Dy. Commissioner of Income Tax-4, Kanpur V. M/s. Quality Steel Products Ltd., Kanpur

ITA 57/LKW/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83314 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-08-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 08-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O N PATHAK
• Assessee Lawyers: P K KAPOOR
• Section: 131

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.57/LKW/2012 ASSESSMENT YEAR:2001 - 02 DY.C.I.T. - 4, KANPUR. VS. M/S QUALITY STEEL PRODUCTS LTD., 133/1, JUHI GAUSHALA, KANPUR. PAN:AAACQ0249E (APPELLANT) (RESPONDENT) APPELLANT BY SHRI O. N.PATHAK, D. R. RESPONDENT BY SHRI P. K. KAPOOR, C.A. DATE OF HEARING 26/08/2014 DATE OF PRONOUNCEMENT 2 5 /09/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, KANPUR, DATED 18/10/2011 FOR THE ASSESSMENT YEAR 2001 - 2002. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS BY DELETING THE ADDITION MADE AN ACCOUNT OF COMMISSIONS PAID TO PARTIES ALTHOUGH NO SERVICES WERE RENDERED BY THEM WHILE PROCURING THE ORDERS. 2. THAT THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) BEING ERRONEOUS, IN LAW AND ON FACTS DESERVES TO BE VACATED AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). HE ALSO SUBMITTED THAT THE COPY OF AGREEMENT WITH THE COMMISSION AGENT REGENCY 2 ENTERPRISES IS AVAILABLE ON PAGES 22 AND 23 OF THE PAPER BOOK AND SIMILAR AGREEMENT LETTER WITH PREMIER ISPAT (P) LTD. IS AVAILABLE ON PAGE NO. 27 OF THE PAPER BOOK. HE ALSO SUBMI TTED THAT COPY OF LETTERS OF CORRESPONDENCES BETWEEN THE ASSESSEE COMPANY AND REGENCY ENTERPRISES IS AVAILABLE ON PAGES 38 TO 64 OF THE PAPER BOOK. AT THIS JUNCTURE, A QUERY WAS RAISED BY THE BENCH THAT AS PER THE AGREEMENT B ETWEEN THE ASSESSEE COMPANY AN D REGENCY ENTERPRISES AVAILABLE ON PAGE 22 & 23 OF THE PAPER BOOK, REGENCY ENTERPRISES WAS SUPPOSE D TO SEND THE ASSESSEE COMPANY FORTNIGHTLY REPORT INDICATING THE PROGRESS IN DEPARTMENT AND EFFORTS BEING MADE FOR PROCUREMENT OF SUPPLY ORDER IN FAVOUR OF TH E ASSESSEE AND IT IS ALSO SPECIFIED THERE THAT IN ABSENCE OF SUCH REPORT FOR TWO CONSECUTIVE FORTNIGHTS, IT WILL BE PRESUMED THAT ADEQUATE EFFORTS ARE NOT BEING MADE FOR PROCUREMENT OF SUPPLY ORDERS IN FAVOUR OF THE ASSESSEE COMPANY. THE BENCH WANTED TO K NOW WHERE THE COPIES OF THOSE LETTERS ARE . IT WAS REPLIED THAT ALL THE CORRESPONDENCES WITH REGENCY ENTERPRISES ARE AVAILABLE ON PAGES 38 TO 64 OF THE PAPER BOOK. HE PLACED RELIANCE ON SEVERAL TRIBUNAL DECISIONS, COPIES OF WHICH ARE SUBMITTED IN THE PAPE R BOOK, THE DETAILS OF WHICH ARE AS UNDER: ( I ) I.T.A.T. ORDER IN THE CASE OF ADDL. CIT VS. QST LTD. IN I.T.A. NO.896/LUCK/2002 FOR THE ASSESSMENT YEAR 1999 - 2000 ( II ) JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN INCOME TAX APPEAL NO. 233 OF 2006 IN THE CASE OF CIT VS. QST LIMITED. ( III ) I.T.A.T. ORDER IN THE CASE OF V.I.P. INDUSTRIES LTD. VS. INSPECTING ASSISTANT COMMISSIONER 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE IN DISPUTE WAS DECIDED BY THE ASSESSING OFFICER AGAINST THE ASSESSEE WITH A CL EAR FINDING THAT REGARDING COMMISSION PAID TO PREMIER ISPAT (P) LTD. OF RS.21,94,211/ - , IS IN RELATION TO ORDER RECEIVED BY THE ASSESSEE COMPANY FROM UPPCL IN 1998 AND AT THAT TIME , PREMIER ISPAT (P) LTD., TO WHOM COMMISSION WAS PAID, WAS NOT IN EXISTENCE. THE ASSESSING OFFICER HAS ALSO NOTED THAT THE ASSESSEE WAS ASKED TO FURNISH DOCUMENTARY EVIDENCE AS WHAT OTHER CERVICES 3 WE RE RENDERED BY PREMIER ISPAT (P) LTD. IN REPLY , THE ASSESSEE FILED LETTER DATED 23/03/2004, COPY OF WHICH IS AVAILABLE ON PAGE NO. 35 TO 37 OF THE PAPER BOOK. THEREAFTER THE ASSESSING OFFICER HAS GIVEN A FINDING THAT NO DOCUMENTARY EVIDENCE WAS FURNISHED BY THE ASSESSEE AS TO WHAT SERVICES ARE RENDERED BY PREMIER ISPAT (P) LTD. REGARDING REGENCY ENTERPRISES ALSO, A CLEAR FINDING IS GIVEN BY THE ASSESSING OFFICER THAT NO SERVICES WAS RENDERED BY THIS PARTY FOR PROCURING ORDERS ON BEHALF OF THE ASSESSEE COMPANY. AS AGAINST THIS CLEAR FINDING OF ASSESSING OFFICER, THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY MAKING FOL LOWING OBSERVATIONS AS PER PARA 4.1.1 AND 4.2.1 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 4.1.1 IN VIEW OF THE DISCUSSION, I AM OF THE CONSIDERED VIEW THAT THE A.O. HAS NOT BEEN ABLE TO BRING ANYTHING ON RECORD WHICH COU LD SUGGEST THAT NO SERVICES HAD BEEN RENDERED BY M/S PREMIER ISPAT CO. PVT. LTD. NOR HAS HE BEEN ABLE TO CONTROVERT THE STATEMENT OF THE DIRECTOR OF M/S PREMIER ISPAT CO. PVT. LTD. THAT THE SERVICES HAD INDEED BEEN RENDERED, IN THIS VIEW OF THE MATTER, THE COMMISSION PAID TO M/S PREMIER ISPAT CO. PVT. LTD. IS ALLOWABLE AND THE ADDITION MADE IN THIS RESPECT IS. THEREFORE, DELETED. 4.2.T IN THIS VIEW OF THE MATTER, I AM OF THE CONSIDERED VIEW THAT THE A.O. HAS NEITHER CONTROVERTED THE ABOVE EXPLANATION/DETAILS GIVEN BY THE ASSESSEE AND THE SERVICE PROVIDER NOR HAS BROUGHT ON RECORD ANY WORTHWHILE MATERIAL WHICH COULD INDICATE THAT THE SAID COMMISSION PAYMENT WAS NOT GENUINE OR BOGUS. THE ADDITION MADE IN THIS RESPECT T DELETED SINCE NO ADDITI ON CAN BE MADE ON THE BASIS OF SUSPICION, AND SURMISES ALONE. 5. BEFORE GIVING THE FINDING IN THESE PARAS, CIT(A) HAS REPRODUCED THE CONTENTS OF LETTER DATED 23/03/2004 WRITTEN BY THE ASSESSEE TO THE ASSESSING OFFICER. HENCE, WE FIRST REPRODUCE THE CONTENTS OF THIS LETTER DATED 23/03/2004, WHICH IS AVAILABLE ON PAGES 35 TO 37 OF THE PAPER BOOK AS UNDER: 4 WITH REFERENCE TO YOUR NOTICE U/S 142 DT. 10.3.2004 FOR THE ABOVE YEAR AND ALSO IN CONTINUATION TO OUR PREVIOUS LETTERS, WE HAVE THE HONOUR TO SUBMIT AS UNDER: 1. THAT WE HAVE PAID COMMISSION TO M/S REGENCY ENTERPRISES, DIMAPUR NAGALAND AMOUNTING TO RS.19,39,224.00 FOR THE WORK OF PROVIDING US THE AMENDED BALANCE SUPPLY ORDER OF STEEL TUBULAR POLES IN OUR FAVOUR FROM THE DEPTT. OF POWER, NAGALAN D KOHIMA WHICH WAS ORIGINALLY ALLOTTED TO M/S THE NATIONAL TUBING COMPANY, KANPUR. THE BRIEF DETAILS ARE AS UNDER: - ( A ) THAT THE AGENT. M/S. REGENCY ENTERPRISES HAS NEGOTIATED WITH US FOR THE PAYMENT OF COMMISSION @20% OF THE SUPPLY ORDER IF GIVEN, TO US BY T HE SAID DEPARTMENT OF NAGALAND. WE HAVE CONSENTED THE SAME WITH THE RESULT OUR AGENT M/S. REGENCY ENTERPRISES HAS MANAGED TO CHANGE THE NAME OF SUPPLIER IN OUR FAVOUR IN PLACE OF M/S. NATIONAL TUBING COMPANY WHO HAD REFUSED TO SUPPLY THE MAJOR QUANTITY OF STEEL TUBULAR POLES. ( B ) THAT AS PER PROCEDURE IF ANY SUPPLIER DENIES FOR ANY SUPPLY OF THE PORTION OR PART, THEN RETENDER IS CALLED FOR A FRESH, BUT WITH THE BEST EFFORTS AND ARRANGEMENT MADE BY OUR AGENT M/S. REGENCY ENTERPRISES WE SUCCEEDED TO PROCURE THE ORDER OF 2480 STEEL TUBULAR POLES THROUGH AMENDED AND REVISED ORDER NO. CEL/PR/POLE/99 - 2000/214 DT. 3 . 7.2000. THE COPY OF THE ORDER HAVE ALREADY BEEN SUBMITTED WITH YOUR GOODSELF. WITH THE RESULT WE HAVE DONE SALES OF RS.96.96 LACS IN FAVOUR OF CHIEF ENGIN EER, DEPTT. OF POWER, NAGALAND AND EARNED PROFIT THERE FROM. ( C ) THAT YOUR GOODSELF HAS PROVIDED US THE LETTER DATED 6.2.2004 ISSUED BY THE CHIEF ENGINEER, DEPTT. OF POWER NAGALAND AND FROM THIS LETTER IT IS VERY MUCH CLEAR THAT THIS ORDER WAS ALLOTTED FOR TH E SUPPLY OF BALANCE QUANTITY OF STEEL TUBULAR POLES WITH THE EFFORTS OF OUR AGENT BECAUSE WE HAVE NO INFRA STRUCTURE OR BUSINESS RELATIONS AT NAGALAND. THE RELEVANT PORTION OF THE SAID LETTER IS AS UNDER: AFTER SUPPLY OF SOME QUANTITIES THE FIRM REQUESTED TO CHANGE THE NAME OF THE SUPPLIER IN FAVOUR OF THEIR ASSOCIATE FIRM M/S QUALITY STEEL PRODUCTS PVT. LTD., 5 133/1, JUHI GAUSH A LA, KANPUR VIDE THEIR LETTER NO, NTC/DMT DT. 22.6.2000 (COPY ENCLOSED), AND SOON AFTER WE HAVE RECEIVED A CONFIRMATION LE TTER FROM M/S. QUALITY STEEL PRODUCTS PVT. LTD., KANPUR V IDE NO.QSPPL/2000 - 2001 DT . 27 . 06 . 2000 (COPY ENCLOSED) THAT THEY ARE WILLING TO SUPPLY THE BALANCE QUANTITY AT THE SAME RATES AND TERMS AND CONDITIONS AS OF THE EARLIER ORDER. HENCE THE DEPARTMENT ISS UED A FRESH ORDER TO M/S. QUALITY STEEL PRODUCTS PVT. LTD., KANPUR . ' ( D ) IT IS FURTHER .SUBMITTED THAT M/S. NATIONAL TUBING COMPANY IS NOT OUR ASSOCIATE CONCERN AND ANY OF OUR DIRECTORS IS NOT INTERESTED IN M/S. NATIONAL TUBING COMPANY, KANPUR DIRECTLY OR INDIRECTLY AND AS PER THE CIRCUMSTANCES OF THE BUSINESS. WE HAVE TO SUBMIT THAT WE HAVE PAID COMMISSION TO M/S. REGENCY ENTERPRISES IN THE BEST INTEREST OF THE COMPANY AND ALSO FOR EARN ING PROFIT FROM THE BUSINESS. MOREOVER OUR AGENT M/S. REGENCY ENTERPRISES NAGALAND HAS CONFIRMED IN WRITING THAT THEY HAVE RECEIVED THE COMMISSION FROM US FOR SERVICE RENDERED BY THEM AS STATED HERE IN BEFORE. HENCE COMMISSION PAID TO REGENCY ENTERPRISES S HOULD BE ALLOWED. 2. THAT WE HAVE ALSO PAID COMMISSION TO M/S. PREMIER ISPAT LIMITED, KANPUR FOR SERVICES RENDERED IN RESPECT OF DEFERRED SUPPLY ORDER OF U. P. POWER CORPORATION, LUCKNOW. AS A MATTER OF FACT THE ORIGINAL TENDER WAS ACCEPTED IN EARLIER YE AR, BUT DUE TO SOME DEPARTMENTAL PROBLEMS AND OBJECTION RAISED BY OTHER PARTIES, THE SAID SUPPLY ORDER WAS WITH HOLDED/DEFERRED BY THE SAID DEPARTMENT. THERE .AFTER WE TOOK THE SERVICES OF M/S. PREMIER ISPAT LIMITED AND APPOINTED THEM AS OUR COMMISSION AGE NT AGAINST, GUARANTEED DELIVERIES AND WE HAVE SETTLED COMMISSION PAYMENT @'7% OF THE F I NAL SALE AMOUNT. THE BRIEF FACTS ARE A UNDER: - ( A ) THERE AFTER OUR AGENT M/S. PREMIER ISPAT LIMITED HAD MADE NECESSARY LIAISON WORK AND EFFORTS ULTIMATELY SUCCEEDED IN REGULARIZING DEFERRED SUPPLY ORDER IN OUR FAVOUR AND ACCORDINGLY WE HAVE BEEN ABLE TO SUPPLY STEEL TUBULAR POLES AMOUNTING TO RS. 313.46 LACS FROM TIME DURING THE YEAR IN FAVOUR OF U.P. POWER CORPN. LTD., LUCKNOW . 6 ( B ) THAT IN OTHER WORDS WITHOUT THE HELP OF OUR LIAISON AGENT M/S. PREMIER ISPAT LIMITED WE COULD NOT GET THE SUPPLY OF THE ABOVE DEFER R ED ORDER. IT IS THEREFORE CLEAR THAT WE HAVE PAID COMMISSION TO M/S. PREMIER ISPAT LIMITED ONLY IN RESPECT BUSINESS CONSIDERATION HENCE THE COMMISSION PAID TO THEM IS FULLY ALLOWABLE. ( C ) THAT YOURS G O OD SE L F IS REQUESTED TO PROVIDE US COPY OF LETTER RECEIVED BY YOUR GOODSELF FROM U.P. POWER CORPN . , LUCKNOW REGARDING THIS SUPPLY AS MENTIONED IN YOUR ABOVE NOTICE WITH A VIEW TO ENABLE US TO FURTHER EXPLAIN THE FACTS IF SO REQUIRED NECESSARY BY YOUR HONOUR. ( D ) THAT SRI A J AY KUMAR JAIN , DIRECTOR OF M/S. PREMIER ISPAT LTD. HAS ALSO CONFIRMED FOR RENDERING SERVICES IN RESPECT OF SUPPL IE S TO U.P. POWER CORPN . , AND ALSO CONFIRMED THE RECEIPT OF COMMISSION FROM US IN HIS STATEMENT R ECORDED U/S 131 OF THE INCOME TAX ACT BEFORE YOUR GOODSELF. IN VIEW OF THE ABOVE, IT IS THEREFORE REQUESTED YOUR HONOUR TO KINDLY CONSIDER THE ABOVE FACTS AND DETAIL WHILE COMPLETING THE ASSESSMENT AND OBLIGE. 6. WE ALSO REPRODUCE THE RELEVANT PORTION OF THE APPOINTMENT LETTERS ISSUED BY THE ASSESSEE COMPANY IN FAVOUR OF REGENCY ENTERPRISES AND PREMIER ISPAT (P) LTD. FROM PAGES 22, 23 AND 27 OF THE PAPER BOOK AS UNDER: M/S REGENCY ENTERPRISES, BURMA CAMP ROAD, DIMAPUR - 797 112 (NAGALAND) DEAR SIR, SUB:YOUR APPOINTMENT AS AN AUTHORIZED LIAISON REPRESENTATIVE FOR PROCURING SUPPLY ORDERS FOR STEEL TUBULAR POLES FROM THE DEPARTMENT OF POWER, GOVT. OF NAGALAND. WITH REFERENCE TO YOUR LETTER NO. RE/CAL/13/2000 - 2001 DATED 07/06/2000, WE ARE GLA D TO APPOINT YOU AS OUR AUTHORIZED REPRESENTATIVE FOR PROCURING ORDERS FROM THE DEPARTMENT OF POWER, GOVT. OF NAGALAND. YOUR APPOINTMENT IS SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS: 7 TERRITORY :NAGALAND PERIOD OF AUTHORIZATION :22/06/2000 TO 31/03/ 2001 RESPONSIBILITY :YOU WILL BE RESPONSIBLE TO PROCURE ORDERS FROM THE DEPARTMENT OF POWER. THE SIZE AND QTY. AS REQUIRED BY US. YOU WILL ALSO ASSIST US IN EVERY POSSIBLE MANNER FOR SMOOTH FUNCTIONING WITH THE DEPARTMENT. YOU WILL ALSO BE RESPONSIBLE TO COLLECT NO DUES FROM RESPECTIVE CONSIGNEE(S), SALES TAX DECLARATION FORM, C/D AND REQULARIZATION OF DELIVERY PERIOD, IF REQUIRED. IT WILL ALSO BE YOUR RESPONSIBILITY TO KEEP US FULLY INFORMED ABOUT THE ACTIVITIES OF OUR COMPETITIONS IN YOUR TERRITORY. SERVICE CHARGES :YOU WILL BE PAID SERVICES CHARGES @22% ON ORDER VALUE EXCEPT SALES TAX. A ) 5% COMMISSION DUE AGAINST INDIVIDUAL ORDER SHALL LBE MADE TO YOU ON RECEIPT OF TECHNICALLY AND COMMERCIALLY CLEAR ORDER AND AFTER IT HAS BEEN ACCEPTED BY US. B ) THE BALANCE PAYMENT OF SERVICE CHARGES DUE AGAINST THE INDIVIDUAL ORDER SHALL BE RELEASED TO YOU AFTER THE ORDER HAS BEEN EXECUTED AND ON RECEIPT OF PAYMENT AND REGULARIZATION OF DELIVERY PERIOD ETC. C ) THE PAYMENT SHALL BE MADE BY CROSSED CHEQUE/DEMAND D RAFT ONLY. THE SERVICE CHARGES WILL BE PAYABLE TO YOU FOR THOSE ORDERS ONLY WHICH ARE RECEIVED FROM YOUR TERRITORY AND THROUGH YOUR EFFORTS, THEREFORE, YOU MUST ENSURE THAT ADVANCE INFORMATION IS SENT TO US ABOUT RELEASE OF THE ORDERS. YOU WILL SEND US FORTNIGHTLY REPORT INDICATING THE PROGRESS IN DEPARTMENT AND EFFORTS BEING MADE FOR PROCUREMENT OF SUPPLY ORDER IN YOUR FAVOUR. IN THE ABSENCE OF SUCH REPORT FOR TWO CONSECUTIVE FORTNIGHTS, WE WILL PRESUME THAT YOU ARE NOT MAKING ADEQUATE EFFORTS FOR PROC UREMENT OF SUPPLY ORDERS IN OUR FAVOUR. IF DURING THE PERIOD OF THE CONTRACT, THE SERVICE RENDERED BY YOU ARE NOT FOUND SATISFACTORY, THIS AGREEMENT WILL BE TERMINATED AT 8 THE SOLE DISCRETION OF THE COMPANY GIVING YOU ONE MONTHS NOTICE IN WRITING. ALL OR DERS BOOKED BY YOU PRIOR TO THE DATE OF TERMINATION WILL, HOWEVER, BE ELIGIBLE FOR THE SERVICE CHARGES AS PER AGREED TERMS. PLEASE SIGN AND RETURN THE DUPLICATE COPY OF THE LETTER IN TOKEN OF YOUR ACCEPTANCE OF ABOVE TERMS AND CONDITIONS. THANKING YOU, FOR QUALITY STEEL PRODUCTS (P) LTD. SD/. AUTHORISED SIGNATORY M/S PREMIER ISPAT (P) LTD., 122/235, PLOT NO. 17, IIIRD FLOOR, FAZALGANJ, KANPUR. DEAR SIR, PLEASE REFER TO THE DISCUSSION WITH YOU AT OUR OFFICE, WE ARE PLEASED TO APPOINT YOU AS OUR AUTHORIZED REPRESENTATIVE FOR PROCURING SUPPLY ORDER IN OUR FAVOUR FROM VARIOUS GOVT. DEPARTMENTS ON FOLLOWING TERMS & CONDITIONS: 1.PERIOD OF AUTHORIZATION :THE PERIOD OF AUTHORIZATION WILL BE 10/05/2000 TO 31/03/2001 1.SERVICE RENDERED & :(1)PROCUREMENT OF ORDER FOR RESPONSIBILITIES SUPPLY OF OUR PRODUCTS SUCH AS STEEL TUBULAR POLES ETC. FROM THE GOVT. DEPARTMENT/ MARKET. (2)AMENDMENT/EXTENSION OF DELIVERY PERIOD FROM GOVT. ORDERS. (3)TO ARRANGE FOR TIMELY/ PAYMENT. (4)TO COLLECT SAL ES TAX/ DECLARATION FORMS ETC. AS APPLICABLE. (5)TO OTHER FEEDBACK REQUIRED BY US. 3.SERVICES CHARGES/ :YOU WILL BE PAID SERVICE 9 COMMISSION CHARGES & COMMISSION AS SETTLED AT THE TIME OF PROCURING ORDER ON OUR ACCOUNT. 4. THE SERVICE CHARGES WILL BE PAYABLE TO YOU FOR THOSE ORDERS ONLY WHICH ARE RECEIVED THROUGH YOUR EFFORTS. 5. IF DURING THE PERIOD OF THE CONTRACT, THE SERVICE RENDERED BY YOU ARE NOT FOUND SATISFACTORY, THIS AGREEMENT WILL BE TERMINATED AT THE SOLE DISCRETION OF THE COMPANY GIVING Y OU ONE MONTHS NOTICE IN WRITING, ALL ORDER PROCURED BY YOU PRIOR TO THE DATE OF TERMINATION WILL, HOWEVER, BE ELIGIBLE FOR THE SERVICE CHARGES/COMMISSION AS PER AGREED TERMS. PLEASE SIGN AND RETURN THE DUPLICATE COPY OF THIS LETTER, IN TOKEN OF YOUR ACCE PTANCE OF ABOVE TERMS AND CONDITIONS. YOURS FAITHFULLY, FOR QUALITY STEEL PRODUCTS PVT. LTD. ACCEPTANCE SD/. SD/. DIRECTOR FOR PREMIER ISPAL (P) LTD. 6.1 FROM THE AGREEMENT LETTER TO REGENCY ENTERPRISES, AS REPRODUCED ABOVE, WE FIND THAT THERE WAS A SPECIFIC CLAUSE OF THE AGREEMENT THAT REGENCY ENTERPRISES WILL SEND FORTNIGHTLY REPORT INDICATING THE PROGRESS REPORT. FROM THE CORRESPONDENCES AVAILABLE ON PAGES 38 TO 64 OF THE PAPER BO OK, WE FIND THAT THE FIRST LETTER IS DATED 29/05/2000 ON PAGE NO. 38 IN WHICH THAT PARTY HAS FORWARDED A LETTER DATED 15/05/2000 FROM CHIEF ENGINEER, DEPARTMENT OF POWER, KOHIMA, NAGALAND. THE SECOND LETTER IS DATED 07/06/2000 AND IN THIS LETTER ALSO , THE Y HAVE ENCLOSED TENDER NOTICE R EGARDING THE SAME TENDER NOTICE EARLIER FORWARDED WITH LETTER DATED 29/05/2000. THIRD LETTER IS DATED 01/08/2000 ENCLOSING A COPY OF PURCHASE ORDER DATED 03/07/2000 AND A LETTER DATED 28/07/2000. THE NEXT LETTER IS DATED 07/09/2000 ENCLOSING A MEMO DATE D 01/09/2000. THE NEXT LETTER IS DATED 15/09/2000 ENCLOSING THE PAPERS REGARDING TERMS AND CONDITIONS IN CONNECTION WITH ORDER DATED 03/07/2000, WHICH WAS EARLIER FORWARDED TO THE ASSESSEE COMPANY. IN NONE OF THE LETTERS OF REGENCY ENTERPRISES, THERE IS 10 ANY REFERENCE TO PROGRESS IN DEPARTMENT AND EFFORTS BEING MADE FOR PROCUREMENT OF SUPPLY ORDERS. 7. AS PER THE AGREEMENT WITH PREMIER ISPAT (P) LTD., THE AGREEMENT IS FOR THE PERIOD 10/05/2000 TO 31/03/2001 FOR PROCUREMENT OF ORDER AND AMENDMENT/EXTENSION OF DELIVERY PERIOD AND FOR TIMELY PAYMENT AND COLLECTION OF SALES TAX FORMS ETC. AND FOR OTHER FEEDBACK REQUIRED BY THE ASSESSEE. HENCE, THE ORDER ALREADY OBTAINED BY THE ASSESSEE COMPANY FROM UP POWER CORPORATION LTD. (UPPCL) IN THE YEAR 1998 CANNOT BE SAID TO BE AN ORDER PROCURED BY PREMIER ISPAT (P) LTD. AFTER THIS AGREEMENT FROM 10/05/2000. THERE IS NO REFERENCE IN THE AGREEMENT FOR ANY SERVICE CHARGES IN RELATION TO REGULARIZATION OF ANY OLD ORDER. 8. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT FROM THE AGREEMENT AND CORRESPONDENCES MADE AVAILABLE BY THE ASSESSEE IN THE PAPER BOOK, NOTHING IS COMING OUT REGARDING RENDERING OF ANY SERVICE BY THESE TWO COMMISSION AGENTS TO WHOM COMMISSION WAS PAID OF HUGE AMOUNT OF RS.19,39,224/ - AND RS.2 1 ,9 4 , 21 1/ - RES PECTIVELY. 9. IN THE LIGHT OF ABOVE FACTUAL DISCUSSION, NOW WE EXAMINE THE APPLICABILITY OF VARIOUS JUDGMENTS CITED BY LEARNED A.R. OF THE ASSESSEE. 10. THE FIRST JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE DECISION OF I.T.A.T. IN THE CASE OF QST LTD. (SUPRA). IN THIS CASE, THE TRIBUNAL HAS GIVEN A FINDING THAT THE ASSESSEE WAS GETTING SERVICES FROM DIFFERENT AGENTS. IN THE PRESENT CASE, THE ASSESSEE COULD NOT ESTABLISH THE FACT THAT THE ASSESSEE WAS GETTING ANY SERVICE FROM THESE AGENTS AND HENCE, THIS TRIBUNAL DECISION IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. 11. THE SECOND JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS ALSO WITH REGARD TO THE SAME TRIBUNAL DECISION IN THE CASE OF QST LIMITED (SUPRA). 11 SINCE THERE WAS A CONCR ETE FINDING OF THE TRIBUNAL REGARDING RENDERING OF SERVICE BY THE AGENTS, THIS JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IS ALSO NOT APPLICABLE IN THE PRESENT CASE. 12. THE THIRD JUDGMENT CITED BY LEARNED A.R. OF THE ASSESSEE IS THE THIRD MEMBER DECISION O F BOMBAY BENCH OF THE TRIBUNAL HAVING BEEN RENDERED IN THE CASE OF VIP INDUSTRIES LTD. (SUPRA). IN THIS CASE, IT WAS FOUND THAT COMMISSION WAS PAID TO THE SAME PERSON IN EARLIER YEARS ALSO AND SUCH COMMISSION WAS ALREADY ALLOWED IN EARLIER YEARS. IN THE PRESENT CASE, THE ASSESSEE COULD NOT ESTABLISH THAT SIMILAR COMMISSION WAS PAID TO THE SAME PARTIES IN EARLIER YEARS ALSO AND THE SAME WAS ALLOWED IN EARLIER YEARS. HENCE, IN THE FACTS OF THE PRESENT CASE, THIS TRIBUNAL DECISION IS ALSO NOT RENDERING ANY HELP TO THE ASSESSEE. 13. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENT S IS RENDERING ANY HELP TO THE ASSESSEE AND MOREOVER , THE FINDING OF THE ASSESSING OFFICER THAT NO SERVICES WERE RENDERED WERE NOT CONTROVERTED BY LEARNED A.R. OF THE ASSESSEE AND CIT(A) HAS SIMPLY DECIDED THE ISSUE BY WAY OF PASSING A CRYPTIC ORDER AFTER REPRODUCING THE SUBMISSIONS OF THE ASSESSEE BEFORE TH E ASSESSING OFFICER BY WAY OF LETTER DATED 23/03/2004 WHICH IS REPRODUCED BY US ALSO. BY WAY OF THIS LETTER FROM THE ASSESSEE, THE FACTUM OF RENDERING OF THE SERVICES CANNOT BE ESTABLISHED BECAUSE EVIDENCE IS REQUIRED FOR ESTABLISHING SUCH FACT AND IN THI S REGARD , THE ASSESSEE HAS MISERABLY FAILED. IN FACT , THE COMMISSION WAS PAID TO PREMIER ISPAT (P) LTD. IN RESPECT OF ORDER RECEIVED FROM UP POWER CORPORATION LTD. IN THE YEAR 1998 WHEN THAT COMPANY WAS NOT IN EXISTENCE AND AS PER THE AGREEMENT LETTER WIT H THIS COMPANY, THE SCOPE OF AGREEMENT IS IN RESPECT OF PROCUREMENT OF ORDERS FOR SUPPLY AND NOT FOR ANY EXISTING ORDER. SIMILARLY, IN RESPECT OF AGREEMENT WITH OTHER PARTY I.E. REGENCY ENTERPRISES, IT IS SEEN THAT TH IS PARTY WAS SUPPOSE D TO SEND FORTNIGH TLY REPORT INDICATING THE PROGRESS IN DEPARTMENT AND EFFORTS BEING 12 MADE FOR PROCUREMENT OF SUPPLY ORDER IN FAVOUR OF THE ASSESSEE BUT NO SUCH REPORT WAS MADE AVAILABLE TO US TO SUPPORT THE CLAIM OF RENDERING OF SERVICE BY THIS PARTY I.E. REGENCY ENTERPRISE S. HENCE, UNDER THESE FACTS, WE FIND THAT THE ORDER OF CIT(A) IS NOT SUSTAINABLE AND THEREFORE, WE REVERSE THE ORDER OF CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. 14. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 5 /09/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR