CONCERN WAS DONE BY THE REPRESENTATIVES OF M /S SANTOKH RAM NARINDER NATH; SWORN DEPOSITION OF THE PARTNER OF M/S SANTOKH RAM NARINDER NATH CONFIRMING THAT HANDLING WAS DONE FOR BOTH M/S DINESH & CO. AND M/S BEDI CARRIERS, LUDHIANA; A CERTIFICATE FROM M/S SANTOKH RAM NARINDER NATH TO THE EFFECT THAT THEY HAD ARRANGED M/S BEDI CARRIERS, LUDHIANA, FOR TRANSPORTATION OF MOLASSES FOR THE ASSESSEE COMPANY AND HAD PAID TRANSPORTATION CHARGE S AS AGREED AND NOTHING WAS RECEIVED BACK BY THE ASSESSE E COMPANY AND DULY SWORN DEPOSITIONS OF S/SHRI JASVEE R SINGH & HARJINDER SINGH IN CONFIRMATIONS OF THEIR SIGNATURES, WHICH HAVE BEEN LOOKED UPON WITH SUSPIC ION ON PAGE-5 OF THE ASSESSMENT ORDER. 7. THE LEARNED COUNSEL FOR ASSESSEE POINTED OUT TH AT THE SUBSCRIBED CAPITAL OF THE ASSESSEE COMPANY AS O N 31. 3.2000 WAS RS.48 LACS AND AFTER INCLUDING RESERVES & SURPLUS OF RS.18 LACS, THE TOTAL CAPITAL WORTH OF T HE COMPANY AMOUNTED TO RS.66 LACS, AS AGAINST WHICH, ITS FIXED ASSETS AS PER WDV WERE AT RS.62 LACS. IT WA S STATED THAT THESE FIGURES CLEARLY SHOW THAT THE COMPANY HA D NO SURPLUS CAPITAL OR LIQUIDITY/WORKING CAPITAL EITHER TO INVEST IN STOCKS OR IN TRADE DEBTORS. THE LEARNED COUNSEL FOR ASSESSEE HAS EXPLAINED THAT UPTO THE PRECEDING ASSE SSMENT YEAR 2000-01, THE ASSESSEE COMPANY WAS ONLY TRADING IN MOLASSES EX-GODOWN AND IT HAD NO DIRECT DEALINGS WI TH THE TRANSPORTERS. IT WAS ONLY DURING THE PRESENT ASSE SSMENT YEAR I.E. 2001-02, THAT THE ASSESSEE COMPANY COULD SECURE 8 A CONTRACT FOR SUPPLY OF 10 LACS QUINTALS OF MOLASS ES TO THE FOUR DISTILLERIES OF PUNJAB FOR MANUFACTURE OF PML (PUNJAB MEDIUM LIQUOR) @ RS.259.25 PER QUINTAL F.O.R. (FREE ON RAIL) BASIS CONSOLIDATED TO THE DISTILLERIES INCLUD ING TAXES. THE EXCISE DUTY AND FREIGHT CHARGES AS PER AGREEMEN T EXECUTED WITH THE EXCISE & TAXATION COMMISSIONER, P UNJAB DATED 26.4.2000. THE LEARNED COUNSEL FOR ASSESSEE HAS STRONGLY EMPHASIZED THAT TIME WAS OF THE ESSENCE IN THE SAID CONTRACT, WHICH CAN BE STRAIGHT AWAY DISCERNED FROM A PLAIN READING OF ITS CLAUSES. IT IS POINTED OUT THAT TH E ASSESSEE COMPANY WOULD HAVE BEEN VISITED WITH DISASTROUS FIN ANCIAL PENALTIES IN THE EVENT OF ANY FAILURE TO ABIDE WITH THE TERMS OF THE CONTRACT AND IT WAS REALLY A DO OR DIE SITUATION FOR THE ASSESSEE COMPANY. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THE ASSESSEE COMPANY NEITHER HAD THE EXPERTISE NOR THE INFRASTRUCTURE NOR THE FUNDS TO H ANDLE SUCH A MAMMOTH SUPPLY OF MOLASSES WHICH REQUIRED DEPLOYMENT OF ABOUT 100 SPECIALIZED TANKERS ON A DA Y-TO-DAY BASIS. IT IS POINTED OUT THAT THE RATE AT WHICH TH E MOLASSES HAD TO BE SUPPLIED ON F.O.R. BASIS TO THE DISTILLER IES HAD ALSO BEEN FIXED FOR THE WHOLE YEAR, WHICH IN ITSELF , WAS AN EXTREMELY RISK PRONE PROPOSITION AS RATES OF MOLASS ES WERE HIGHLY FLUCTUATING. THE LEARNED COUNSEL FOR ASSESSE E HAS SUBMITTED THAT AVAILABILITY OF MOLASSES FROM SUGAR MILLS IS MORE DURING SUGAR CANE CRUSHING SEASON, WHICH IS US UALLY FROM 2 ND WEEK OF OCTOBER TO 31 ST MARCH LATEST. THE RATES OF MOLASSES DURING THE CRUSHING SEASON ARE LESS AS COM PARED TO THE RATES THEREAFTER AND ARE ALSO DEPENDANT ON W HAT 9 QUANTITY HAS BEEN STORED BY THE SUGAR MILLS AND WHA T CAPACITY THE MILLS HAVE TO STORE THE MATERIAL. IT IS POINTED OUT THAT 10 LACS QUINTALS OF MOLASSES COULD NOT HAV E BEEN MADE AVAILABLE EITHER FROM ALL THE SUGAR MILLS IN P UNJAB OR HARYANA BUT HAD TO BE ARRANGED FROM U.P. ALSO. THE LEARNED COUNSEL FOR ASSESSEE HAS EXPLAINED THAT UNDER THIS SITUATION THE ASSESSEE COMPANY WAS IN A REAL PREDICAMENT, VIZ ., EITHER TO FULFILL THE TERMS OF THE CONTRACT OR TO LOOSE HE AVILY INCLUDING FORFEITURE OF THE BANK GUARANTEE OF RS.3 CRORES. IT IS SUBMITTED THAT IN ORDER TO INSULATE AGAINST A NY IMPENDING LOSSES, THE MANAGING DIRECTOR OF THE COMP ANY RAN ALL OVER THE PLACE TO ENSURE SUPPLIES OF MOLASSES T O THE FOUR DISTANTLY PLACED DISTILLERIES IN TIME. 8. THE LEARNED COUNSEL FOR ASSESSEE HAS FURTHER SUBMITTED THAT IN PUNJAB, THE COMPANY SOUGHT THE SE RVICES OF A DECADES OLD CONCERN DEALING IN MOLASSES, NAMEL Y, M/S SANTOKH RAM NARINDER NATH, PHAGWARA FOR PROPER HAND LING OF MOLASSES. IT IS SUBMITTED THAT THE SAID HANDLI NG IS NOT MERE PHYSICAL LIFTING OR TRANSPORTATION OF THE COMM ODITY BUT IT INCLUDES : A) LIAISON WITH THE EXCISE & TAXATION DEPARTMENT FOR SECURING NECESSARY PERMITS FOR THE LIFTING/TRANSPORTATION OF MOLASSES FROM SUGAR MILLS; B) QUALITY CHECKS OF MOLASSES TO ENSURE THAT THEY CORRESPOND TO THE AGREED SPECIFICATIONS OF MOLASSES, I.E., NOT LESS THAN 42% SUGAR CONTENT IN THE PRESENT CASE; 10 C) ENSURING THAT MOLASSES IS LIFTED AND DELIVERED AT THE RIGHT PLACE AND IN TIME; D) SUPERVISE LOADING OF MOLASSES FROM SUGAR MILLS AND UNLOADING AT DISTILLERIES. 9. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT IN U.P., SHRI SUDHIR GOEL AND SHRI SATYA PARKASH GOEL, PROPRIETORS, M/S SIDHARTH BULK CARRIER, 45-B, NEW M ANDI, MUAZAFFAR NAGAR M/S. AGGARWAL BULK CARRIER AT THE S AME ADDRESS RESPECTIVELY, WHO WERE ALREADY INTO TRADING AND TRANSPORTATION OF MOLASSES AND WERE OLD FAMILY FRIE NDS OF THE MANAGING DIRECTOR, SHRI A.K.MITTAL AND DIRECTOR , G.K. JAIN WERE CONTACTED AND THEY UNEQUIVOCALLY CONFIRME D HAVING DONE THE TRANSPORTATION OF MOLASSES FROM HAR YANA AND U.P. SUGAR MILLS TO DISTILLERIES IN PUNJAB AT T HE RATES OF RS. 69/- AND RS. 82.50 PER QUINTAL. THUS, TO AVOI D LOOSING FINANCIALLY AND TO FULFILL THE AGREEMENT IN TIME, T HE SUPPLIES OF MOLASSES TO DISTILLERIES IN PUNJAB AS PER QUANTI TY EARMARKED FOR EACH DISTILLERY BY THE EXCISE DEPARTM ENT, THE ASSESSEE COMPANY IN ITS BUSINESS PRUDENCE FINALIZED CONTRACTS FOR TRANSPORTATION OF MOLASSES FROM U.P. AND HARYANA BY VARIOUS TRANSPORTERS AT THE FLAT RATES O F RS.82.50 AND RS.69/- PER QUINTAL OF MOLASSES, WHERE AS IN PUNJAB THE RATES WERE FINALISED ON THE BASIS OF THE DISTANCES UNDERTAKEN BY THE TRANSPORTERS. THE LEAR NED COUNSEL FOR ASSESSEE ALSO SUBMITTED THAT IN HARYANA , THE ASSESSEE COMPANY FINALISED THE RATE OF MOLASSES AT RS.250.16 PER QUINTAL ON F.O.R. BASIS TO THE DISTIL LERIES AT BANUR AND PATIAIA WITH ONE M/S. AHUJA BARREL SUPPLY 11 COMPANY, NEW ANAJ MANDI, ROHTAK (HARYANA), AS PER PURCHASE ORDER DATED 5.8.2000 (COPY PLACED AT PAGE 114 OF THE PAPER BOOK) IN TERMS OF WHICH THAT PARTY HAD TO SUPPLY MOLASSES TO DISTILLERIES AT BANUR AND PATIAIA AT T HE RATE OF 212.16 PER QUINTAL TO BE DIRECTLY BILLED BY THE SUG AR MILLS TO THE AFORESAID DISTILLERIES AND THE BALANCE OF RS.38 /- PER QUINTAL WAS TO BE BILLED BY THEM DIRECTLY OR THROUG H THEIR TRANSPORTER NAMELY, M/S GANPATI GOODS TRANSPORT CO. AS TRANSPORTATION CHARGES TO THE ASSESSEE COMPANY. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT BY SO A RRANGING THE TRANSPORTATION OF MOLASSES, THE ASSESSEE COMPA NY NOT ONLY ADHERED TO TERMS OF THE CONTRACT WITH THE EXCI SE & TAXATION COMMISSIONER, PUNJAB, BUT ALSO MADE PROFIT OF RS.9.09 PER QUINTAL IN THE SAID TRANSACTION. THE L EARNED COUNSEL FOR ASSESSEE CONTENDED THAT THE ASSESSING O FFICER HAD GROSSLY FAILED TO UNDERSTAND THE REALITY OF THI S TRANSACTION WHILE MAKING THE DISALLOWANCE OF RS.71,01,534/- ON A COMPLETE MISREADING OF THE FACT S. THE LEARNED COUNSEL FOR ASSESSEE HAS DRAWN ATTENTION T O THE FACT THAT AT THE OF THE FINANCIAL YEAR I.E. AS ON 3 1.3.2001 THE ASSESSEE COMPANY HAD TO RECEIVE RS,1,23,76,269/ - FROM THE DISTILLERIES REPRESENTING BALANCE PAYMENT ON MO LASSES AND THE COMPANY HAD TO PAY RS.1,35,52,021/- TO VARI OUS TRANSPORTERS WHO HAD DONE THE TRANSPORTATION WORK. IT WAS SUBMITTED THAT IN ORDER TO MEET ITS REQUIREMENT OF FUNDS, THE ASSESSEE COMPANY WAS COMPELLED TO RAISE ADDITIO NAL FUNDS DURING THE YEAR UNDER CONSIDERATION BY WAY OF LOANS FROM DIRECTORS, SHAREHOLDERS AND OTHER CORPORATE BO DIES 12 AMOUNTING TO RS.51,40,999/-. THE ASSESSEE IS AGGRI EVED THAT WITHOUT APPRECIATING THESE CIRCUMSTANCES AND S OLELY ON THE BASIS OF OUTSTANDING TRANSPORTATION CHARGES PAY ABLE TO THE MOLASSES TRANSPORTERS, THE ASSESSING OFFICER PI CKED UP THE CASE FOR SCRUTINY WITHOUT OBSERVING THAT THE AS SESSEE COMPANY HAD RETURNED INCOME AT RS.51,38,948/- AND STARTED MAKING ALL ROVING AND FISHING ENQUIRIES INT O THE REASONABLENESS OF THE TRANSPORTATION CHARGES PAID T O VARIOUS TRANSPORTERS WITHOUT CONSIDERING THE SETTLE D POSITION IN LAW THAT IT WAS FOR THE BUSINESSMAN TO SO ARRANGE HIS AFFAIRS AS WOULD BE IN THE BEST OF INTE REST OF THE BUSINESS. THE LEARNED COUNSEL FOR ASSESSEE VEHEMEN TLY CONTENDED THAT WHAT EXPENDITURE IS TO BE INCURRED IN THE COURSE OF THE BUSINESS IS NOT WITHIN THE DOMAIN OF THE INCOME TAX DEPARTMENT. IT WAS SUBMITTED THAT EXPEN DITURE MAY BE INCURRED VOLUNTARILY AND WITHOUT ANY NECESSI TY AND IF IT IS INCURRED FOR PROMOTING THE BUSINESS AND TO EARN PROFITS, THE EXPENDITURE IS AN ALLOWABLE DEDUCTION EVEN IF THERE IS NO COMPELLING NECESSITY TO INCUR SUCH EXPE NDITURE OR THAT SOMEBODY OTHER THAN THE ASSESSEE IS ALSO BE NEFITED. IT WAS SUBMITTED THAT COMMERCIAL EXPEDIENCY IN ORDE R TO FACILITATE THE CARRYING ON OF THE BUSINESS IS THE T RUE TEST FOR ALLOWING AN EXPENDITURE AS DEDUCTION. THE LEARNED COUNSEL FOR ASSESSEE HAS PLACED RELIANCE ON THE DECISIONS M ENTIONED AS UNDER : I) (1960) 38 ITR 601 (SC); II) (1961) 42 ITR 219 (SC); III) (1964) 53 ITR 140 (SC); 13 IV) (1966) 60 ITR 277 (SC): V) (1967) 63 ITR 207 (SC); VI) (1972) 84 ITR 735 (SC); VII) (1973) 91 ITR 544 (SC): VIII) (1979) 118 ITR 261(SC): IX) (1982) 133 ITR 756 (SC), 10. THE LEARNED COUNSEL FOR ASSESSEE HAS POINTED OU T THAT WITHOUT REALIZING AND APPRECIATING THE CIRCUMSTANCE S AS THEY EXISTED AT THE TIME OF ALLOTMENT OF CONTRACT B Y THE STATE GOVERNMENT FOR SUPPLY OF MOLASSES, ITS MAGNITUDE AN D THE RISK INVOLVED, THE ASSESSING OFFICER ISSUED COMMISS ION TO THE ADI (INV), MEERUT FOR SUMMONING ALL THE TWELVE TRANSPORTERS IN U.P. FOR RECORDING THEIR STATEMENTS SO AS TO ELICIT THE GENUINENESS OF THE TRANSPORTATION CHARGE S PAID AND PAYABLE TO THEM. OUR ATTENTION WAS INVITED TO THE FACT THAT ALL THE TRANSPORTERS DULY APPEARED BEFORE THE ADI (INVESTIGATION) IN RESPONSE TO SUMMONS UNDER SECTIO N 131 OF THE ACT AND THEY DEPOSED CATEGORICALLY THAT THEY H AD DONE THE TRANSPORTATION OF MOLASSES FOR AND ON BEHALF OF THE ASSESSEE COMPANY AT THE FLAT RATE OF RS.82.50 PER Q UINTAL AND ALSO CONFIRMED THE TRANSPORTATION CHARGES AS WE RE RECEIVABLE BY THEM. IT WAS ALSO CONFIRMED THAT TH E PAYMENTS RECEIVED BY THEM FROM THE ASSESSEE COMPANY HAD DULY BEEN DECLARED IN THEIR RETURNS AND CREDIT HAD BEEN CLAIMED FOR THE TAX DEDUCTED AT SOURCE. THE LEARN ED COUNSEL FOR ASSESSEE WAS AGGRIEVED THAT STILL NOT BEING SATISFIED WITH THE REPORT OF THE ADI (INVESTIGA TION) 14 AND/OR THE CONFIRMATION BY THE TRANSPORTERS OF HAVI NG CHARGED THE RATES AS SHOWN IN THE BOOKS OF ACCOUNT, THE ASSESSING OFFICER AGAIN ISSUED SUMMONS UNDER SECTIO N 131 OF THE ACT TO THE TRANSPORTERS AT U.P. INSISTING UPON THEIR PERSONAL PRESENCE IN HIS OFFICE AT CHANDIGARH. OUR ATTENTION WAS ALSO DRAWN TO THE FACT THAT TWO OF TH E TRANSPORTERS NAMELY, SHRI JANG SINGH OF JANG SINGH & CO AND SHRI HARJINDER SINGH OF J.S. TRANSPORT AGENCY I N RESPONSE TO SUMMONS UNDER SECTION 131 OF THE ACT, WROTE BACK TO THE ASSESSING OFFICER VIDE THEIR COMMUNICAT IONS DATED 22.11.2003. SHRI HARJINDER SINGH WROTE AS U NDER: 1. THAT IN CONNECTION WITH ENQUIRY ABOUT MY DEALI NG WITH M/S SUPERB AGROVET INDUSTRIES (P) LTD., MOHALI, I W AS EARLIER REQUIRED TO ATTEND BEFORE THE ASSTT. DIRECTOR OF IN COME-TAX (INVESTIGATION WING) AT MEERUT ON 10-10-2003. MY STATE MENT ON OATH WAS RECORDED BY THE LEARNED ASTT. COMMISSIONER O F INVESTIGATION, MEERUT, AND I FURNISHED COMPLETE FACTS, DERAILS OF MY DEALINGS AND ALL RELATED DOCUMENTS & PAPERS TO HIM. 2. THE LEARNED ASSISTANT DIRECTOR OF INVESTIGATION H AD TALLIED AND VERIFIED THE PAYMENTS RECEIVED BY ME FROM THE SAID CO MPANY AND STATEMENT ON OATH IN REGARD TO ALL THE ISSUES R AISED IN YOUR PRESENT NOTICE WERE RECORDED AT MEERUT. I AM REGULARLY ASSESSED TO INCOME TAX AT MUZAFFARNAGAR AND MY P.A.N. NO. HAS BEEN MENTIONED ABOVE. 3. THAT I HAVE BEEN COOPERATING IN THE INVESTIGATIO N THROUGHOUT AND HAVE ALREADY SUBMITTED ALL THE RELEVANT AND CONN ECTED DOCUMENTS AND PAPERS INCLUDING ASSESSMENT ORDERS, AC COUNT STATEMENT. BANK STATEMENTS AND COPIES OF THE HILLS F AR THE TWO YEARS AS ASKED FOR EARLIER AND ONCE AGAIN NOW. I HAV E NOTHING TO ADD FURTHER TO MY STATEMENT OR DOCUMENTS ALREADY PLACED ON RECORDS OF THE DEPARTMENT. 15 4. KINDLY TREAT THE STATEMENT ALREADY RECORDED AT M EERUT AND THE EARLIER FILING OF ALL RELEVANT RECORDS AND DOCUMENT S BEFORE THE DEPARTMENT, AS SUFFICIENT COMPLIANCE TO YOUR PRE SENT NOTICE U/S, 131, YOUR NEW SUMMONS ISSUED NOW FOR 27-11-2003 ON THE SAME POINTS APPEAR TO HE JUST TO PUT UNDUE PRESS URE AND TO CAUSE HARASSMENT TO THE ASSESSEE AND TO PUT HINDRAN CE IN HIS DAY TO DAY BUSINESS OF PLYING TRUCKS WHICH IS HIS ME ANS OF LIVELIHOOD. 5. THAT IN CASE, THERE ARE SOME OTHER POINTS B ESIDES THE THREE POINTS MENTIONED IN YOUR NOTICE (ALREADY COMPLI ED WITH THE BY THE ASSESSEE) IT IS HUMBLY REQUESTED THAT YOU MA Y KINDLY ISSUE COMMISSION TO ANY LOCAL INCOME-TAX OFFICER AT MUZAFFARNAGAR WHO MAY EXAMINE THE ASSESSEE HERE IF SO DEEMED NECESSARY EVEN NOW. 6. THAT THE STATEMENT ON OATH ALREADY RECORDED AND THE DOCUMENTS AND RECORDS ALREADY FURNISHED TO THE DEPAR TMENT BE KINDLY TREATED AS SUFFICIENT COMPLIANCE TO YOUR PRES ENT SUMMONS. 11. SHRI JANG SINGH, PROPRIETOR OF M/S J.S TRANSPORT AGENCY ALSO SIMILARLY WRITTEN TO THE ASSESSING OFFI CER. THE LEARNED COUNSEL FOR ASSESSEE SUBMITTED THAT THESE STATEMENTS AS ALSO OTHERS, DEPOSE OBVIOUSLY NOT ONL Y HAVING CARRIED OUT TRANSPORTATION FOR AND ON BEHALF OF THE ASSESSEE COMPANY AT THE FLAT RATES OF RS.82.50 AND RS.69/- P ER QUINTAL OF MOLASSES BUT ALSO UNAMBIGUOUSLY CONFIRMED HAVING RECEIVED THE BALANCE PAYMENTS OUTSTANDING AS ON 31.03.2001 I N THE IMMEDIATELY SUCCEEDING YEAR. IT IS ARGUED THAT THE ASSESSING OFFICER UNNECESSARILY AND JUST ON BASELESS SUSPICIO N, INFERRED THAT TRANSPORTATION EXPENSES HAD BEEN INFLATED AND DISALLOWED A HUGE AMOUNT OF RS.1,38,46,010/- WHICH IS COMPLETELY IN VIOLATION OF THE FUNDAMENTALS OF SOUND ADMINISTRATION OF JUST ICE DELIVERY 16 SYSTEM, TO MAKE KNOWN THAT THERE HAS BEEN PROPER AN D DUE APPLICATION OF MIND TO THE ISSUE, BESIDES BEING BAS ED ON PRINCIPLES OF NATURAL JUSTICE. THE LEARNED COUNSEL FOR ASSESSEE CONTENDED THAT THE SUSPICION, HOWEVER STRO NG IT MAY BE, CANNOT LEAD TO ANY ADVERSE INFERENCE BEING DRAWN AGAINST THE ASSESSEE. IT IS SUBMITTED THAT THERE I S NO PRESUMPTION IN FAVOUR OF ILLEGALITY OF A TRANSACTIO N; IN FACT THE PRESUMPTION IS THE OTHER WAY ROUND. RELIANCE WAS PLACED ON THE FOLLOWING JUDGMENTS : I) 34 ITR 328 (MAD); II) 117ITR 371 (KER); III) 190 ITR 672 (KER); IV) 211 ITR 492 (ALL). 12. THE LEARNED COUNSEL FOR ASSESSEE ARGUED THAT THE ASSESSING OFFICER HAD GRAVELY ERRED IN BASING HIS C ONJECTURAL CONCLUSIONS ON THE UNTESTED STATEMENTS OF S/SHRI DI NESH BANSAL AND HARPAL SINGH BROTHER OF SHRI AMARJIT SI NGH, WHICH ARE ANNEXED WITH THE ASSESSMENT ORDER. IT IS CONTENDED THAT THESE STATEMENTS WERE RECORDED BEHIN D THE BACK OF THE ASSESSEE AND NO OPPORTUNITY FOR CROS S EXAMINATION WAS ACCORDED BY THE ASSESSING OFFICER. THE LEARNED COUNSEL FOR ASSESSEE HAS DRAWN THE ATTENTION TO THE SWORN STATEMENTS OF SHRI DINESH AND M/S SANTOKH RAM NARIN DER NATH PLACED IN THE PAPER BOOKS AND IT WAS STATED THAT AN OPPORTUNITY TO CROSS EXAMINE SHRI DINESH BANSAL, AS ALSO S/SHRI AM ARJIT SINGH/HARPAL SINGH OF M/S BEDI CARRIERS MAY BE ACC ORDED 17 TO THE ASSESSEE. RELIANCE WAS ALSO PLACED ON THE FOLLOWING DECISIONS : I) 45 ITR 206 (SC); II) 125 ITR 713(SC); III) 172 ITR ------(SC) 13. THE LEARNED COUNSEL FOR ASSESSEE ALSO MADE DETAILED SUBMISSIONS IN RESPECT OF EACH OF THE SUBJ ECT DISALLOWANCES, SO AS TO DEMONSTRATE, THAT THE ASSES SING OFFICER HAD NOT ADHERED TO THE BASIC TENANT, THAT O NLY LIKE CAN BE COMPARED WITH LIKE. IT IS STATED THAT THE COMPARISONS MADE BY THE ASSESSING OFFICER WITH THE RATES CHARGED BY THE TRANSPORTERS FOR TRANSPORTATION OF MOLASSES TO EITHER M/S INDIA GLYCOLS LTD. OR M/S VAM ORGANIC CHEMICALS LTD. OR M/S CHANDIGARH DISTILLERS & BOTTL ERS LTD., OR M/S PATIALA DISTILLERS & MFG. LTD., WAS COMPLETELY A MISNOMER AND UNCALLED FOR AS ALL THESE DISTILLERIES ARE MAKING REGULAR & HUGE BULK PURCHASES OF MOLASSES DIRECTLY FROM THE SUGAR MILLS FOR THE PAST MANY NU MBER OF YEARS AND THEY ARE IN A POSITION TO DICTATE THEIR R ATES TO THE TRANSPORTERS. ON THE OTHER HAND, THE ASSESSEE COM PANY HAD TO PAY THE RATES OF TRANSPORTATION AS DEMANDED, LEAVING NO MARGIN FOR ANY UNCERTAINTIES TO AVOID ENDING UP IN FINANCIAL DISASTER. IT WAS PLEADED THAT THE ENTIRE DISALLOWANCE OF RS.1,38,46,010/-WAS BASED ON NOTHIN G MORE THAN SUSPICION AND CONJECTURES AND THE SAME DESERVE S TO BE DELETED IN TOTO. 18 14. THE AFORESAID SUBMISSIONS AND PAPER BOOKS TENDERED BY THE LEARNED COUNSEL FOR ASSESSEE WERE MADE AVAILABLE TO THE ASSESSING OFFICER FOR COMMENTS. I N RESPONSE, THE ASSESSING OFFICER HAD INTIMATED THAT SHRI DINESH BANSAL, PROP, M/S DINESH & CO., SHRI NARINDE R NATH AHUJA, PARTNER OF M/S SANTOKH RAM NARINDER NATH AND SHRI PRABAL MITTAL PROP. M/S NEW JANTA TRANSPORT CO., MO HALI (SON OF SHRI A.K. MITTAL. MD OF THE ASSESSEE COMPAN Y) HAD APPEARED AND DEPOSED BEFORE HIM DURING THE REMAND PROCEEDINGS AND THEY HAD ALSO BEEN SUBJECTED TO CRO SS EXAMINATION BY THE LEARNED COUNSEL FOR ASSESSEE. TH E ASSESSING OFFICER ADMITTED THAT ALL THREE OF THEM I .E. S/SHRL DINESH BANSAL, NARINDER NATH AHUJA & PRABAL MITTAL HAD SUPPORTED THE CASE PUT UP BY THE ASSESSEE COMPANY. IN FACT, SHRI PRABAL MITTAL DEPOSED THAT HE HAD CHARGE D MUCH HIGHER RATES FROM M/S JAGJIT INDUSTRIES LTD., HAMIR A, AND HE PRODUCED COPIES OF THE BILLS IN SUPPORT OF THE CONT ENTION. THE ASSESSING OFFICER HAD ALSO INFORMED THAT SHRI AMARJIT SINGH, PROP. M/S BEDI CARRIERS, LUDHIANA, AND HIS B ROTHER SHRI HARPAL SINGH DID NOT APPEAR BEFORE HIM FOR CRO SS- EXAMINATION, DESPITE THREE SUMMONS BEING ISSUED TO THEM UNDER SECTION 131 OF THE ACT. ALL THAT THEY DID, WAS TO SEND A LETTER TO THE ASSESSING OFFICER REQUESTING THAT A COPY OF THEIR EARLIER STATEMENTS BE SUPPLIED TO THEM AND TH AT THEY BE EXAMINED AT LUDHIANA BECAUSE IT WAS INCONVENIENT FOR THEM TO COME TO CHANDIGARH. THE ASSESSING OFFICER F ORWARDED THE RECORD OF THE REMAND PROCEEDINGS TO THE OFFICE OF CIT (APPEALS) IN THE FORM OF A PAPER BOOK RUNNING INTO 64 PAGES. 19 BUT BE THAT AS IT MAY, THE ASSESSING OFFICER OPINED THAT THE OTHER CIRCUMSTANCES MENTIONED IN THE ASSESSMENT ORD ER WERE SUFFICIENT TO ESTABLISH THE DEPARTMENT'S CASE AND HELD THAT ALL THE IMPUGNED DISALLOWANCES DESERVE TO BE SUSTAINED. 15. IN HIS REJOINDER ON THE REMAND REPORT, THE LEA RNED COUNSEL FOR ASSESSEE HAS DRAWN SPECIAL ATTENTION T O THE FOLLOWING STATEMENT MADE BY THE ASSESSING OFFICER I N PARAGRAPH 16(B) OF THE SAID REPORT : HOWEVER, REGARDING THE HANDLING CHARGES OF MOLASSES AMOUNTING TO RS.4,72,297/- DISALLOWED BY THE ASSESSING OFFICE R, IT IS SUBMITTED THAT SHRI NARINDER NATH AHUJA PROP. M/S. SA NTOKH RAM NARINDER NATH HAS FURNISHED COPIES OF THE BILLS AND HAS ALSO CONFIRMED THESE EXPENSES IN HIS STATEMENT DATED 01-12-200 4. 16. THE LEARNED COUNSEL FOR ASSESSEE ALSO INVITED ATTENTION TO THE FACT THAT BOTH THE TRANSPORTERS SH RI DINESH KUMAR, PROP. M/S DINESH KUMAR & CO. AND SHRI PRABAL MITTAL, PROP. M/S NEW JANTA TRANSPORT CO., MOHALI, HAD CATEGORICALLY CONFIRMED DURING THE REMAND PROCEEDIN GS THAT THEY HAD CHARGED TRANSPORTATION RATES FROM THE ASSE SSEE AS AGREED TO AND THE BILLS WERE RAISED THEREFOR. SHRI DINESH KUMAR HAD ALSO DEPOSED DURING THE REMAND PROCEEDING S, THAT DURING THE COURSE OF HIS EXAMINATION AT THE TIME OF THE ASSESSMENT PROCEEDINGS, HE HAD NOT CORRECTLY UNDERSTOOD THE CONNOTATION OF THE WORD, HANDLING WHICH AT THAT POINT OF TIME HE THOUGHT TO BE REPRESENTIN G PHYSICAL LIFTING ONLY. THE LEARNED COUNSEL FOR ASSESSEE ALS O DRAWN 20 ATTENTION TO PARAGRAPH 14 OF THE REMAND REPORT WHER E THE ASSESSING OFFICER HAS MENTIONED AS UNDER :- SHRI PRABAL MITTAL SON OF SHRI A.K. MITTAL, PROP. M /S. NEW JAMA TRANSPORT COMPANY, MOHALI WAS ALSO PRODUCED BY T HE ASSESSEE AND HE WAS EXAMINED ON OATH ON 10-11-2004 (KINDLY SEE PAGES 8 TO 12 OF THE PAPER BOOK). HE HAS CONFIRMED TO HAVE CHARGED TRANSPORTATION CHARGES FR OM M/S. SUPERB AGROVET AT THE RATES OF RS.40/- TO RS.42/- PE R QUINTAL AND FURTHER STATED THAT DURING THE YEAR, HE CHARGED TRANSPORTATION CHARGES FROM M/S. JAGJIT INDUSTRIES LT D.. HAMIRA AT RS.55-50P. PER QUINTAL AND RS.75/- PER QU INTAL FOR TRANSPORTING MOLASSES FROM SUGAR MILLS OF HARVAN A AND PUNJAB. HE HAS PRODUCED PHOTOCOPIES OF THE BILLS IN S UPPORT OF HIS CONTENTION. 17. THE LEARNED COUNSEL FOR ASSESSEE HAS SUBMITTED THAT NO DISALLOWANCE UNDER SECTION 40A(2)(B) OF TH E ACT CAN AT ALL BE MADE IN THESE CIRCUMSTANCES. 18. THE LEARNED COUNSEL FOR ASSESSEE VEHEMENTLY CONTENDED THAT THE SO-CALLED INCRIMINATING STATEME NT OF SHRI HARPAL SINGH, BROTHER OF AMARJEET SINGH, PROP. M/S BEDI CARRIERS. LUDHIANA, AS RECORDED DURING THE ASS ESSMENT PROCEEDINGS, WAS MERELY A CASE OF PUTTING WORDS IN THE MOUTH OF AN ILLITERATE PERSON, IN COMPLETE VIOLATIO N OF ALL JUDICIAL NORMS. IT IS STATED THAT IN LAW THE STATE MENT RECORDED BEHIND THE BACK OF THE ASSESSEE, DOES NOT REPRESENT ANY MATERIAL EVIDENCE AND HAS NECESSARILY TO BE IGNORED. IT IS SUBMITTED THAT DESPITE REPEATED SUM MONS UNDER SECTION 131 OF THE ACT NEITHER SHRI AMARJIT S INGH NOR SHRI HARPAL SINGH APPEARED FOR CROSS-EXAMINATION AN D, 21 THEREFORE, IN VIEW OF THE DECISION OF THE HON'BLE A PEX COURT IN THE CASE OF KISHAN CHAND CHELA RAM VS. CIT, 125 ITR 713, THE STATEMENT OF SHRI HARPAL SINGH AS RECORDED BY THE ASSESSING OFFICER WOULD MERIT TO BE ELIMINATED AS O F NO CONSEQUENCE AT ALL. THE LEARNED COUNSEL FOR ASSESS EE SUBMITTED THAT THERE WAS NO INFLATION IN RATES OF TRANSPORTATION AS PAID BY THE ASSESSEE COMPANY AND ALL TRANSPORTERS HAD DULY CLAIMED CREDIT FOR THE TDS IN THEIR RESPECTIVE RETURNS OF INCOME. IT IS SUBMITTED THAT THE TOTAL DISALLOWANCES MAY BE DELETED. 19. THE LEARNED CIT (APPEALS) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE REPORT OF THE ASSE SSING OFFICER AND AFTER CAREFUL CONSIDERATION OF THE MATE RIAL ON RECORD DELETED THE ADDITION AND ALLOWED THE APPEAL OF THE ASSESSEE. THE FINDINGS OF THE LEARNED CIT (APPEAL S) IN PARAS 6 TO 7 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER: 6. I HAVE FULLY CONSIDERED THE FACTS ON RECORD AND RIVAL POSITIONS. IT IS IMPORTANT TO REMEMBER THAT IN THE PRESENT CASE, T HERE IS NO CLINCHING EVIDENCE ON THE DEPARTMENT RECORD TO SHOW THAT THE SUBJECT EXPENDITURE HAD NOT ACTUALLY BEEN INCURRED BY THE APPELLANT OR THAT A PARTICULAR OVER BILLED AMOUNT HA D ACTUALLY BEEN ROTATED BACK BY ANY TRANSPORTER TO THE ASSESSEE COM PANY. IT MAY BE RECALLED THAT FOR ITS DEDUCTIBILITY, A BUSINESS EXPE NDITURE IS GOVERNED BY THE PROVISIONS OF SECTIONS 30 TO 36 AND 37. FOR ALLOWANCE U/S 37(1), THE FOLLOWING CONDITIONS ARE TO BE SATISFIED , I.E., (A) THERE MUST BE EXPENDITURE, (B) SUCH EXPENDITURE MUST NOT BE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36. (C) THE EXPENDITURE MU ST NOT BE IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENSE S OF THE ASSESSEE, AND (D) THE EXPENDITURE MUST HAVE BEEN LAID OUT WHOL LY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROF ESSION. THE WORD 22 WHOLLY REFERS TO THE QUANTUM OF THE EXPENDITURE, WH ILE THE WORD EXCLUSIVELY REFERS TO THE MOTIVE, OBJECTIVE AND P URPOSE OF THE EXPENDITURE. IT IS WELL SETTLED THAT THE EXPRESSIO N WHOLLY AND EXCLUSIVELY, DOES NOT MEAN NECESSARILY AND AN EXPENDITURE TO WHICH ONE CANNOT APPLY A EMPIRICAL OR SUBJECTIVE STA NDARD IS TO BE JUDGED FROM THE POINT OF VIEW OF A BUSINESSMAN. THE P RINCIPLE WAS EXPOSITED BY THE APEX COURT IN CIT VS. WALCHAND AND CO. PVT. LTD. 65 ITR 381 (SC) WHERE THE COURT HAD HELD THUS:- IN APPLYING THE TEST OF COMMERCIAL EXPEDIENCY FOR DETERMINING WHETHER THE EXPENDITURE, WAS WHOLLY AND EXCLUSIVELY LAID OUT FOR THE PURPOSE OF THE BUSINESS, REASONABLENESS OF THE EXPENDITURE HAS TO BE ADJUDGED FROM THE POINT OF VIEW OF-THE BUSINESSMAN AND NOT OF THE REVENUE . THE SAME VIEW WAS REITERATED IN J.K. WOOLLEN MANUFACTURER S VS CIT (1969) 72 ITR 612 (SC). IN CIT VS, DHANRAJGIRIJI RAJA NARSHINGHIRAJ (1973) 91 ITR 5 44, THE SUPREME COURT HAD OPINED AS UNDER:- IT IS NOT OPEN TO THE DEPARTMENT TO PRESCRIBE WHAT EXPENDITURE AN ASSESSEE SHOULD INCUR AND IN WHAT CIRCUMSTANCES HE SHOULD INCUR THAT EXPENDITURE. EVERY BUSINESSMAN K NOWS HIS INTEREST BEST. IN FACT, THE APEX COURT WENT ON TO FURTHER EXPOUND THIS VIEW IN THE DECISION REPORTED IN 118 ITR 261 SASSOON J, DAV ID AND CO. (P) LTD. VS. CIT WHERE IT WAS HELD:- ORDINARILY, IT IS FOR THE ASSESSEE TO DECIDE WHETH ER ANY EXPENDITURE SHOULD BE INCURRED IN THE COURSE OF HIS OR ITS BUSINESS. SUCH EXPENDITURE MAY BE INCURRED VOLUNTAR ILY AND WITHOUT ANY NECESSITY AND IF IT IN INCURRED FOR PRO MOTING THE BUSINESS AND TO EARN PROFITS, THE ASSESSES CAN CLAI M DEDUCTION UNDER S. 10(2)(XV) OF THE ACT EVEN THOUGH THERE WAS NO COMPELLING NECESSITY TO INCUR SUCH EXPENDITURE. 23 THE GAUHATI HIGH COURT IN THE CASE OF NARSINGDAS SURAJ MAL PROPERTIES (P) LTD. (1981) 127 ITR 221 RELYING UPON THE DECISION RENDERED BY THE SUPREME COURT IN EASTERN INVESTMENTS LTD. VS . CIT ( 1951) 20 ITR AT PAGE 1 HELD THAT :- IN THE ABSENCE OF FRAUD, THE QUESTION WHETHER A TRANSACTION HAD THE EFFECT OF REDUCING THE ASSESSEE 'S TAXABLE INCOME OR WHETHER IT WAS A PRUDENT OR JUDICIOUS TRANSACTION O R WHETHER IT WAS INDISPENSABLE OR NECESSARY FOR THE ASSESSEE TO ENTER INTO THE TRANSACTION, ARE ALL IRRELEVANT IN DETERMINING WHETHER THE EXPENDITURE RELATING TO THAT TRANSACTION SHOULD BE ALLOWED U/S 37 OF THE ACT. IN OUR OPINION, THE SAID PRINCIPLE AND CONSIDERATIONS ARE DIRECTLY APPLICABLE WHILE CONSIDERING THE QUEST ION OF 'BUSINESS EXPENDITURE ' UNDER SECTION 37 OF THE IT. ACT. THE GUJARAT HIGH COURT IN CIT VS CITY AHMEDABAD SP INNING AND WEAVING MFG. CO. (1994) 207 ITR 427 (GUJ) HAD SPOKE N THUS:- MERELY BECAUSE THE ASSESSEE'S INCOME, AFTER INCURRING SUCH EXPENSES, WAS FOUND TO BE LITTLE OR NEGLIGIBLE , IT CANNOT BE SAID THAT THE SAID EXPENDITURE BECAME AN IMPERM ISSIBLE DEDUCTION. THE DELHI HIGH COURT IN CIT VS DALMIACEMEN T (P) LTD. (2002) 121 TAXMAN706 (DEL) HAS ALSO REITERATED THE SAME PRINC IPLE THUS:- THE REASONABLENESS OF THE EXPENDITURE COULD BE GON E INTO ONLY FOR THE PURPOSE OF DETERMINING WHETHER, IN FACT, TH E AMOUNT WAS SPENT. ONCE IT IS ESTABLISHED THAT THERE WAS A NEXU S BETWEEN THE EXPENDITURE AND THE PURPOSE OF THE BUSI NESS , THE REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARMCHAIR OF A BUSINESSMAN OR IN THE POSITION OF THE HOARD OF DIRECTORS AND ASSUME THE SAID ROLE TO DECIDE HOW MU CH IS A REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMS TANCES OF THE CASE, 6.1 IT IS WELL SETTLED THAT EXPENDITURE IN THE CO URSE OF THE TRADE WHICH IS UNREMUNERATIVE IS NONE THE LESS A PROPER DEDUCTI ON IF WHOLLY AND 24 EXCLUSIVELY MADE FOR THE PURPOSES OF THE TRADE. THE PRESENCE OF A RECEIPT ON THE CREDIT SIDE IS NOT ALWAYS REQUIRED TO JUSTIFY T HE DEDUCTION OF AN EXPENSE [TATA SONS LTD. VS. CIT (1950) 18 ITR 460 (BOM); TR AVANCORE RUBBER & TEA CO. LTD, VS. C. AG. IT.(1961) 41 ITR 751 (SC)]. IF AN EXPENDITURE FALLING INTO THE PHRASEOLOGY OF SECTION 37(1) FITS IN ANY ONE OF THE POSITIVE TESTS LAID DOWN IN CIT VS. NAVSARI COTTON & SILK MI LLS (1982) 135 ITR 546 (GUJ), THEN IT CAN BE ALLOWED AS A BUSINESS EXPENDI TURE. AND SOME OF THESE POSITIVE TESTS ARE - (I) WITH A VIEW TO BRI NG PROFITS OR MONETARY ADVANTAGE EITHER TODAY OR TOMORROW, (II) IN ORDER T O LOSSES IN FORESEEABLE FUTURE, (III) FOR EFFECTING ECONOMY IN WORKING WHIC H MAY PAY DIVIDENDS TODAY OR TOMORROW, (IV) FOR REMOVING INEFFICIENCY IN THE WORKING, AND (V) WHERE THE EXPENDITURE INCURRED IS SUCH AS A PRUDENT, PRAG MATIC, ETHICAL MAN OF THE WORLD OF BUSINESS WOULD CONSCIENTIOUSLY INCUR W ITH AN EYE ON PROMOTING HIS BUSINESS PROSPECTS SUBJECT TO THE EXPENDITURE B EING GENUINE AND WITHIN REASONABLE LIMITS. 6.2 IT MAY BE RECALLED THAT THE PROVISIONS OF SECTI ON 40A (2) COME INTO PLAY WHEN TAX LIABILITY IS SOUGHT TO BE ARTIFICIAL LY REDUCED BY DIVERTING BUSINESS AND PROFITS TO RELATIVES ASSOCIATE CONCERN S IN THE FORM OF EXCESSIVE PAYMENTS FOR GOODS AND SERVICES, ETC. THE SECTION EMPOWERS THE A.O. IF HE CONSIDERS ANY SUCH EXPENDITURE OR PAYMEN T TO BE EXCESSIVE OR UNREASONABLE, THE EXPENDITURE OR PAYMENT SHALL BE D ISALLOWED TO THE EXTENT OF ITS BEING EXCESSIVE OR UNREASONABLE. THE EXCESSIVEN ESS HAS TO BE MEASURED ASSESSING THE FAIR MARKET VALUE OF THE GOODS, SERVI CES OR FACILITIES RENDERED AND THE LEGITIMATE NEEDS OF THE BUSINESS OR PROFESS ION OR THE BENEFIT DERIVED BY, OR ACCRUING TO, THE ASSESSEE BY SUPPLY OF SUCH GOODS, SERVICES OR FACILITIES AGAINST THE QUANTUM OF THE EXPENDITURE OR PAYMENT MADE. IT IS, HOWEVER, SETTLED THAT TRANSACTIONS EVEN WITH RELATIVES AND ASSOCIATE CONCERNS CANNOT BE DISCARDED AND PRICE PA ID THEREFORE CANNOT BE DISREGARDED UNLESS IT IS SHOWN - AND THE ONUS IN TH IS REGARD IS ON THE DEPARTMENT - THAT THE TRANSACTION WAS A SHAM O NE , OR THE VALUE SHOWN IN THE BOOKS WAS NOT THE VALUE REALLY PAID, OR THE TRA NSACTION WAS NOT A BONA FIDE ONE [MARGABHAI KISHABHAI PATEL & CO, VS. (19 77) 108 ITR 54 (GUJ)], RELYING ON SRI RAMALINGA CHOODAMBIKAI MILLS LTD . V S. CIT (1955) 28 ITR 952 25 (MAD), CIT VS. KESHAVLAL CHANDULAL (1966) 59 ITR 12 0 (GUJ) AND DAS & CO. VS. CIT (1962) 45 ITR 369 (PAT)]. IT IS ALSO TRITE THAT IN SO FAR AS THE LEGITIMATE BUSINESS NEEDS OF AN ASSESSEE OR THE BEN EFIT DERIVED BY OR ACCRUING TO THE ASSESSEE FROM GOODS, SERVICES OR FA CILITIES, ETC., ARE CONCERNED, THESE ARE NOT TO BE JUDGED FROM THE VIEW POINT OF THE REVENUE BUT FROM THE VIEW POINT OF THE BUSINESS MAN [VOLTAM P TRANSFORMERS PVT. LTD. VS. CIT (1981) 129 ITR 105, 113 (GUJ)]. 6.3 IN THE PRESENT MATTER, IT HAS TO BE BORNE IN MI ND, THAT RETRACTION FROM AN ADMISSION IS PERMISSIBLE IN LAW. THE FOLLOWING AU THORITIES CAN BE ADVERTED TO IN THIS CONNECTION : (A) PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA (1973) 91 ITR 18 (SC) HELD : THAT RETRACTION FROM ADMISSION WAS PERMISSIBLE IN L AW. IT WAS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT. (B) PANGAMBAM KALANIOY SINGH VS. STATE OF MANIPUR AIR 1 956 SC 9 (SO HELD : THAT THE CONFESSION, EVEN IF INCULPATORY, S HOULD BE CORROBORATED, IF RETRACTED. THE CORROBORATION HAS OBVIOUSLY TO BE DONE ON THE BASIS OF INDEPENDENT EVIDENCE. (C) PALANI SWAMI VS. STATE OF TAMILNADU AIR 1956 SC 593 HELD: THAT WHERE CIRCUMSTANCES CAST A SUSPICION ON THE GENUINENESS OF CONFESSION, CORROBORATION IS NECESSARY. (D) SATINDER KUMAR (HUF) VS. CIT(1977) 106 ITR 64. 74 (HP) HELD: THAT IT IS TRUE THAT AN ADMISSION MADE BY AN ASSESS EE CONSTITUTES A RELEVANT PIECE OF EVIDENCE, BUT IT CANNOT BE RELIED UPON AS SUCH, WITHOUT CONSIDERING ASSESSEE 'S CASE THAT HE PROCEEDED ON M ISTAKEN UNDERSTANDING OF THE TRUE POSITION. 26 (E) CIT VS. CHRESTAIN MICA INDUSTRIES LTD. (1977) 1 09 ITR 324 (CAL.) HELD: THAT ADMISSION OF FACT BY THE COUNSEL CONSTITUTED E VIDENCE AGAINST HIS CLIENT. NEVERTHELESS, IT WAS OPEN TO ASSESSEE TO PROVE THAT SUCH ADMISSION WAS WRONG. (F) CIT VS. MS. DORIS S. LUIZ (1974) 96 ITR 646, 6 48 (KERALA) HELD: INSPITE OF THE ADMISSION IT IS INCUMBENT ON THE DEP ARTMENT TO ESTABLISH BY RELEVANT PROOF THAT THE AMOUNT IN QUESTION WAS I NCOME IN THE HANDS OF THE ASSESSEE. G) KRISHAN LAI SHIV CHAND RAI VS CIT (1973) 8 8 ITR 293 (PUNJ) HELD: IT IS AN ESTABLISHED PRINCIPLE OF LAW THAT A PARTY IS ENTITLED TO SHOW AND PROVE THAT THE ADMISSION MADE BY HIM PREVIOUSLY IS IN FACT NOT CORRECT AND TRUE. IN THE INSTANT CASE THE ASSESSEE HAD DEF INITELY ALLEGED THAT THE AMOUNTS SURRENDERED WERE NOT IN FACT HIS UNDISCLOSE D INCOME, THAT THE HUNDIS IN FAVOUR OF THE CREDITORS WERE GENUINE AND THAT THE SURRENDER WAS MADE SIMPLY TO AVOID BOTHERATION. TH AT BEING SO, IT WAS INCUMBENT UPON THE INSPECTING ASSISTANT COMMISS IONER TO HAVE AFFORDED THE ASSESSEE FULL OPPORTUNITY TO PROVE HIS ASSERTIONS, IT WAS AN INDISPUTABLE RIGHT WHICH HAD BEEN DENIED TO THE ASS ESSEE WITHOUT ANY JUSTIFICATION. IT SEEMS CLEAR TO MY MIND THAT THE ISSUE INVOLVED I N THE PRESENT MATTER WOULD HAVE TO BE DECIDED DE HORS OF WHAT WAS STATED BEFORE THE ID. A.O. BY BOTH SHRI DINESH BANSAL AND S/SHRI AMARJIT SINGH/HARPAL SINGH. THIS IS BECAUSE SHRI DINESH BANSAL HAS SUBSEQUENTLY RETRACTED, ALBEIT WITH THE PRODUCTION OF M/S SANTOKH RAM NARINDER NATH AND OTHER SUPPORTING EVIDENCE INCLUDING THE TDS CERTIFICATES. S/SHRI AMARJIT SINGH/HARPAL SINGH DID NOT TENDER THEMSELVES FOR TH E APPELLANTS CROSS EXAMINATION DESPITE THREE SUMMONSES BEING ISSUED TO THEM. QUITE CLEARLY, IN THESE CIRCUMSTANCES, THE DEPARTMENT WAS ENJOINED IN LAW TO PROVE ITS CASE INDEPENDENTLY, FOLLOWING THE RATIOS LAID DOWN IN THE AUTHORITIES SUPRA. 27 6.4 NOW IT IS WELL KNOWN THAT CROSS-EXAMINATI ON IS THE SINCE QUA NON OF DUE PROCESS OF TAKING EVIDENCE AND NO ADVERSE INFER ENCE CAN BE DRAWN AGAINST A PARTY UNLESS THE PARTY IS PUT ON NOTICE O F THE CASE MADE OUT AGAINST HIM. THE ASSESSEE MUST BE SUPPLIED THE CON TENTS OF ALL SUCH EVIDENCE, BOTH ORAL AND DOCUMENTARY, SO THAT HE CAN PREPARE TO MEET THE CASE AGAINST HIM. IF AN ASSESSING AUTHORITY IS REL YING ON THE TESTIMONY OF A WITNESS, THE ASSESSEE IS TO BE AFFORDED AN OPPORTUN ITY TO CROSS-EXAMINE HIM [CIT VS. EASTERN COMMERCIAL ENTERPRISES (1994) 210 ITR 103, 110-11 (CAL)]. IT IS NOT OPEN TO THE ASSESSING AUTHORITY TO GET OVER THIS HURDLE ON THE PLEA THAT THE WITNESS HAD NOT BEEN PRODUCED BY THE ASSESSEE [PAHAR CHAND & SONS VS. STATE OF PUNJAB (1972) 30 STC 211 (PUNJ) ; BANWARILAL SITARAM VS. STATE OF ORISSA (1974) TAX LR 1960 (ORI) AND GA RGI DIN JWALA PRASAD VS. CIT (1974) 96 ITR 97 (ALL)]. IT IS WELL SETTL ED THAT A QUASI-JUDICIAL OR ADMINISTRATIVE DECISION RENDERED, OR AN ORDER MADE IN VIOLATION OF THE AUDI ALTERAM PARTEM RULE, IS NULL AND VOID AND CAN BE ST RUCK DOWN AS INVALID ON THAT SCORE ALONE [SWADESHI COTTON MILLS CO. LTD. VS . UNION OF INDIA (1981) 51 COMP CAS 210, 255 (SC) = AIR 1981 SC 818 AND MAN EKA GANDHI VS. UNION OF INDIA, AIR 1978 SC 597]. THE PROPOSITION IS TRITE THAT HOSTILE STATEMENTS OF THIRD PARTIES WHICH ARE UNTESTED BY C ROSS EXAMINATION, CANNOT BE USED AGAINST THE ASSESSEE. 6.5 THE LAW AS REGARDS TO ONUS PROBANDI IS ENU NCIATED IN THE WELL- KNOWN ROMAN DICTUM : A) INCUINBIT PROBATIO QUI DICIT NON QUI NEGAT B) AFFIRMANTI NON NEGANTI INCUMBIT PROBATIO THE UNDERLYING IDEA EMBODIED IN THE DICTUM IS THAT THE BURDEN LIES UPON ONE WHO ALLEGES AND NOT ONE WHO DENIES THE EXI STENCE OF THE STATE OF FACT. IT IS ALSO WELL SETTLED THAT THE FATE OF AN ASSE SSEE CANNOT BE DECIDED BY THE REVENUE ON THE BASIS OF SURMISES, SUSPICIONS OR PRO BABILITIES AND NO ADDITION OR DISALLOWANCE CAN BE SUSTAINED ON MERE IPSE DIX IT OF THE ASSESSING OFFICER. TWO LANDMARK CONSTITUTIONAL BENCH DECISIO NS OF THE APEX COURT IN DHAKESWARI COTTON MILLS LTD. VS. CIT (1954) 26 ITR 775 (SC) AND DHIRAJLAL GIRDHARILAL VS CIT (1954) 26 ITR 736 (SC) COME TO M IND. IN THE CASE OF DHAKESWARI COTTON MILLS LTD., THE HIGHEST COURT OF THIS LAND SPOKE THUS 28 AS REGARDS THE SECOND CONTENTION, WE ARE IN ENTIRE AGREEMENT WITH THE LEARNED SOLICITOR-GENERAL WHEN HE SAYS THA T THE INCOME-TAX OFFICER IS NOT FETTERED BY TECHNICAL RUL ES OF EVIDENCE AND PLEADINGS, AND THAT HE IS ENTITLED TO ACT ON MA TERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE IN A COURT OF LAW, BUT THERE THE AGREEMENT ENDS; BECAUSE IT IS EQUALLY CLEAR THAT I N MAKING THE ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 23 OF T HE ACT, THE INCOME-TAX OFFICER IS NOT ENTITLED TO MAKE A PURE G UESS AND MAKE AN ASSESSMENT WITHOUT REFERENCE TO ANY EVIDENC E OR ANY MATERIAL AT ALL. THERE MUST BE SOMETHING MORE THAN BARE SUSPICION TO SUPPORT THE ASSESSMENT UNDER SECTION 2 3(3). THE RULE OF LAW ON THIS SUBJECT HAS, IN OUR OPINION, BE EN FAIRLY AND, RIGHTLY STATED, BY THE LAHORE HIGH COURT IN TH E CASE OF SETH GURMUKH SINGH V. COMMISSIONER OF INCOME-TAX, PUNJAB . IN DHIRAJLAL GIRDHARILAL VS CIT (1954) 26 ITR 736 ( SC) THE PRINCIPLE WAS EXPOSITED THUS:- THE LEARNED ATTORNEY-GENERAL FRANKLY CONCEDED THAT IT COULD NOT BE DENIED THAT TO A CERTAIN EXTENT THE TRIBUNAL HAD DRAWN UPON ITS OWN IMAGINATION AND HAD MADE USE OF A NUMB ER OF SURMISES AND CONJECTURES IN REACHING ITS RESULT. HE , HOWEVER, CONTENDED THAT ELIMINATING THE IRRELEVANT MATERIAL EMPLOYED BY THE TRIBUNAL IN ARRIVING AT ITS CONCLUSION, THERE W AS SUFFICIENT MATERIAL ON WHICH THE FINDING OF FACT COULD BE SUPP ORTED. IN OUR OPINION, THIS CONTENTION IS NOT WELL FOUNDED. IT I S WELL ESTABLISHED THAT WHEN A COURT OF FACT ACTS ON MATER IAL, PARTLY RELEVANT AND PARTLY IRRELEVANT, IT IS IMPOSSIBLE TO SAY TO WHAT EXTENT THE MIND OF THE COURT WAS AFFECTED BY THE IR RELEVANT MATERIAL USED BY IT IN ARRIVING AT ITS FINDING. SUC H A FINDING IS VITIATED BECAUSE OF THE USE OF INADMISSIBLE MATERIA L AND THEREBY AN ISSUE OF LAW ARISES. IT WAS ALSO SETTLED IN LALCHAND BHAGAT AMBICA RAM V S. CIT (1959) 37 ITR 288 (SC) THAT THERE IS NO PRESUMPTION OF BAD FAITH AGAINST AN ASSESSEE AND EVEN NOTORIETY IS NO BASI S FOR MAKING AN 29 ADDITION ON A MERE POSSIBILITY. IN UMA CHARAN S HAW & ORS VS. CIT (1959) 37 ITR 271 (SC) THE BASIC PRINCIPLE WA S SUCCINCTLY STATED THUS THERE ARE MANY SURMISES AND CONJECTURES, AND THE C ONCLUSION IS THE RESULT OF SUSPICION WHICH CANNOT TAKE THE PLACE OF PROOF IN THESE MATTERS. 6.6 IT IS HARDLY NECESSARY TO POINT OUT THAT A CASE CAN ONLY BE DECIDED ON ITS OWN FACTS, AND THE DESIRE TO BASE ONE'S DECI SION ON ANOTHER CASE IN WHICH THE FACTS APPEAR TO BE NEAR ENOUGH, SOMETIMES LEADS TO ERROR. IT IS WELL TO REMEMBER THE WHOLESOME ADVI CE GIVEN BY LORD DUNEDIN IN GREEN V. GLIKSTEN & SON LTD THAT IN THESE INCOME-FAX ACT CASES ONE HAS TO TRY, AS F AR AS POSSIBLE, TO TREAD A NARROW PATH, BECAUSE THERE ARE QUAGMIRES ON EITHER SIDE INTO WHICH ONE CAN EASILY BE LED ... TO M Y MIND, EVERY MATTER HAS TO BE CONSIDERED PRAGMATICALLY KEE PING IN VIEW THE VICISSITUDES AND THE EXIGENCIES OF BUSINES S, WHERE IT IS NOT ALWAYS POSSIBLE TO GET THINGS DONE OR TO ANTICIPATE THE COURSE OF EVENTS WITH INFALLIBLE PRECISION. IN MY OPINION AND APPLYING THE PRINCIPLES EXPOSITED IN THE AUTHOR ITIES SUPRA, TO THE FACTS OF THE PRESENT CASE, THE CONCLUSION SE EMS TO BE INESCAPABLE THAT THE DISALLOWANCES FROM OUT OF THE TRANSPORTATION & HANDLING CHARGES WERE NOT WARRANTE D. THE IMPUGNED DISALLOWANCES TOTALING TO RS.1,38,46,010/- ARE DELETED. 7. IN FINE, THE APPEAL IS ALLOWED. 20. THE LEARNED D.R FOR THE REVENUE RELIED UPON TH E ORDER OF THE ASSESSING OFFICER. THE LEARNED D.R FOR THE REVENUE SUBMITTED THAT THE ASSESSING OFFICER COLLEC TED ALL THE POSSIBLE EVIDENCE AGAINST THE ASSESSEE AND IT I S WELL SETTLED THAT RIGOR OF EVIDENCE ACT DO NOT APPLY TO THE INCOME TAX PROCEEDINGS. THE LEARNED D.R FOR THE REVENUE RELIED UPON 30 THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF SUMATI DAYAL VS. CIT,214 ITR 801 ON THE PROPOSITION THAT THE COURTS AND THE TRIBUNALS HAVE TO JUDGE THE EVID ENCE BEFORE THEM BY APPLYING THE PRINCIPLE OF HUMAN PROB ABILITY. THE LEARNED D.R FOR THE REVENUE ALSO RELIED UPON TH E DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F ITO VS. M.PIRAI CHOODI, 334 ITR 262 AND SUBMITTED THAT THE MATTER COULD HAVE BEEN REMANDED TO THE ASSESSING OF FICER FOR GIVING OPPORTUNITY TO CROSS EXAMINE THE WITNESS ES, WHO HAVE DEPOSED AGAINST THE ASSESSEE AT THE ASSESSMENT STAGE. THE LEARNED D.R FOR THE REVENUE, HOWEVER, FAIRLY ST ATED THAT THE ASSESSING OFFICER HAD MADE ADDITION ON ESTIMATE D BASIS. 21. ON THE OTHER HAND, THE LEARNED COUNSEL FOR ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT IN THE YEAR UN DER CONSIDERATION, IT WAS THE FIRST AND LAST CONTRACT W ITH THE GOVERNMENT DEPARTMENT FOR SUPPLY OF MOLASSES TO THE DISTILLERIES OF PUNJAB. THE ASSESSEE ALSO GAVE BA NK GUARANTEE OF RS.3 CRORES. THE TANKERS HAVE QUOTED RATES WHICH WERE PAID BY THE ASSESSEE FOR TRANSPORTATION AND HANDLING OF THE MOLASSES AS PER THE AGREEMENT WITH THE EXCISE AND TAXATION COMMISSIONER (PB-24), 42% SUGAR CONTENTS HAVE TO BE SUPPLIED AND THAT THE TIME WAS THE ESSENCE OF THE AGREEMENT. THEREFORE, IT IS VERY SP ECIALIZED JOB TO BE PERFORMED BY THE TANKERS. THEREFORE, WH ATEVER AMOUNT WAS SETTLED BY THEM FOR SUPPLY OF MOLASSES T O THE DISTILLERIES WAS REASONABLE AND FAIR. HE HAS REFERR ED TO VARIOUS SUMMONS ISSUED AT THE REMAND PROCEEDINGS BY THE ASS ESSING OFFICER 31 UNDER SECTION 131 OF THE ACT TO S/SHRI AMARJIT SING H AND HARPAL SINGH BUT THEY DID NOT APPEAR BEFORE THE ASS ESSING OFFICER AT THE REMAND PROCEEDINGS. THEREFORE, THEI R STATEMENTS REMAINED WITHOUT CROSS EXAMINATION AT TH E INSTANCE OF THE ASSESSEE. THEREFORE, IT WOULD NOT BE READ IN EVIDENCE AGAINST THE ASSESSEE. SHRI PRABAL MITTAL AND SHRI DINESH BANSAL APPEARED BEFORE THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS AND IN THEIR STATEMENTS THEY HAV E SUPPORTED THE CASE OF THE ASSESSEE. SHRI NARINDER NATH ALSO FURNISHED BILLS AND CONFIRMED THE PAYMENTS MAD E BY THE ASSESSEE. THEREFORE, THE LEARNED CIT (APPEALS ) WAS JUSTIFIED IN DELETING THE ENTIRE ADDITION. NO CASE OF UNREASONABLE OR EXCESSIVE PAYMENT HAVE BEEN MADE BY THE ASSESSING OFFICER. THEREFORE, THE DEPARTMENTAL APP EAL HAS NO MERIT AND MAY BE DISMISSED. 22. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND MATERIAL AVAILABLE ON RECORD. THE FACTS AS NOTED ABOVE ARE NOT IN DISPUTE. IT IS NOT IN DISPUTE THAT THE ASS ESSEE WAS AWARDED CONTRACT FOR SUPPLY OF MOLASSES TO DISTILLE RIES IN PUNJAB. IT WAS A CONTRACT OF BULK SUPPLY OF MOLA SSES IN WHICH THE ASSESSEE ALSO GAVE BANK GUARANTEE OF RS.3 CRORES AND ASSESSEE WAS TO ARRANGE THE MOLASSES FROM DIFFE RENT SUGAR MILLS. THE TIME WAS THE ESSENCE OF THE CON TRACT FOR SUPPLY OF MOLASSES AS WELL AS SUGAR CONTENTS OF MIN IMUM 42% WERE TO BE SUPPLIED, OTHERWISE THE ASSESSEE WOULD B E SUBJECT TO PENALTY. IT IS ALSO NOT IN DISPUTE THAT THE PRICE STRUCTURE OF MOLASSES WAS HIGHLY FLUCTUATING AND WAS DEPENDENT U PON 32 VARIOUS CRUSHING SEASONS. THE ASSESSEE CLAIMED TH AT SINCE IT WAS THE FIRST YEAR OF BUSINESS OF THE ASSESSEE F OR SUPPLY OF MOLASSES, THEREFORE, THE ASSESSEE WAS DEPENDENT ONLY UPON THE EXPERIENCED TRANSPORTERS HAVING SPECIALIZE D TANKERS FOR TRANSPORTATION. IT WAS ALSO EXPLAINE D BEFORE THE LEARNED CIT (APPEALS) THAT THE HANDLING OF MOLA SSES WAS A HIGHLY SKILLED JOB, WHICH INCLUDES LIAISON WITH T HE EXCISE AND TAXATION DEPARTMENT FOR TAKING PERMISSION FOR LIFTING/TRANSPORTATION OF MOLASSES FROM SUGAR MILLS , ENSURE AND QUALITY CHECK OF MOLASSES AND DELIVERY AT THE S PECIFIED TIME AND ALSO TO SUPERVISE ENTIRE WORK. THE AMOUN TS PAID BY THE ASSESSEE TO VARIOUS OWNER/OCCUPIER OF THE VA RIOUS TANKERS THROUGH BILLS HAVE NOT BEEN DISPUTED BY THE AUTHORITIES BELOW. THE ASSESSING OFFICER ISSUED CO MMISSION TO THE ADI (INVESTIGATION), MEERUT FOR SUMMONING AL L THE TWELVE TRANSPORTERS IN U.P. FOR RECORDING THEIR STA TEMENTS SO AS TO CONFIRM THE GENUINENESS OF THE TRANSPORTATION CHARGES PAID AND PAYABLE TO THEM. THE TRANSPORTERS APPEAR ED BEFORE THE ADI (INVESTIGATION) AND HAVE DEPOSED CATEGORICALLY THAT THEY HAVE DONE TRANSPORTATION OF MOLASSES FOR AND ON BEHALF OF THE ASSESSEE COMPANY AND ALSO CONFIRMED THE TRANSPORTATION CHARGES. THE ASSESSIN G OFFICER EVEN SUMMONED SOME OF THE TRANSPORTERS AT THE ASSES SMENT STAGE AND THEY HAVE CONFIRMED RECEIPT OF TRANSPORTA TION CHARGES FROM THE ASSESSEE. 22.1 THE ASSESSEE ALSO EXPLAINED THAT WHEN THE ENTI RE MOLASSES COULD NOT BE PROCURED FROM SUGAR MILLS OF PUNJAB, 33 THEN THE ASSESSEE COMPANY PROCURED THE SUBSTANTIAL MOLASSES FROM U.P. AND HARYANA FOR SUPPLY TO THE DISTILLERIES OF PUNJAB AS PER THE AGREEMENT. THE ASSESSING OFFICER MERELY NOTED THAT THE RATES GIVEN BY THE AS SESSEE FOR HANDLING AND TRANSPORTATION CHARGES WERE NOT AS PER THE PREVAILING MARKET RATES AND ASSUMED THAT THE OVER B ILLED MUST HAVE BEEN DONE IN THIS CASE AND ACCORDINGLY, O PINED THAT THE EXCESSIVE RATES HAVE GIVEN BY THE ASSESSEE . THE ASSESSING OFFICER RECORDED THE STATEMENTS OF SHRI D INESH BANSAL, PROPRIETOR OF M/S DINESH & CO. AND SHRI HAR PAL SINGH, BROTHER OF SHRI AMARJIT SINGH, PROPRIETOR OF M/S BEDI CARRIERS IN SUPPORT OF HIS FINDINGS THAT EXCESSIVE TRANSPORTATION AND HANDLING CHARGES HAD BEEN PAID. SIMILARLY, WITH REGARD TO DISALLOWANCE UNDER SECTIO N 40A(2)(B) OF THE ACT IT WAS FOUND THAT THE ASSESSEE MADE EXCESSIVE PAYMENT TO SHRI PRABAL MITTAL. THE ASSE SSING OFFICER ALSO DISALLOWED HANDLING CHARGES IN RESPECT OF M/S SANTOKH RAM NARINDER NATH. HOWEVER, LATER ON, SHRI DINESH BANSAL RETRACTED FROM HIS STATEMENT AND CONF IRMED THE RATES GIVEN BY THE ASSESSEE COMPANY TO HIM FOR TRANSPORTATION AND HANDLING CHARGES. THE SWORN DEPOSITIONS OF M/S SANTOKH RAM NARINDER NATH WERE F ILED FOR DOING SIMILAR HANDLING AND TRANSPORTATION CHARG ES IN WHICH THEY HAVE CONFIRMED DOING JOB FOR THE ASSESSE E AND RECEIPT OF THE AMOUNT. M/S DINESH & CO. AND BEDI CARRIERS ALSO FILED CERTIFICATE FROM M/S SANTOKH RAM NARINDE R NATH FOR DOING JOB FOR THE ASSESSEE. IT IS NOT IN DISP UTE THAT THE ASSESSEE COMPANY HAS NO INFRASTRUCTURE FOR SUPPLY O F 34 MOLASSES TO THE DISTILLERIES. THEREFORE, THE ASSE SSEE COMPANY REMAINED DEPENDENT UPON THE TANKERS FOR SUP PLY OF HUGE QUANTITY OF MOLASSES. S/SHRI DINESH BANSAL A ND PRABAL MITTAL APPEARED BEFORE THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS FOR CROSS EXAMINATION AND HAD SUPPORTED THE CASE OF THE ASSESSEE FOR PAYMENT IN Q UESTION FOR SUPPLY OF THE MOLASSES TO THE DISTILLERIES. S HRI NARINDER NATH OF M/S SANTOKH RAM NARINDER NATH FURNISHED BIL LS OF PAYMENTS AND CONFIRMATION OF PAYMENTS BEFORE THE ASSESSING OFFICER. HOWEVER, S/SHRI AMARJIT SINGH AND HARPAL SINGH DID NOT APPEAR BEFORE THE ASSESSING OF FICER IN THE REMAND PROCEEDINGS. THE ASSESSING OFFICER ISS UED SUMMONS UNDER SECTION 131 OF THE ACT TO THESE PERSO NS AND THEY DID NOT APPEAR FOR CROSS EXAMINATION ON BEHALF OF THE ASSESSEE. THEY HAVE SENT THEIR REPLIES BEFORE THE ASSESSING OFFICER, IN WHICH THEY HAVE ASKED COPIES OF THEIR S TATEMENTS RECORDED EARLIER AND THE ASSESSING OFFICER DID NOT SUPPLY THESE STATEMENTS TO THESE PERSONS. IT IS, THEREFOR E, CLEAR THAT THE STATEMENTS OF S/SHRI AMARJIT SINGH AND HAR PAL SINGH WERE RECORDED BEHIND THE BACK OF THE ASSESSEE AND NO OPPORTUNITY OF CROSS EXAMINATION WAS GIVEN BY THE A SSESSING OFFICER. IN THIS CASE, IT APPEARS, THE LEARNED CI T (APPEALS) DIRECTED THE ASSESSING OFFICER AT THE APPELLATE PRO CEEDINGS TO GIVE RIGHT OF CROSS EXAMINATION TO THE ASSESSEE OF THEIR STATEMENTS BUT EVEN AT THE STAGE OF REMAND PROCEEDINGS S/SHRI AMAR JIT SINGH AND HARPAL SINGH DID NOT APPEAR BEFORE THE ASSESSIN G OFFICER FOR CROSS EXAMINATION. THEREFORE, THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF KISHINCHAND CHELLARAM VS. 35 CIT, 125 ITR 713 CLEARLY APPLY AGAINST THE REVENUE AND, THEREFORE, THE STATEMENTS CANNOT BE READ IN EVIDENC E AGAINST THE ASSESSEE. THE LEARNED D.R FOR THE REVENUE, HO WEVER, RELIED UPON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF M.PIRAI CHOODI (SUPRA) IN WHICH THE HON 'BLE SUPREME COURT HAS DIRECTED THE HIGH COURT SHOULD DI RECT THE ASSESSING OFFICER TO GRANT OPPORTUNITY TO THE A SSESSEE TO CROSS EXAMINE THE CONCERNED WITNESSES. IN THE CASE OF THE PRESENT ASSESSEE, THE LEARNED CIT (APPEALS) HAS ALR EADY DIRECTED THE ASSESSING OFFICER TO GRANT OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE CONCERNED PERSONS BUT THE ASSESSING OFFICER FAILED TO PRODUCE THESE PERSONS F OR CROSS EXAMINATION EVEN AT THE STAGE OF REMAND PROCEEDINGS . THEREFORE, THIS JUDGMENT WOULD NOT SUPPORT THE CASE OF THE REVENUE. THE LEARNED COUNSEL FOR ASSESSEE ALSO RE FERRED TO THE STATEMENTS OF VARIOUS PERSONS WHICH ARE RECORDE D BY THE ADI (INVESTIGATION) UNDER SECTION 131 OF THE ACT, I N WHICH TRANSPORTERS HAVE CONFIRMED RECEIPT OF THE AMOUNTS IN QUESTION FROM THE ASSESSEE COMPANY, WHICH INCLUDES CONFIRMATION BY S/SHRI HARBHAJAN SINGH, HARJINDER S INGH AND JANG SINGH. THE COPIES OF THEIR STATEMENTS AR E FILED IN THE PAPER BOOK. THE TDS WAS ALSO DEDUCTED AND CLAI MED IN THE RETURNS BY ALL THESE TRANSPORTERS. THE LEARNE D COUNSEL FOR ASSESSEE, THEREFORE, RIGHTLY ARGUED THAT ALL TH E TRANSPORTERS INCLUDING S/SHRI DINESH BANSAL AND PRA BAL MITTAL, HAVE CONFIRMED THE TRANSPORTATION CHARGES P AID BY THE ASSESSEE COMPANY. 36 22.2 THE ASSESSING OFFICER HAS ALSO NOT BROUGHT ANY MATERIAL ON RECORD TO PROVE HOW EXCESSIVE PAYMENTS HAVE BEEN MADE UNDER SECTION 40A(2)(B) OF THE ACT. THE ASSESSING OFFICER HAS MERELY ASSUMED CERTAIN FACTS WITHOUT BRINGING ANY EVIDENCE OR MATERIAL AGAINST THE ASSES SEE OF EXCESSIVE PAYMENTS. THE FINDINGS OF THE ASSESSIN G OFFICER ARE BASED ON MERE INFERENCE OF THE ASSESSING OFFICE R, WHICH WOULD NOT BE RELEVANT CRITERIA TO MAKE ADDITION AGA INST THE ASSESSEE. IT IS WELL SETTLED LAW THAT THE SUSPICIO N HOWSOEVER MAY BE STRONG, IT CANNOT TAKE PLACE OF LEGAL PROOF. IT IS, THEREFORE CLEAR THAT IN THE PRESENT CASE, THERE IS NO CLINCHING EVIDENCE ON RECORD TO SHOW THAT THE EXPEN DITURE IN QUESTION HAD NOT ACTUALLY BEEN INCURRED BY THE ASSE SSEE COMPANY OR THAT A PARTICULAR OVER BILLED AMOUNT HAD ACTUALLY BEEN ROTATED BACK BY ANY TRANSPORTER TO TH E ASSESSEE COMPANY. THE ASSESSEE INCURRED TRANSPORTA TION AND HANDLING CHARGES WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND EXPENDITURE INCURRED BY THE ASSESSE E FOR BUSINESS PURPOSE SHOULD BE JUDGED FROM THE POINT OF VIEW OF THE BUSINESSMAN AND NOT FROM THE POINT OF VIEW OF T HE ASSESSING OFFICER. THE LEARNED CIT (APPEALS) WAS, THEREFORE, JUSTIFIED IN RELYING UPON SEVERAL DECISIONS IN SUPP ORT OF HIS FINDINGS THAT THE ENTIRE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ENTIR E CASE WAS MADE OUT BY THE ASSESSING OFFICER AGAINST THE ASSES SEE ON THE BASIS OF STATEMENTS RECORDED AT THE ASSESSMENT STAGE OF SHRI DINESH BANSAL AND S/SHRI AMARJIT SINGH AND HAR PAL SINGH. SHRI DINESH BANSAL HAD SUBSEQUENTLY RETRAC TED FROM 37 HIS STATEMENT AND PRODUCED M/S SANTOKH RAM NARINDER NATH WITH SUPPORTING EVIDENCE INCLUDING THE TDS CER TIFICATE AND SUPPORTED CASE OF ASSESSEE IN REMAND PROCEEDING S. HOWEVER, S/SHRI AMARJIT SINGH AND HARPAL SINGH DID NOT APPEAR BEFORE THE ASSESSING OFFICER AT THE REMAND PROCEEDINGS FOR CROSS EXAMINATION ON BEHALF OF THE ASSESSEE. THEREFORE, THEIR STATEMENTS CAN NOT BE READ IN EVID ENCE AGAINST THE ASSESSEE. 22.3 THE ASSESSEE ON THE BASIS OF THE ABOVE OVERWHELMING EVIDENCES ON RECORD HAS BEEN ABLE TO P ROVE THAT BECAUSE OF THE COMMERCIAL EXPEDIENCY, THE ASSE SSEE COMPANY HAD TO PROCURE SUBSTANTIAL MOLASSES FROM U. P. AND HARYANA. IN PERFORMING ITS SPECIALIZED TRANSACTIO N TO SUPPLY MOLASSES WITH PARTICULAR QUALITY, (SUBJECT T O CHECK BY THE EXCISE AND TAXATION DEPARTMENT), IF THE ASSE SSEE HAD PAID THE AMOUNT IN QUESTION TO THE TRANSPORTERS/TAN KERS, NOTHING EXCESSIVE OR UNREASONABLE PAYMENTS HAVE BEE N PAID TO ANY OF THE TRANSPORTERS. THE LEARNED CIT (APPE ALS) ON THE BASIS OF THE ENTIRE FACTS, MATERIAL AND EVIDENCE ON RECORD, CORRECTLY ANALYSED THE FACTS AND CORRECTLY DELETED THE ADDITI ON IN QUESTION. THE LEARNED CIT (APPEALS) HAS PASSED A SPEAKING AND REASONED ORDER INTO THE MATTER AND SINCE THE EVIDENCE AND MATERIAL ON RECORD IS SUFFICIENT TO HOLD THAT THE AMOUNT IN QUESTION WAS PAID WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, THEREFORE, MERE ESTIMATED DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ASSUM PTION WOULD NOT BE JUSTIFIED. THE ASSESSING OFFICER HAS NOT B ROUGHT ANY EVIDENCE ON RECORD TO CONTRADICT THE FINDINGS OF TH E LEARNED CIT 38 (APPEALS). THEREFORE, THE DECISION IN THE CASE OF SUMATI DAYAL (SUPRA) RELIED UPON BY THE LEARNED D.R FOR TH E REVENUE WOULD NOT SUPPORT THE CASE OF THE REVENUE. 23. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, MATERIAL ON RECORD IN THE LIGHT OF T HE FINDINGS OF THE LEARNED CIT (APPEALS), WE DO NOT FI ND ANY ERROR IN THE ORDER OF THE LEARNED CIT (APPEALS) IN DELETING THE ENTIRE DISALLOWANCE. WE, THEREFORE, DO NOT FIN D ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. 24. IN THE RESULT, THE DEPARTMENTAL APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF MAY, 2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH MAY, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH