Septu India (P) Ltd, Gurgaon V. DCIT, Gurgaon

ITA 831/DEL/2009

• Counselvise Citation: 83120114 RSA 2009
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 18-06-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 06-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: S R WADHWA
• Keywords: Reopening of assessment; Bogus purchase; Principle of natural justice; Reasonable cause; Bad and doubtful debts; Reassessment proceedings
• Section: 143(3); 234B; 37(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 831, 832 & 952/DEL/2009 ASSTT. YRS: 1999-2000, 2004-05 & 2005-06 SEPTU INDIA (P) LTD., VS. DCIT, CIRCLE GURGAON. 12/7, URBAN ESTATE, GURGAON-122001. PAN: AAFCS 0224 A ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI S.R. WADHWA ADV. RESPONDENT BY : MS. Y. KAKKAR SR. DR O R D E R PER R.P. TOLANI, J.M : THESE ARE THREE APPEALS BY THE ASSESSEE AGAINST SE PARATE ORDERS OF CIT(A) RELATING TO A.Y. 1999-2000, 2004-05 & 2005-0 6. ALL THESE APPEALS ARE HEARD TOGETHER AND DISPOSED OF BY A CONSOLIDATE D ORDER FOR THE SAKE OF CONVENIENCE. 2. GROUNDS RAISED FOR A.Y. 1999-2000 ARE AS UNDER: 1. THAT THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW AND ON FACTS. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN AGREEING WITH THE LD. AO THAT THERE WERE VALID GROUND FOR R EOPENING OF THE REGULAR ASSESSMENT COMPLETED U/S 143(3) BY INVO KING POWERS U/S 148 OF THE INCOME-TAX ACT. 3. THAT THE LD. CIT(A) HAS FURTHER ERRED IN HOLDING THAT THERE WAS NO NEED FOR PASSING A SEPARATE E ORDER BY THE LD. AO 2 DISPOSING OF THE APPELLANTS OBJECTION AGAINST THE LEGALITY OF THE RE-ASSESSMENT PROCEEDINGS U/S 147/148 OF THE ACT. 4. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN NOT ANN ULLING THE REASSESSMENT ORDER ON THE GROUND THAT THE NOTIC E U/S 143(2) WAS ISSUED BEYOND THE PERIOD OF 12 MONTHS FROM THE END OF THE MONTH IN WHICH THE RETURN WAS FILED. 5. THE LD. CIT(A) HAS ERRED IN HOLDING THAT REASONA BLE OPPORTUNITY WAS ALLOWED BY THE AO IN PASSING THE RE - ASSESSMENT ORDER U/S 143(3)/148 OF THE INCOME-TAX A CT, 1961. 6. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDIT ION OF RS. 81,03,553/- MADE BY AO ON THE GROUND THAT THESE ARE BOGUS PURCHASES MADE FROM VARIOUS FICTITIOUS CONCERNS. 7. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDI TION OF RS. 56,440/- BEING BUSINESS PROMOTION EXPENSES BY R ELYING UPON HIS OWN ORDER DATED 05-03-2004 FOR A.Y. 1998-9 9. 8. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDI TION OF RS. 4,81,588/- BEING EMPLOYER AND EMPLOYEES CONTRIB UTION TOWARDS PROVIDENT FUND AND ESI DESPITE THE FACT THA T THE AMOUNTS WERE DEPOSITED IN THE GOVERNMENT ACCOUNT BE FORE THE DUE DATE FOR FILING THE RETURN OF INCOME FOR A.Y. 1 999-00. 9. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE CHARG ING OF INTEREST U/S 234A, 234B AND 234C OF THE ACT. 10. THAT THE APPELLANT CRAVE LEAVE TO ADD, ALTER, A NY OF THE ABOVE GROUNDS OF APPEALS. 3. THE APPEAL FOR A.Y. 1999-2000 IS DELAYED BY A CO NSIDERABLE PERIOD OF THREE YEARS AND TWENTY DAYS. A PETITION FOR CONDONA TION OF DELAY U/S 253(5) HAD BEEN FILED STATING THE FOLLOWING REASONS FOR DE LAY IN FILING THE APPEAL: (I) SMT. REKHA VYAS, DIRECTOR OF THE APPELLANT COM PANY AND IN-CHARGE OF FINANCE AND INCOME-TAX MATTERS, GAVE T HE ORDER APPEALS AGAINST TO SHRI HARISH GAMBHIR, CHARTERED 3 ACCOUNTANT, SOON AFTER IT WAS RECEIVED ON 19-12-200 5 AS PER THE PAST PRACTICE AS HE HAS ALWAYS BEEN HANDLING THE IN COME TAX AFFAIRS OF THE COMPANY. (II) UNFORTUNATELY, WITHIN A SHORT TIME THEREAFTER, HER SON DHIVESH KR. VYAS DIED IN A MOTOR-CYCLE ACCIDENT ON 13-01-2006 AT BANGALORE CAUSING HER GREAT MENTAL AGONY AND GRI EF AND RESULTING IN HER GOING IN DEPRESSION. FOR THE NEXT ABOUT SIX MONTHS, SHE COULD NOT ATTEND HER INCOME TAX AFFAIRS AND FORGOT TO ASK SHRI HARISH GAMBHIR IF THE APPEAL HAD BEEN F ILED. COPY OF THE DEATH CERTIFICATE DATED 13-01-2006 OF HER SO N IS ENCLOSED AT ANNEX-I. (III) THE AUTHORIZED REPRESENTATIVE OF THE COMPANY SHRI HARISH GAMBHIR, CHARTERED ACCOUNTANT, WHO WAS REPRE SENTING THE CASE BEFORE THE ASSESSING OFFICER AS WELL AS TH E CIT(A) HAS HIMSELF BEEN A PATIENT OF ACUTE DIABETES AND HIGH B LOOD PRESSURE AND WAS ALSO SUFFERING FROM SEVERAL OTHER AILMENTS INCLUDING CARDIAC PROBLEMS AND CHRONIC RENTAL FAILU RE AND WAS DIALYSIS DEPENDENT. BECAUSE OF THESE AILMENTS, HE W OULD OFTEN RELAPSE INTO AMNESIA AND WAS HOSPITALIZED FOR A LON G TIME BEFORE HIS DEATH ON 29-04-2008. COPIES OF THE MEDIC AL REPORTS IN SUPPORT OF THE APPELLANTS SUBMISSIONS ARE ENCLO SED AT ANNEX-I AND HIS DEATH CERTIFICATE IS ENCLOSED AT AN NEX. II. (IV) HE ALSO DID NOT INFORM HIS TAX ASSISTANT SHRI NITIN ANEJA IN THIS REGARD. A COPY OF HIS AFFIDAVIT IS ENCLOSED AT ANNEXURE- III. (V) SMT. REKHA VYAS, DIRECTOR OF THE COMPANY, IN CH ARGE OF FINANCE AND INCOME TAX MATTERS WAS UNDER THE BONAFI DE BELIEF THAT AFTER HANDING OVER THE PAPERS TO THE COMPANYS AUTHORIZED REPRESENTATIVE, THE APPEAL OF THE APPELLANT COMPANY FOR A.Y. 1999-00 WAS DULY PREPARED BY THE AID (LATE) SHRI HA RISH GAMBHIR AND SIGNED BY HER AND HAD BEEN FILED BEFORE THE TRIBUNAL WELL WITHIN TIME. HER AFFIDAVIT TO THIS EF FECT IS AT ANNEX-IV. (VI) IT WAS ONLY AFTER THE COMPANY RECEIVED THE SHO W CAUSE NOTICE FOR THE PAYMENT OF OUTSTANDING TAX FOR VARIO US YEARS VIDE 4 NOTICE DATED 16-01-2009 (RECEIVED ON 31-01-2009) TH AT THE COMPANY REALIZED THAT THE APPEAL FOR THIS YEAR I.E. A.Y. 1999-00 COULD NOT BE FILED BEFORE THE TRIBUNAL BY THE ERSTW HILE COUNSEL. A COPY OF THE SHOW CAUSE NOTICE DATED 16-01-2009 IS AT ANNEX.- V. 4. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE U NTIMELY AND UNFORTUNATE DEATH OF SHRI DHIVESH KUMAR VYAS THE YO UNG SON OF SMT. REKHA VYAS, DIRECTOR OF THE COMPANY, RENDERED HER IN STAT E OF SHOCK, DEPRESSION AND DISENCHANTED TO WORLDLY AFFAIRS. THE PROBLEM WA S AGGRAVATED BY THE SERIOUS AILMENTS OF THE LIFE TIME CA OF THE COMPANY SHRI HARISH GAMBHIR AND HIS DEATH CAUSED BY DISEASES WHICH BROUGHT PROB LEMS IN PROFESSIONAL COMPLIANCE. SHE WAS UNDER BONA FIDE BELIEF THAT TH E APPEALS WERE BEING TAKEN CARE OF BY HIS OFFICE. HOWEVER, WHEN THE REMI NDERS FOR OUTSTANDING TAX PAYMENTS WERE RECEIVED BY THE COMPANY, THE STATE OF AFFAIRS WERE ASCERTAINED THAT THE APPEALS WERE NOT FILED. CONSEQ UENTLY THEY WERE FILED BELATEDLY. COPIES OF DEATH CERTIFICATES OF SHRI DHI VESH KUMAR VYAS AND LATE SHRI HARISH GAMBHIR ARE FILED ALONG WITH THE AFFIDA VIT OF SHRI VIPIN ANEJA CA ALONG WITH THE AFFIDAVIT OF SMT. REKHA VYAS DEPO SING THESE FACTS. IT IS PLEADED THAT DUE TO THESE CIRCUMSTANCE IN THE LIVES OF FINANCE DIRECTOR AND C.A. FIRMS WORKING THE ASSESSEE COMPANY WAS PREVE NTED BY REASONABLE CAUSE, THE DELAY IN FILING THE APPEAL MUST BE CONDO NED IN THE INTEREST OF JUSTICE. RELIANCE IS PLACED ON HONBLE SUPREME COUR T JUDGMENT IN THE CASE 5 OF COLLECTOR, LAND ACQUISITION VS. MST. KATIJI & OT HERS 167 ITR 471; AND THAT OF HONBLE DELHI HIGH COURT IN THE CASE OF PRE M CHAND BANSAL & SONS VS. ITO 237 ITR 65 (DEL) FOR THE PROPOSITION THAT T HAT FOR DELAY ATTRIBUTABLE TO PERSONAL INABILITY OF COUNSEL, LITIGANT CANNOT BE BLAMED. SUCH DELAY CONSTITUTES SUFFICIENT CAUSE FOR CONDONING THE DELA Y IN TERMS OF SEC. 256(5) OF THE I.T. ACT. 5. LD. DR OPPOSED THE SAME AND CONTENDS THAT THE A SSESSEE WAS NOT DILIGENT IN PURSUING THE LEGAL REMEDIES. 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. THE FACTS OF THE DELAY, WHIC H ARE SPECIFIED BY AFFIDAVITS AND DEATH CERTIFICATES INDICATE THE UNFO RTUNATE CIRCUMSTANCES WHICH THE LITIGANT HAD TO FACE. THE HONBLE SUPREME COURT IN THE CASE OF MST. KATIJI & OTHERS (SUPRA) HAS HELD THAT WHEN THE TECHNICAL CONSIDERATION AND CAUSE OF SUBSTANTIAL JUSTICE ARE PITTED AGAINST EACH OTHER THE CAUSE OF SUBSTANTIAL JUSTICE HAS TO PREVAIL. IT HAS BEEN FU RTHER HELD THAT WHILE CONSIDERING THE ISSUES OF CONDONATION OF DELAY, A R IGID AND PEDANTIC APPROACH SHOULD NOT BE ADOPTED AND THE ISSUE SHOULD BE DECIDED CONFORMING TO NATURAL JUSTICE. IN THE CASE OF PREM CHAND BANSA L & SONS (SUPRA), THE HONBLE DELHI HIGH COURT HAS DEALT WITH THE ISSUE O F THE INABILITY OF THE COUNSEL CAUSING THE DELAY IN FILING THE APPEAL AND HAS HELD THAT THE SAME 6 CANNOT BE ATTRIBUTED TO THE LITIGANT AND SUCH CIRCU MSTANCES CONSTITUTE SUFFICIENT REASON FOR CONDONATION OF DELAY. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND RELYING ON HONBLE SU PREME COURT AND HONBLE DELHI HIGH COURTS JUDGMENTS AS MENTIONED A BOVE, WE HOLD THAT THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE IN FIL ING THE APPEAL. THE DELAY IS CONDONED. 7. COMING TO THE APPEAL FOR A.Y. 1999-2000 THE ASSE SSEE HAS CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT ON THE GROU ND THAT THE ORIGINAL ASSESSMENT WAS FRAMED U/S 143(3). ASSESSEE CONTENDS THAT IT HAD FILED OBJECTIONS AGAINST THE REOPENING OF ASSESSMENT BEFO RE . ASSESSING OFFICER WHO DID NOT CONSIDER THESE OBJECTIONS BEFORE PROCEE DING WITH THE REASSESSMENT AS HELD BY HONBLE SUPREME COURT IN TH E CASE OF G.K.N. DRIVESHAFT 259 ITR 90 FOR THE PROPOSITION THAT ASS ESSEE HAS A RIGHT TO FILE OBJECTION ON THE ISSUES OF REASON AND REASSESSMENT NOTICE. THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY A SPEAKI NG ORDER, ASSESSING OFFICER HAS FAILED TO DECIDE THE OBJECTIONS RAISED BY THE A SSESSEE, BESIDES, SUFFICIENT TIME WAS NOT GIVEN DURING ASSESSMENT FOR COMPLIANCE . THESE ISSUES WERE RAISED BEFORE CIT(A) ALONG WITH A SPECIFIC GROUND T HAT NO MANDATORY 143(2) NOTICE WAS ISSUED ON THE ASSESSEE BEFORE PROCEEDING WITH ASSESSMENT. ALL THESE ISSUES WERE RAISED BEFORE CIT(A) WHICH THOUGH ARE MENTIONED IN HIS 7 ORDER, HOWEVER, LD. . THE CIT(A) DISPOSED OF THE IS SUE ABOUT OBJECTION IN TERMS OF G.K.N. DRIVESHAFT (SUPRA) BY SUMMARILY HOL DING THAT NO VALID OBJECTIONS WERE RAISED BY THE ASSESSEE. IT IS PLEAD ED THAT THE OBJECTIONS ARE TO BE DECIDED BY THE ASSESSING OFFICER WHO INITIATED T HE REASONS AND NOT BY CIT(A). THE VALIDITY OF OBJECTIONS IS TO BE DECIDED BY THE ASSESSING OFFICER. WHEN THE ASSESSING OFFICER FAILS TO DO THE SAME, TH E GROUND IS TAKEN BEFORE CIT(A) THE SAME CANNOT BE REJECTED BY CIT(A) HOLDIN G THAT NO VALID OBJECTIONS WERE RAISED. THE ORDER OF CIT(A) ON THIS ISSUE THUS RUNS CONTRARY TO THE MANDATE OF THE HONBLE SUPREME COURT. 7.1. APROPOS THE GROUND ABOUT NON-SERVICE OF NOTICE U/S 143(2), ACCORDING TO ASSESSEE THE OBSERVATION OF CIT(A) ARE TO THE EF FECT THAT NOTICE U/S 143(2) WAS ISSUED. THERE IS NO FINDING EITHER BY ASSESSING OFFICER OR BY THE CIT(A) ABOUT THE SERVICE OF NOTICE EFFECTED ON THE ASSESSE E. IT IS PLEADED THAT IN THE ABSENCE OF A VALID SERVICE OF NOTICE U/S 143(2), TH E REASSESSMENT PROCEEDINGS ARE LIABLE TO BE QUASHED IN VIEW OF THE VARIOUS DEL HI AND HONBLE PUNJAB & HARYANA HIGH COURTS JUDGMENTS. 8. IN REPLY TO THESE TWO ISSUES, LD. DR RELIED ON T HE ORDER OF CIT(A) AND ABOUT THE SERVICE OF NOTICE LD. DR CONTENDS THAT TH E SERVICE OF NOTICE CAN BE ASCERTAINED FROM THE RECORD ONLY. 8 9. LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE B ENCH ON EARLIER OCCASIONS HAS DIRECTED THE LD. DR TO ESTABLISH THE FACTUM OF SERVICE, HOWEVER, THE RELEVANT RECORD HAS NOT BEEN PRODUCED SO FAR. 10. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUG H THE ENTIRE MATERIAL AVAILABLE ON RECORD. APROPOS THE ISSUE RAISED ABOUT THE OBJECTIONS OF THE ASSESSEE ON REOPENING OF ASSESSMENT WHICH WAS ALREA DY EARLIER COMPLETED U/S 143(3) ASSESSING OFFICER FAILED TO DECIDE THE O BJECTIONS ONE WAY OR THE OTHER WHICH IS AGAINST THE RATIO OF HONBLE SUPREME COURT JUDGMENT IN THE CASE OF G.K.N. DRIVESHAFT (SUPRA). CIT(A) HAS HELD THAT ACCORDING TO HIM THE OBJECTIONS RAISED BY ASSESSEE WERE NOT PROPER. IN O UR CONSIDERED VIEW THE ISSUE DECIDED BY CIT(A) IS NOT IN CONSONANCE WITH H ONBLE SUPREME COURT JUDGMENT IN THE CASE OF G.K.N. DRIVESHAFT (SUPRA). IN VIEW OF HONBLE SUPREME COURT JUDGMENT THAT THE OBJECTIONS ARE MAND ATORY TO BE DECIDED BY ASSESSING OFFICER. CONSEQUENTLY, WE HAVE NO CHOICE BUT TO SET ASIDE THE ASSESSMENT BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE OBJECTIONS OF THE ASSESSEE BY SPEAKING ORDER AND THEN TO CONSIDE R PROCEEDING WITH REASSESSMENT. 10.1. APROPOS SERVICE OF NOTICE U/S 143(2), DESPITE THE BENCH DIRECTIONS, DEPARTMENT HAS FAILED TO PRODUCE THE ASSESSMENT REC ORD. CONSEQUENTLY, THE FACTUM OF VALID SERVICE OF THE NOTICE U/S 143(2) ON THE ISSUE COULD NOT BE 9 ASCERTAINED. AS WE ARE INCLINED TO SET ASIDE THE MA TTER TO ASSESSING OFFICER APART FROM THE ISSUE OF DECIDING THE OBJECTIONS, IT IS IMPERATIVE ON THE PART OF ASSESSING OFFICER TO SEE WHETHER A PROPER AND VALID SERVICE OF NOTICE U/S 143(2) WAS MADE ON THE ASSESSEE OR NOT. MERE ISSUA NCE OF NOTICE DOES NOT SUFFICE AND PAR TAKE THE CHARACTER OF PROPER SERVIC E OF NOTICE U/S 143(2) ON THE ASSESSEE. WITHOUT THE SERVICE OF A PROPER NOTIC E U/S 143(2), THE REASSESSMENT CANNOT BE HELD TO BE VALID. THESE ASPE CTS ARE SPECIFICALLY AND CATEGORICALLY TO BE DECIDED BY THE ASSESSING OFFICE R IN SET ASIDE PROCEEDINGS. THE ASSESSEES OBJECTIONS ABOUT THE SUFFICIENT TIME BEING NOT GIVEN FOR REASSESSMENT, IF ANY, ALSO STANDS REMEDIED BY SETTI NG ASIDE PENDING PROCEEDINGS. 10.2. SINCE WE HAVE SET ASIDE THE ISSUES, WHICH GO TO THE ROOT OF THE VALIDITY OF THE ASSESSMENT, THE ISSUES RAISED BY THE ASSESSE E ON MERITS WILL BE GERMINATED ONLY AFTER DECIDING THE ABOVE ISSUES. CO NSEQUENTLY, THE ENTIRE APPEAL IS SET ASIDE AND RESTORED TO THE FILE OF ASS ESSING OFFICER TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW. ITA NO. 832/DEL/2009 (ASSTT. YR: 2004-05) 11. FOLLOWING EFFECTIVE GROUNDS ARE RAISED: 1. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE DISA LLOWANCE OF RS. 1,56,256/- BEING AMOUNTS PAID TO CANARA BANK TO MEET 10 LIABILITY TOWARDS VALUATION CHARGES, INSURANCE CHAR GES AND DRT SUIT EXPENSES. 2. THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF BAD DEBTS AND ADVANCES WRITTEN OFF AMOUNTING TO RS. 3,76,470/- (RS. 41,161/- + RS. 3,35,309/-) C LAIMED AS DEDUCTION U/S 36(1)(VII) OF THE INCOME-TAX ACT, 196 1. 3. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE CHARGING OF INTEREST UNDER SECTIONS 234A, B & C OF THE ACT. 12. APROPOS GROUND NO. 1 LD. COUNSEL FOR THE ASSESS EE CONTENDS THAT THE ABOVE AMOUNTS WERE PAID BY THE ASSESSEE COMPANY TO THE CANARA BANK ON THE DIRECTION OF DEBT RECOVERY TRIBUNAL (DRT) APROP OS DEFAULT OF SOME HYPOTHECATION OF STOCK AND SECOND CHARGE ON IMMOVAB LE ASSETS. MERELY BECAUSE DRT USED THE WORD AMOUNT BEING PENAL THE SAME HAS BEEN DISALLOWED U/S 37(1) AS BEING INFRACTION OF THE LAW . IT IS PLEADED THAT THE ISSUES RELATING TO LOAN RECOVERY, DEFALCATION IN HY POTHECATION TERMS IS A CIVIL MATTER AND MERELY BECAUSE THE DRT USED THE WORD PE NAL, IT DOES NOT MAKE THE AMOUNT CRIMINAL IN NATURE PAID FOR INFRACTION O F LAW. THEREFORE, LOWER AUTHORITIES ERRED IN DISALLOWING THE SAME. 12.1. APROPOS GROUND NO. 2 I.E. DISALLOWANCE OF CLA IM OF BAD DEBTS WRITTEN OFF IN THE BOOKS OF A/C, IT IS PLEADED THAT ALL THE DETAILS ARE FILED BY THE ASSESSEE WHICH ARE PLACED ON PAPER BOOK NO. 12 AND THE REASON THEREOF ALONG WITH VARIOUS OTHER PAPER BOOK PAGES FROM 13 TO 43 I NCLUDING THE DETAILS 11 CLAIMED BY CIT(A) NOT TO HAVE BEEN NOT FILED BY THE ASSESSEE. THUS, THE OBSERVATIONS ARE PURELY MISTAKEN. ALL THE RELEVANT HAVING BEEN FILED, THERE IS NO JUSTIFICATION IN DISALLOWING THE CLAIM OF BAD DE BTS IN THIS BEHALF. 12.2. ABOUT CHARGING OF INTEREST U/S 234A, B AND C THE LD. COUNSEL CONCEDED THAT THE SAME IS CONSEQUENTIAL. 13. LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORITIE S. 14. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MA TERIAL AVAILABLE ON RECORD. APROPOS GROUND NO. 1 PERTAINING TO THE PAYM ENT MADE TO CANARA BANK ON THE DIRECTION OF DRT, THE HYPOTHECATION DEF ALCATION AND ITS CONSEQUENT EFFECT ON THE IMMOVABLE PROPERTY PLACED BY THE ASSESSEE IS PURELY A CIVIL DISPUTE AND ANY DAMAGES ALLOWED IN T HIS BEHALF EVEN REFERRED TO AS PENAL BY DRT, DO NOT CONSTITUTE PAYMENT FOR I NFRACTION OF LAW AND DISALLOWABLE U/S 37(1). IN VIEW THEREOF, THE ADDITI ON IS DELETED. 14.1. APROPOS GROUND NO. 2, WE FIND THAT THE RELEVA NT DETAILS ABOUT THE BAD DEBTS WRITTEN OFF WAS BROUGHT ON RECORD BY THE ASSE SSEE AND HAS BEEN DISALLOWED ON WRONG ASSUMPTION THAT RELEVANT DETA ILS WERE NOT FILED. IN VIEW THEREOF WE ARE INCLINED TO DELETE THE ADDITION . ASSESSEES APPEAL FOR A.Y. 2004-05 IS ALLOWED. 12 ASSESSEES APPEAL 952/DEL/2009 ( A.Y.2005-06) : 15. FOLLOWING EFFECTIVE GROUNDS ARE RAISED: 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE AO TO DISALLOW 50% OF THE COMMISSION U/S 40(A) (IA) 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN SUSTAIING THE ADDITION OF RS. 1,89,000/- REPRESENTING LOANS F ROM VARIOUS PARTIES. 3. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 17,395/- BEING CONTRIBUTION TOWARDS ESI AND PF DEPOSITED IN THE GOVERNMENT ACCOUNT. 4. THAT THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE CHARGING OF INTEREST U/S 234A, B & C OF THE INCOME-TAXACT, 1961. 16. APROPOS FIRST ISSUE LD. COUNSEL FOR THE ASSESSE E CONTENDS THAT THE TDS WAS DEDUCTED BY ASSESSEE QUA THE COMMISSION PAYMENT ALBEIT AT A LESSER RATE UNDER A BONA FIDE IMPRESSION THAT THE COMMISSION WA S PAYABLE @ 5%. ACCORDING TO ASSESSING OFFICER THE TDS WAS NOT PAID WITHIN TIME. THE ASSESSEES DUE DATE FOR FILING OF THE RETURN OF INC OME FALLS ON 31-12-2005 WHEREAS THE ASSESSEE MADE THE PAYMENT OF TDS ON 30 TH MAY 2005 AND 30 TH JUNE 2005. THE RELIEF HAS BEEN GRANTED BY CIT(A). H OWEVER, APROPOS THE BALANCE COMMISSION PAYMENT THE SAME WAS MADE TO NON -RESIDENTS ON EXPORTS EARNING AND WERE NOT LIABLE TO TDS AS PER B OARDS CIRCULAR NO. 23 DATED 23-7-1967. THE AAR IN THE CASE OF TELESOFT (P ) LTD. 267 ITR 725 (AAR) HAS HELD THAT NO TAX IS DEDUCTIBLE AT SOURCE UNDER S. 195 ON THE PAYMENTS OF COMMISSION AND RETAINER FEE MADE BY THE APPLICANT T O THE NON- 13 RESIDENT COMPANIES FOR SECURING BUSINESS OUTSIDE IN DIA WHERE THE SAID ENTITIES HAVE NO OFFICE OR BUSINESS OPERAT IONS IN INDIA. 16.1. IT HAS NOT BEEN DISPUTED THAT THE REMINDER AM OUNT OF COMMISSION WAS PAID BY THE ASSESSEE TO NON-RESIDENT COMPANIES FOR SECURING BUSINESS OUTSIDE INDIA AND THEN HAD NO OFFICE OR BUSINESS OPERATIONS IN INDIA. THIS VIEW IS FURTHER UPHELD BY HONBLE SUPREME COURT IN THE CASE OF TRANSMISSION CORPORATION OF A.P. LTD. VS. CIT 239 ITR 587. APROP OS GROUND NO. 2 IT IS CONTENDED THAT THE AMOUNT ON ACCOUNT OF VARIOUS LOA NS HAS BEEN ADDED BY ASSESSING OFFICER BY HOLDING THAT ASSESSEE COMPANY AGREED FOR THIS ADDITION SUBJECT TO NO PENAL ACTION. THE ASSESSEE DENIED HAV ING MADE ANY VOLUNTARY OFFER THEREFORE ON 22-12-2009, ASSESSEE ASKED THE A SSESSING OFFICER TO PROVIDE A COPY OF THE PROCEEDING SHEET. THE SAME H AS NOT BEEN GIVEN. THE ORDER SHEET ENTRY WOULD SHOW THAT CA OF THE ASSESSE E WAS NOT PRESENT ON THE DATE OF ALLEGED OFFER. COPY OF THE ORDER SHEET ENTR Y HAS NOT BEEN GIVEN SO FAR. APROPOS GROUND NO. 3 IT IS PLEADED THAT THE PAYMENT OF ESI AND PF AMOUNTING TO RS. 17,395/- WAS DEPOSITED ON THE DAT ES PRIOR TO THE DUE DATE OF FILING OF THE RETURN. THE LAST PAYMENT IS DATED 15-4-2005. THE PAYMENT BEING WITHIN TIME I.E. BEFORE FILING OF THE RETURN OF INCOME, THE ADDITION NEEDS TO BE DELETED. APROPOS CHARGING OF INTEREST U /S 234A, B & C THE LD. 14 COUNSEL CONCEDED THAT THE CHARGING OF INTEREST UNDE R THE AFOREMENTIONED SECTIONS IS CONSEQUENTIAL. 17. LD. DR SUPPORTED THE ORDER OF LOWER AUTHORITIES . 18. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MA TERIAL AVAILABLE ON RECORD. APROPOS GROUND NO. 1 WE FIND MERIT IN THE A RGUMENT OF LD. COUNSEL. IT HAS NOT BEEN DISPUTED THAT THE COMMISSION PAYMEN T HAS BEEN MADE TO FOREIGN PARTIES FOR PROCUREMENT OF FOREIGN BUSINESS AND THEY HAD NO PRESENCE OR OFFICE IN INDIA. IN VIEW THEREOF, THE 50% DISAL LOWANCE U/S 40A(IA) IS DELETED. 18. APROPOS GROUND NO. 2, THE ASSESSEE HAS CHALLENG ED THE FACT THAT ON THE ALLEGED DATE CA OF THE ASSESSEE WAS NOT PRESENT IN THE PROCEEDINGS BEFORE ASSESSING OFFICER AND MRS. VYAS, THE LADY DIRECTOR , HAD NOT MADE ANY SUCH OFFER AS ALLEGED BY THE ASSESSING OFFICER. SINCE TH E COPY OF THE PROCEEDING SHEET HAS NOT BEEN GIVEN TO THE ASSESSEE, INTEREST OF NATURAL JUSTICE REQUIRE THAT ASSESSEE BE ALLOWED AN OPPORTUNITY TO DEFEND ITS CASE AFTER THE ORDER SHEET ENTRY IS MADE AVAILABLE. THE ISSUE IS ACCORDI NGLY SET ASIDE BACK TO THE FILE OF ASSESSING OFFICER. 18.2. APROPOS GROUND NO. 3 THE PAYMENT OF RS. 17, 3 95/- ON ACCOUNT OF ESI AND PF HAVING BEEN PAID BEFORE THE DUE DATE OF FILI NG OF THE RETURN, THE 15 DISALLOWANCE IS DELETED. THE ASSESSEES APPEAL IS A LLOWED FOR STATISTICAL PURPOSES. 19. IN THE RESULT, ASSESSEES APPEAL FOR A.Y., 1999 -2000 IS ALLOWED FOR STATISTICAL PURPOSES; FOR A.Y. 2004-05 IS ALLOWED; AND FOR A.Y. 2005-06 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 13-09-2013. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 TH SEPT. 2013. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR