M/S. POMONA EXPORTS PVT.LTD., MUMBAI V. ITO-8(2)-4, MUMBAI

ITA 6301/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7384 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-04-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 24-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANT J LAL
• Assessee Lawyers: Y P TRIVEDI PANKAJ TEPRANI
• Keywords: Opportunity of being heard; Principle of natural justice; Bonafide belief; Additional evidence; Non-deduction of tax
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE P.M. JAGTAP (A.M.) AND SHRI N.V. VASUDEVAN ( J.M.) ITA NO.6301/MUM/2008 ASSESSMENT YEAR : 2005-2006 POMANA EXPORTS PVT. LTD. 214, JANAKI CENTRE, SHAH INDUSTRIAL ESTATE, OFF VEERA DESAI RD., ANDHERI (E), MUMBAI 400 058. VS. ITO 8(2)-4 MUMBAI (APPELLANT) (RESPONDENT) ITA NO.6302/MUM/2008 ASSESSMENT YEAR : 2005-2006 POMANA TRADING PVT. LTD. 214, JANAKI CENTRE, SHAH INDUSTRIAL ESTATE, OFF VEERA DESAI RD., ANDHERI (E), MUMBAI 400 058. VS. ITO 8(2)-4 MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.P. TRIVEDI/ PANKAJ TEPRANI RESPONDENT BY : SHRI HEMANT J. LAL O R D E R PER P.M. JAGTAP, A.M. THESE TWO APPEALS FILED BY THE TWO ASSESSEES AGAINS T TWO SEPARATE ORDERS OF THE LEARNED CIT(A) VIII, MUMBAI INVOLVE COMMON ISSUES AND THE SAME THEREFORE HAVE BEEN HEARD TOGETHER AND ARE BEI NG DISPOSED OF BY THIS SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIEN CE. 2. FIRST WE SHALL TAKE UP THE APPEAL FILED IN THE C ASE OF M/S. POMONA EXPORTS PVT. LTD. BEING ITA NO.6301/MUM/08 WHICH IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-VIII, MUMBAI DATED 18.0 9.2008. 3. IN GROUND NO.1, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF RS.5,96,28,947/- MADE BY THE ASSESSING OFFICER U/S. 40(A)(IA) AND CONFIRMED BY THE LEARNED CIT(A) ON ACCOUNT OF PAYMENTS MADE T OWARDS FREIGHT, CLEARING AND FORWARDING CHARGES WITHOUT DEDUCTION OF TAX AT SOURCE. ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 2 4. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF EXPORT OF VEGETABLES AND FRUITS. THE R ETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 31.10.2 005 DECLARING TOTAL INCOME OF RS.1,44,248/-. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED UPON BY THE ASSESSING OFFIC ER TO PRODUCE THE DETAILS OF TAX DEDUCTED AT SOURCE FROM THE PAYMENTS MADE TO WARDS FREIGHT, CLEARING AND FORWARDING CHARGES AMOUNTING TO RS.5,96,28,947/ -. AS NOTED BY THE ASSESSING OFFICER IN HIS ORDER, THE ASSESSEE HOWEVE R FAILED TO PRODUCE THE SAID DETAILS AND ALSO FAILED TO PRODUCE THE BOOKS O F ACCOUNT AS WELL AS SUPPORTING BILLS AND VOUCHERS. A LETTER DATED 13 .12.2007 THEREFORE WAS ISSUED BY THE ASSESSING OFFICER TO THE ASSESSEE POI NTING OUT THIS FAILURE AND CALLING FOR ITS EXPLANATION. IN REPLY, A LETTER DATED 28.12.2007 WAS FILED BY THE ASSESSEE MAKING THE FOLLOWING SUBMISSIONS :- 2.0 AS PER YOUR DESIRE TO MAKE DISALLOWANCE U/S.40 (A)(IA) OF THE GENUINELY PAID EXPENSE FOR THE ALLEGED FAILU RE TO DEDUCT TAXES AT SOURCE ON FREIGHT AND CLEARING AND FORWARD ING CHARGES, YOUR ASSESSEE PROCEEDS TO SUBMIT AS UNDER: I) AS FAR AS THE PAYMENTS ARE CONCERNED, YOUR ASSE SSEE HAD PAID FREIGHT AMOUNT TO THE AUTHORITIES AND/OR C LEARING AND FORWARDING AGENTS, WHICH HAD LATER ON BEEN REALIZED FROM THE CUSTOMERS AND HAD BEEN REFLECTED IN THE ACCOUNTS. II) YOUR ASSESSEE WAS UNDER BONAFIDE BELIEF THAT N O TAXES WERE REQUIRED TO BE DEDUCTED AT SOURCE WHEN, IT ACTED AS ONLY AN INTERMEDIARY FOR PAYMENT AND COLLECTION OF SAME AMOUNT AS FREIGHT CHARGES. III) AS EXPLAINED TO YOU, YOUR ASSESSEE HAD PAID F OR THE FREIGHT AND LATER ON COLLECTED THE SAME AMOUNT. IV) WE HAVE PRODUCED THE CONFIRMATION FROM VARIOUS PARTIES. V) THE ASSESSEE IS NOT THE CONTRACTOR WHERE IT IS REQUIRED TO DEDUCT TDS. VI) THE PAYMENT WAS NOT MADE IN PURSUANCE TO ANY CONTRACT BETWEEN THE PARTIES. VII) THE ACCOUNTS WERE SUBJECT TO STATUTORY AUDITS AS WELL AS TAX AUDIT. BONAFIDE BELIEF THAT NO TAX WAS REQUIRED TO BE DEDU CTED AT SOURCE: ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 3 THE ASSESSEE IS UNDER BONAFIDE BELIEF THAT THE TAX IS NOT REQUIRED TO BE DEDUCTED IN THIS CASE AS IT HAD MERE LY COLLECTED THE PAYMENT FOR FREIGHT FROM THE PARTY WHICH IT HAD PAID. BOTH PAYMENTS AND RECEIPTS ARE REFLECTED IN ITS BOOKS. IN FACT, THE RECIPIENT OF FREIGHT HAD DISCLOSED THE INCOME ON WH ICH TAXES HAD BEEN PAID. THEREFORE, IT DOES NOT FALL INTO T HE MISFIT OF EITHER SECTION 194C OR 194J. HENCE, IT IS NOT A C ASE WHICH COULD ATTRACT THE PROVISION OF SECTION 40(A)(IA) OF THE I.T. ACT. 5. THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT FO UND ACCEPTABLE BY THE ASSESSING OFFICER AND RELYING ON THE PROVISIONS OF SECTION 194C AS WELL AS ON THE CBDT CIRCULAR NO.715 DATED 08.08.1995, HE DISALLOWED THE FREIGHT, CLEARING AND FORWARDING CHARGES CLAIMED BY THE ASSESSEE BY INVOKING THE PROVISION OF SECTION 40(A)(IA) HOLDING THAT THE RE WAS FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TAX AT SOURCE FROM THE PAYME NTS OF THE SAID EXPENSES. 6. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER O N ACCOUNT OF FREIGHT, CLEARING AND FORWARDING CHARGES AMOUNTING TO RS.5,9 6,28,947/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) WAS CHALLENGED BY THE ASSESSEE IN AN APPEAL FILED BEFORE THE LEARNED CIT(A) AND BESIDES REITERATING THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER, IT W AS ALSO SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(A) TH AT IT WAS UNDER A BONA- FIDE BELIEF THAT NO TAX WAS DEDUCTIBLE AT SOURCE FR OM THE PAYMENTS MADE TOWARDS FREIGHT, CLEARING AND FORWARDING CHARGES. IT WAS ALSO SUBMITTED THAT THE SAID EXPENSES WERE ULTIMATELY RECOVERED BY THE ASSESSEE FROM THE CUSTOMERS AND THE PROVISIONS OF SECTION 40(A)(IA) T HEREFORE WERE NOT APPLICABLE. IT WAS CONTENDED THAT THE CASE OF T HE ASSESSEE THUS WAS THAT OF REIMBURSEMENT OF EXPENSES ACTUALLY INCURRED FROM THE CUSTOMERS ON ACCOUNT OF FREIGHT, CLEARING AND FORWARDING CHARGES AND THE PAYMENTS OF THE SAID EXPENSES NOT BEING COVERED BY ANY CONTRACT, TH ERE WAS NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE. ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 4 7. THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE B EFORE HIM WERE NOT FOUND TO BE ACCEPTABLE BY THE LEARNED CIT(A) FOR TH E FOLLOWING REASONS GIVEN IN PARA 2.12 TO 2.15 OF HIS IMPUGNED ORDER: 2.12 THE UNDERSIGNED HAS CAREFULLY PERUSED THROUGH THE RIVAL CONTENTIONS. IT IS MADE CLEAR THAT IT IS NOT A PENALTY PROCEEDING WHETHER THE BONAFIDE OF COMMITTING A DEF AULT HAS TO BE DISCUSSED. THE PROVISIONS OF SECTION 40(A)(IA) ARE STATUTORY IN NATURE AND THEREFORE, THE SAME HAVE TO BE FOLLOW ED GRADUALLY. 2.13 IT IS NOTED BY THE UNDERSIGNED THAT BONAFIDY O F THE EXPENDITURE WAS NOT A QUESTION BEFORE THE ASSESSING OFFICER AND EVEN THE ASSESSING OFFICER HAS NOT DOUBTED THE SAME. HE ALSO DID NOT DOUBT ALL THE ARGUMENTS THAT THE RECIP IENTS HAVE SHOWN THE ENTIRE RECEIPTS IN THEIR BOOKS. THE MAI N QUESTION INVOLVED HERE WAS WHETHER THE APPELLANT WAS REQUIRE D TO MAKE THE TDS U/S. 194C OR 194J OR NOT AND IF YES, WHETHE R SUCH TDS MADE WAS PAID TO THE GOVERNMENT ACCOUNT WITHIN THE PRESCRIBED TIME LIMIT U/S.200(1) OF THE I.T. ACT. 2.14 THE APPELLANT ADMITTED THAT IT HAS COMMITTED T HE DEFAULT AS OBSERVED BY THE ASSESSING OFFICER. THE REFORE, AS FAR AS THE MERITS OF THE ADDITIONS ARE CONCERNED, THE M ATTER ENDS IN THE FAVOUR OF THE ASSESSING OFFICER AND AGAINST THE APPELLANT. 2.15 THE APPELLANT ALSO CLAIMED THAT HE WAS NOT REQ UIRED TO MAKE ANY TDS. IN SUCH A CASE, THE LEARNED COUN SEL WAS ASKED WHETHER THE APPELLANT HAD APPLIED FOR AND REC EIVED ANY CERTIFICATE U/S.197(1) OF THE I.T. ACT FROM THE ASS ESSING OFFICER THAT IT WILL BE EXEMPT FROM MAKING THE TDS OR IT WI LL BE MAKING THE TDS AT A LOWER RATE THAN THE PRESCRIBED ONE. I T WAS ADMITTED THAT THE APPELLANT HAD NEITHER APPLIED FOR ANY CERTIFICATE U/S.197(1) NOR THE ASSESSING OFFICER HA D ISSUED ANYONE LIKE THAT. THE BONAFIDY OF THE APPELLANTS DOES NOT FIND A PLACE AS FAR AS THE MERITS OF THE CLAIMS OR THE V IOLATION OF THE STATUTORY PROVISIONS OF THE I.T. ACT ARE CONCERNED. IT IS NOT A PENALTY PROCEEDING WHERE ALL THESE THINGS HAD TO BE NORMALLY CONSIDERED BEFORE COMING TO A FINAL FINDING. 8. FOR THE REASONS GIVEN ABOVE AND RELYING ON THE C BDT CIRCULAR NO.715 DATED 08.08.1995 AS WELL AS ON THE PROVISIONS OF SE CTION 194C, THE LEARNED CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSES SING OFFICER ON ACCOUNT OF FREIGHT, CLEARING AND FORWARDING CHARGES BY INVO KING THE PROVISIONS OF SECTION 40(A)(IA). AGGRIEVED BY THE ORDER OF THE LE ARNED CIT(A), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBU NAL. ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 5 9. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US, THE ASSESSEE HAS SOUGHT TO FILE THE FOLLOWING DOCUMENTS AS ADDITIONA L EVIDENCE. 1. COPY OF AGREEMENT DATED 15.03.04 ENTERED INTO BETWEEN THE APPELLANT AND PAN VIET FOODSTUFF VEG. & FRUITS, UAE FOR SUPPLY OF FRESH FRUITS AND VEGETABLES. 2. COPY OF INVOICE NO.PPEL/76/2004 05 DATED 30.04.04 RAISED BY THE APPELLANT ON PAN VIET FOODST UFF VEG & FRUITS FOR GOODS. 3. COPY OF INVOICE NO.PPEL/76F/2004 05 DATED 30.04.2004 RAISED BY THE APPELLANT ON PAN VIET FOOD STUFF VEG & FRUITS FOR FREIGHT. 4. COPY OF AIRWAY BILL NO.09881648932 RAISED BY AI R INDIA FOR FREIGHT. 5. COPY OF INVOICE NO.PCM/CCJ/FR/1752/2004 05 DATED 30.04.2004 RAISED BY POMANA CARGO MOVERS ON T HE APPELLANT FOR FREIGHT. 6. COPY OF INVOICE NO.PPEL/1053/2004 05 DATED 27.05.2005 RAISED BY THE APPELLANT ON PAN VIET FOOD STUFF VEG. & FRUITS FOR GOODS. 7. COPY OF INVOICE NO.PPEL/1053F/2004 05 DATED 27.02.2005 RAISED BY THE APPELLANT ON PAN VIET FOOD STUFF VEG & FRUITS FOR FREIGHT. 8. COPY OF AIRWAY BILL NO.098 81638723 RAISED BY AIR INDIA FOR FREIGHT. 9. COPY OF INVOICE NO.PCM/CCJ/FR/4304/2004-05 DATED 27.02.2005 RAISED BY POMANA CARGO MOVERS ON T HE APPELLANT FOR FREIGHT. 10. COPY OF AGREEMENT DATED 15.03.2004 ENTERED INTO BETWEEN THE APPELLANT AND ASHRAF SAAD ALALWANI TRAD ING EST. FOR SUPPLY OF FRESH FRUITS AND VEGETABLES. 11. COPY OF INVOICE NO.PPEL/38/2004-05 DATED 29.04.2004 RAISED BY THE APPELLANT ON ASHRAF SAAD A LALWANI TRADING EST. FOR GOODS. 12 . COPY OF INVOICE NO.PPEL/38F/2004-05 DATED 29.04.2004 RAISED BY THE APPELLANT ON ASHRAF SAAD A LALWANI TRADING EST. FOR FREIGHT. 13. COPY OF AIRWAY BILL NO.098 8164891 RAISED BY AI R INDIA FOR FREIGHT. ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 6 14. COPY OF INVOICE NO.PCM/CCJ/FR/1747 DATED 29.04.2004 RAISED BY POMONA CARGO MOVERS ON THE APP ELLANT FOR FREIGHT. 15. COPY OF INVOICE NO.PPEL/1059/2004-05 DATED 28.02.2005 RAISED BY THE APPELLANT ON ASHRAF SAAD A LALWANI TRADING EST. FOR GOODS. 16. COPY OF INVOICE NO. PPEL/1059/2004-05 DATED 28.02.2005 RAISED BY THE APPELLANT ON ASHRAF SAAD A LALWANI TRADING EST. FOR FREIGHT. 17. COPY OF AIRWAY BILL NO.098 81638756 RAISED BY A IR INDIA FOR FREIGHT. 18. COPY OF INVOICE NO.PCM/CCJ/FR/4809/2004-05 DATED 28.02.2005 RAISED BY POMANA CARGO MOVERS ON T HE APPELLANT FOR FREIGHT. 19. COPY OF TRADING & PROFIT AND LOS A/C. AND BALAN CE SHEET AS AT 31.03.2005 OF THE APPELLANT. 20. SUMMARY OF FREIGHT CHARGES FOR THE YEAR ENDED O N 31.03.2005. 21. COPY OF CBDT CIRCULAR NO.715 DATED 08.08.1995. 10. THE ASSESSEE HAS ALSO FILED AN APPLICATION SEEK ING ADMISSION OF THE ABOVE ADDITIONAL EVIDENCE ON THE FOLLOWING GROUNDS: 1. THE BOOKS OF ACCOUNTS, AGREEMENT WITH THE PURCH ASE, PURCHASE INVOICES AND VOUCHERS CALLED FOR BY THE AS SESSING OFFICER WERE MADE AVAILABLE TO MR. KAIRSER BAIG OUR ITP. 2. THE DOCUMENTS RUNNING FROM SR.NO.1 TO 18 & 20 CONTAINED IN THE PAPER BOOK FILED BEFORE THE TRIBUN AL ARE COPIES OF AGREEMENTS WITH OUR PURCHASERS, OUR SALES BILLS, COPIES OF AIRWAY BILLS AND INVOICES FROM IATA AGENTS AND SUMM ARY OF FREIGHT CHARGES FOR WHICH WE WERE UNDER THE WRONG I MPRESSION THAT THEY WERE PRODUCED BEFORE THE ASSESSING OFFICE R. 3. THE DOCUMENTS STATED AGAINST SR. NO.19 IS A COP Y OF TRADING & PROFIT & LOSS A/C. AND BALANCE SHEET WHIC H WERE FILED WITH OUR RETURN OF INCOME. 4. WE ENCLOSE HEREWITH OUR LETTER DATED 28.12.2007 (COPY ENCLOSED) SUBMITTED TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN IN FIRST P ARA IT HAS BEEN STATED THAT THROUGH OUR AUTHORIZED REPRESENTAT IVE WE AD MADE ALL THE SUBMISSIONS AS ASKED AS PER QUESTIONNA IRE AND OTHER DETAILS ON VARIOUS DATES. ON THE BASIS OF T HIS LETTER WE ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 7 WERE UNDER A BONAFIDE BELIEF THAT DOCUMENT REFERRED TO IN PARA NO.2 ABOVE WERE FILED BY OUR ITP BEFORE THE ASSESSI NG OFFICER. 5. HOWEVER, AFTER VERIFICATION OF THE ASSESSMENT R ECORDS MAINTAINED BY THE ASSESSING OFFICER WHICH WERE BROU GHT IN THE TRIBUNAL WE FIND THAT THE SAID DOCUMENTS RUNNING FR OM SR. NO.1 TO 18 AND 20 FILED BEFORE THE TRIBUNAL WERE NOT FIL ED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. THEREFORE IT IS SUBMITTED THAT THE SAID DOCUMENTS B E CONSIDERED AS ADDITIONAL EVIDENCE FILED BEFORE THE TRIBUNAL FO R A FIRST TIME. 6. IT IS REQUESTED THAT THE SAID ADDITIONAL EVIDEN CES BE ADMITTED BY THE TRIBUNAL UNDER RULE 29 OF THE APPEL LATE TRIBUNAL RULES AS THEY GO TO THE MATTER AND CLINCHE S THE ISSUE WHICH IS BEFORE THE TRIBUNAL FOR ADJUDICATION. 7. THE APPELLANT HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR T HE VERIFICATION OF THE SAID DOCUMENTS AFTER THEIR ADMISSION BY THE TRI BUNAL. 8. THE APPELLANT RESPECTFULLY SUBMITS THAT IF THE ABOVE ADDITIONAL EVIDENCE IS NOT ADMITTED BY THE TRIBUNAL A GRAVE AND IRREPARABLE LOSS WILL BE SUFFERED BY THE APPELLANT. 11. THE LEARNED D.R., ON THE OTHER HAND, HAS STRONG LY OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE. HE HAS CONTENDED THAT NO GOOD AND SUFFICIENT REASONS HAVE BEEN GIVEN BY THE ASSESSEE FOR NOT PRODUCING THE SAID ADDITIONAL EVID ENCE BEFORE THE ASSESSING OFFICER OR BEFORE THE LEARNED CIT(A). HE HAS CONT ENDED THAT THE REQUEST OF THE ASSESSEE FOR ADMISSION OF THE SAID ADDITIONAL E VIDENCE THEREFORE SHOULD NOT BE ACCEDED TO AND IF AT ALL THE TRIBUNAL DECIDE S TO ACCEDE TO THE SAID REQUEST AND TO TAKE THE ADDITIONAL EVIDENCE ON RECO RD, AN OPPORTUNITY MAY BE GIVEN TO THE ASSESSING OFFICER TO EXAMINE THE SA ID ADDITIONAL EVIDENCE. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL ON RECORD. THE PRODUCTION OF ADDITIONAL EVIDENCE AT THE APPELLATE STAGE IS NOT THE MATTER OF RIGHT TO THE LITIGATING PARTIES AND ALLOWING OF PRODUCTION OF ADDITIONAL EVIDENCE IS IN THE DISCRET ION OF THE TRIBUNAL. THE SAID DISCRETION HOWEVER IS TO BE EXERCISED JUDICIAL LY AND NOT ARBITRARILY. AS PER RULE 29 OF APPELLATE TRIBUNAL RULE, THE TRIBUNA L HAS THE POWER TO ALLOW ADDITIONAL EVIDENCE NOT ONLY IF IT REQUIRES SUCH EV IDENCE TO UNABLE IT TO ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 8 PRONOUNCE JUDGEMENT BUT ALSO FOR ANY OTHER SUBST ANTIAL CAUSE. THE POWER OF THE TRIBUNAL TO ADMIT ADDITIONAL EVIDENCE IN SUPPORT OF THE CLAIM OF THE ASSESSEE IS DISCRETIONARY AND NO FETTERS CAN BE IMPOSED ON EXERCISE OF SUCH POWER. HOWEVER IT IS NOT AN ARBITRARY POWER BU T IT IS A JUDICIAL ONE CIRCUMSCRIBED BY LIMITATION GIVEN IN RULE 29. TH E CONDITIONS PRECEDENT FOR EXERCISE OF POWER UNDER RULE 29 MUST, THEREFORE, BE FOUND TO HAVE BEEN ESTABLISHED. IT IS OPEN TO THE TRIBUNAL TO INVOKE ITS POWER OF ALLOWING ADDITIONAL EVIDENCE TO RENDER SUBSTANTIAL JUSTICE A ND NOT TO DENY THE PARTY OF SUCH JUSTICE ON TECHNICAL GROUNDS. 13. THE ISSUE INVOLVED IN THE PRESENT CASE RELATES TO THE DISALLOWANCE OF EXPENSES INCURRED BY THE ASSESSEE ON FREIGHT, CLEAR ING AND FORWARDING CHARGES MADE BY INVOKING THE SECTION 40(A)(IA) AS A RESULT OF FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE AGAINST THE SAID EXPENSES. IN SO FAR AS THE EXPENSES INCURRED ON C LEARING AND FORWARDING CHARGES ARE CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE HAS FAIRLY AND FRANKLY ACCEPTED THE DISALLOWANCE MADE INVOKING THE PROVISION OF SECTION 40(A)(IA) AS A RESULT OF FAILURE OF THE ASSESSEE TO DEDUCT TAX AT SOURCE. THE DISALLOWANCE OF FREIGHT EXPENSES MADE BY THE ASSESS ING OFFICER U/S.40(A)(IA) HOWEVER HAS BEEN SERIOUSLY CHALLENGED BY THE ASSESS EE ON THE GROUND THAT NO TAX AT SOURCE WAS ACTUALLY DEDUCTIBLE FROM THE P AYMENTS MADE AGAINST FREIGHT CHARGES. IN THIS REGARD, THE CLAIM OF T HE ASSESSEE AS MADE BEFORE THE AUTHORITIES BELOW AS WELL AS BEFORE US HAS BEEN THAT THE FREIGHT EXPENSES WERE INCURRED BY IT ON BEHALF OF THE FOREIGN CUSTOM ERS AND THE SAME WERE ENTIRELY REIMBURSED TO IT BY THE CONCERNED CUSTOMER S. IN ORDER TO SUPPORT AND SUBSTANTIATE THIS CLAIM, THE ASSESSEE HAS FILED ADDITIONAL EVIDENCE IN THE FORM OF AGREEMENT WITH THE OVERSEAS CUSTOMERS AS WE LL AS AIRWAY BILLS RECEIVED BY IT AND THE CORRESPONDING INVOICES RAISE D BY IT TO SHOW THAT THE FREIGHT EXPENSES WERE ACTUALLY INCURRED BY IT ON BE HALF OF THE FOREIGN CUSTOMERS AND THE SAME WERE ENTIRELY RECOVERED FROM THE SAID CUSTOMERS WITHOUT THERE BEING ANY PROFIT ELEMENT IMBEDDED THE REIN. RELYING ON THE DECISIONS OF THE TRIBUNAL IN THE CASE OF CAIRN ENER GY INDIA PVT. LTD. VS ACIT 126 TTJ (CHENNAI) 226 AND IN THE CASE OF ACIT VS ME DICON NETWORK PVT. ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 9 LTD. 14 SOT 204 (DELHI), THE CASE OF THE ASSESSEE T HEREFORE IS THAT NO TAX WAS DEDUCTIBLE AT SOURCE FROM THE PAYMENT OF FREIGHT CH ARGES AND THERE WAS NO QUESTION OF MAKING ANY DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) FOR FAILURE TO DEDUCT TAX AT SOURCE. AS F URTHER POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE ADDITIONAL EV IDENCE SOUGHT TO BE FILED BY THE ASSESSEE ALSO SUPPORTS AND SUBSTANTIATE ITS CASE THAT PAYMENTS OF FREIGHT CHARGES WERE MADE TO IATA AGENT TOWARDS AIR -CARGO CHARGES AND AS PER THE CBDT CIRCULAR NO.715 DATED 08.08.1995, NO T AX WAS DEDUCTIBLE FROM THE SAID PAYMENTS. THE ADDITIONAL EVIDENCE SOU GHT TO BE FILED BY THE ASSESSEE THUS SUPPORT ITS CASE THAT NO TAX WAS ACTU ALLY DEDUCTIBLE FROM THE PAYMENTS OF FREIGHT CHARGES AND THERE WAS THUS NO Q UESTION OF MAKING DISALLOWANCE OF THE SAID CHARGES BY INVOKING THE PR OVISIONS OF SECTION 40(A)(IA). THE SAID ADDITIONAL EVIDENCE THUS IS V ERY MUCH RELEVANT TO DECIDE THE MAIN ISSUE INVOLVED IN THIS APPEAL OF THE ASSES SEE AND THE SAME IS REQUIRED TO DECIDE THE SAID ISSUE ON MERIT. THE DOCUMENTS SOUGHT TO BE FILED BY THE ASSESSEE AS ADDITIONAL EVIDENCE ARE TH US RELEVANT TO APPRECIATE AND CONSIDER THE CLAIM OF THE ASSESSEE THAT NO TAX WAS DEDUCTIBLE AT SOURCE FROM THE PAYMENTS MADE OF FREIGHT CHARGES WHICH ASP ECT ULTIMATELY HAS A DIRECT BEARING ON THE MAIN ISSUE INVOLVED FOR CONSI DERATION AND DECISION IN THE PRESENT APPEAL. WE ARE, THEREFORE, OF THE VIEW THAT IT IS A FIT CASE WHEREIN THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED BY THE A SSESSEE BE ADMITTED HAVING REGARD TO ITS RELEVANCE AS WELL AS REQUIREME NT FOR THE PURPOSE OF DECIDING THE MAIN ISSUE RAISED IN THE PRESENT APPEA L. THE APPLICATION FILED BY THE ASSESSEE SEEKING ADMISSION OF THE SAID EVIDE NCE IS THEREFORE ALLOWED AND THE SAID ADDITIONAL EVIDENCE IS ADMITTED ON REC ORD. 14. HAVING ADMITTED THE ADDITIONAL EVIDENCE FILED B Y THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL TO SUPPORT AND SUBST ANTIATE ITS CASE, WE FIND MERIT IN THE CONTENTION OF THE LEARNED D.R. THAT BE FORE DRAWING ANY INFERENCE ON THE BASIS DOCUMENTS ADMITTED AS ADDITIONAL EVIDE NCE, THE PRINCIPLES OF NATURAL JUSTICE DEMAND THAT AN OPPORTUNITY SHOULD B E GIVEN TO THE ASSESSING OFFICER TO EXAMINE THE SAID DOCUMENTS. WE, THEREF ORE, RESTORE THIS ISSUE TO THE EXTENT IT RELATES TO THE DISALLOWANCE OF FREIGH T CHARGES TO THE FILE OF THE ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 10 ASSESSING OFFICER FOR DECIDING THE SAME AFRESH IN T HE LIGHT OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AFTER GIVING THE ASS ESSEE AN OPPORTUNITY OF BEING HEARD. GROUND NO.1 OF THE ASSESSEES APPEAL IS ACCORDINGLY TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 15. THE REMAINING GROUNDS I.E. GROUND NOS. 2 TO 5 R AISED BY THE ASSESSEE IN ITS APPEAL HAVE NOT BEEN PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US. THE SAME ARE ACCO RDINGLY DISMISSED AS NOT PRESSED. 16. AS REGARDS THE APPEAL FILED BY THE OTHER ASSESS EE NAMELY M/S POMONA TRADING CO. PVT. LTD. BEING ITA NO. 6203/MUMBAI/200 8 WHICH IS DIRECTED AGAINST THE ORDER OF LERNED CIT(A)- VIII, MUMBAI, I T IS OBSERVED THAT THE MAIN ISSUE RAISED IN GROUND NO. 1 THEREIN RELATING THE D ISALLOWANCE OF FREIGHT, CLEARING AND FORWARDING CHARGES BY INVOKING THE PRO VISIONS OF SECTION 40(A)(IA) FOR FAILURE TO DEDUCT TAX AT SOURCE IS SI MILAR TO THE ONE INVOLVED IN THE CASE OF M/S PONAMA EXPORTS PVT. LTD.(SUPRA). IN THIS CASE ALSO, THE ASSESSEE HAS FILED SIMILAR DOCUMENTS AS ADDITIONAL EVIDENCE SEEKING ADMISSION THEREOF ON SIMILAR GROUNDS. AS THE NATURE OF THE SAID ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AS WELL AS THE ARGUM ENTS RAISED IN SUPPORT OF ADMISSION THEREOF ARE ALSO THE SAME, THE APPLICATIO N OF THE ASSESSEE FOR ADMISSION OF ADDITIONAL EVIDENCE IS ALLOWED BY US F OLLOWING OUR DECISION RENDERED IN THE CASE OF M/S PONAMA EXPORTS PVT. LTD .(SUPRA). HAVING ADMITTED THE ADDITIONAL EVIDENCE FILED BY THE ASSES SEE FOR THE FIRST TIME BEFORE THE TRIBUNAL TO SUPPORT AND SUBSTANTIATE ITS CASE, WE FIND MERIT IN THE CONTENTION OF THE LEARNED D.R. THAT BEFORE DRAWING ANY INFERENCE ON THE BASIS DOCUMENTS ADMITTED AS ADDITIONAL EVIDENCE, TH E PRINCIPLES OF NATURAL JUSTICE DEMAND THAT AN OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSING OFFICER TO EXAMINE THE SAID DOCUMENTS. WE, THEREFORE, RES TORE THIS ISSUE TO THE EXTENT IT RELATES TO THE DISALLOWANCE OF FREIGHT CH ARGES TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH IN T HE LIGHT OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AFTER GIVING THE ASS ESSEE AN OPPORTUNITY OF ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 11 BEING HEARD. GROUND NO.1 OF THE ASSESSEES APPEAL IS ACCORDINGLY TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 17. THE REMAINING GROUNDS I.E. GROUND NOS. 2 AND 3 RAISED BY THE ASSESSEE IN ITS APPEAL HAVE NOT BEEN PRESSED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US. THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. 18. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE ES ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THIS 5 TH DAY OF MARCH, 2010. SD/- (N.V. VASUDEVAN) (JUDICAIL MEMBER) SD/- (P.M. JAGTAP) (ACCOUNTANT MEMBER) MUMBAI, DATED 5 TH MARCH, 2010. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- VIII, MUM BAI 4. COMMISSIONER OF INCOME TAX, CITY-VIII, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA NO.6301/MUM/2008 ITA NO.6302/MUM/2008 A.Y.: 2005-2006 12 DATE INITIALS 1. DRAFT DICTATED ON 25.02.10 PS 2. DRAFT PLACED BEFORE AUTHOR 03.03.10 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON 05-03-10 PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER