Millenium Technosystems Pvt. Ltd., V. ITO, Ward-6(4),

ITA 836/DEL/2005

• Counselvise Citation: 83620114 RSA 2005
• Duration Of Justice: 9 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-12-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 21-02-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Additional evidence; Reasonable cause; Corroborative evidences; Onus to prove; Reassessment proceedings
• Section: 43B; 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: C BENCH: N EW DELHI BEFORE SHRI R P TOLANI, JM AND SHRI D K SRIVASTAVA, AM ITA NO. 836/DEL/2005 ASSESSMENT YEAR: 2001-02 M/S MILLENNIUM TECHNOSYSTEMS P. LTD. V. ITO 33, RANI JHANSI ROAD, NEW DELHI 110055 WARD 6(4), NEW DELHI ITA NO. 1276/DEL/2005 ASSESSMENT YEAR: 2001-02 ITO V . M/S MILLENNIUM TECHNOSYSTEMS WARD 6(4), NEW DELHI PVT. LTD., 33, RANI JHANS I ROAD NEW DELHI-110055 ASSESSEE BY: SHRI RAJKUMAR, CA REVENUE BY: SHRI SATPAL SINGH, SR. DR ORDER THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) ON 23.12.2004. THEY ARE BEING DISPOSED OF BY A CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. THE ASSESSEE IS A PRIVATE LIMITED COMP ANY. IT IS ENGAGED IN THE BUSINESS OF SUPPLY AND INSTALLATION OF COMPUTERS AND OTHER DEVI CES. IT FILED ITS RETURN OF INCOME ON 31.10.2001 DECLARING TOTAL INCOME OF RS.2,52,422/- FOR THE ASSESSMENT YEAR UNDER APPEAL AS AGAINST WHICH ASSESSMENT U/S 143(3) OF THE INCOM E-TAX ACT WAS COMPLETED ON 29.03.2004 ASSESSING THE TOTAL INCOME AT RS.1,00,81 ,600/-. THE ADDITIONS/DISALLOWANCES MADE BY THE AO WERE CHALLENGED BY THE ASSESSEE BEFO RE THE LD. CIT(A). WHILE SOME OF THE ADDITIONS/DISALLOWANCES MADE BY THE AO WERE CON FIRMED, MAJOR PORTION OF ADDITIONS/DISALLOWANCES MADE BY THE AO WAS DELETED. BOTH THE PARTIES ARE AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A). THEY ARE NOW IN CROSS-APPEALS BEFORE THIS TRIBUNAL. ITA NO. 836: ASSESSEES APPEAL 2. GROUND NO. 1 (DISALLOWANCE OF COMMISSION OF RS.2 ,21,600/-), GROUND NO. 4 (DISALLOWANCE OF TRAVELING EXPENSES OF RS.1,00,000/ -), GROUND NO. 6 (DISALLOWANCE OUT OF 2 ITA NO.836 AND 1276/DEL/2005 MISCELLANEOUS EXPENSE OF RS.12,408/-), GROUND NO. 8 (DISALLOWANCE U/S 43B FOR LST/CST) AND GROUND NO. 9 (DISALLOWANCE U/S 43B FOR PF) WERE NOT PRESSED AT THE TIME OF HEARING. THEY ARE THEREFORE DISMISSED AS NOT PRESSED. 3. GROUND NOS. 2 AND 3 ARE INTERLINKED WITH GROUND NO. 3 IN THE DEPARTMENTS APPEAL. THEY SHALL THEREFORE BE CONSIDERED TOGETHER WITH GR OUND NO. 3 IN THE DEPARTMENTS APPEAL. 4. GROUND NO. 5 TAKEN BY THE ASSESSEE READS AS UNDE R: 5. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE I S NO JUSTIFICATION FOR DISALLOWING RS.1,00,000/- ON AD HOC BASIS FROM DIWA LI EXPENSES. 5. WE HAVE HEARD BOTH THE PARTIES. LD. CIT(A) HAS C ONFIRMED THE IMPUGNED DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS: 9.3 I HAVE DULY CONSIDERED THE FACTS AND SUBMISSIO NS. IT IS ADMITTED THAT THE EXTERNAL BILL IS NOT YET AVAILABLE ALTHOUG H INTERNAL VOUCHER HAS BEEN PRODUCED. IT IS A SETTLED LAW THAT THE ONUS OF PROVING THE EXPENSES SQUARELY LIES ON THE APPELLANT. IN THE PRESENT CASE , THE APPELLANT HAS NOT FULLY DISCHARGED THIS ONUS. ON THE OTHER SIDE, EYES CANNOT BE SHUT FROM THE FACT THAT DIWALI EXPENSES ARE CUSTOMARY AND ARE IN THE NATURE OF LEGITIMATE BUSINESS NEEDS. IN VIEW OF THIS, I HOLD THAT THE AP PELLANT MUST HAVE INCURRED DIWALI EXPENSES BUT, SINCE EXTERNAL BILL I S MISSING THEREFORE, WHOLE EXPENSES CANNOT BE ALLOWED. I FEEL THAT THE ENDS OF JUSTICE WILL MEET OUT IF THE DISALLOWANCE IS RESTRICTED TO RS.1,00,000/-. HE NCE, THE ASSESSEE GETS THE RELIEF OF RS.50,000/-. 6. THE LD. CIT(A) HAS CORRECTLY APPRECIATED THE FAC TUAL AND LEGAL ASPECTS OF THE CASE. WE ARE IN AGREEMENT WITH HIS REASONING AND DECISION . THE DISALLOWANCE CONFIRMED OF RS.50,000/- BY HIM IS REASONABLE. HIS ORDER IN THIS BEHALF IS THEREFORE CONFIRMED. GROUND NO. 5 IS DISMISSED. 3 ITA NO.836 AND 1276/DEL/2005 7. GROUND NO. 7 TAKEN BY THE ASSESSEE READS AS UNDE R: 7. THAT, UNDER THE FACTS AND CIRCUMSTANCES, THERE IS ABSOLUTELY NO JUSTIFICATION FOR DISALLOWING RS.1,00,390/- BEING 1 /6 TH OUT OF TELEPHONE EXPENSES ON THE GROUND OF PERSONAL USE OF DIRECTORS . IN ANY CASE, NO DISALLOWANCE CAN BE MADE IN THE HANDS OF A COMPANY ON THE GROUND OF PERSONAL USE. 8. THE LD. CIT(A) HAS CONFIRMED THE IMPUGNED DISALL OWANCE WITH THE FOLLOWING OBSERVATIONS: 12.4 I HAVE DULY CONSIDERED THE FACTS AND SUBMISSI ONS OF THE LD. COUNSEL AND THE REASONS RECORDED BY THE AO IN THE ASSESSMEN T ORDER. ADMITTEDLY, THE APPELLANT IS NOT MAINTAINING ANY LOG BOOK/REGIS TER TO MAINTAIN THE COMPLETE DETAILS OF CALLS MADE AND WHETHER THE SAME HAVE BEEN DONE FOR THE BUSINESS PURPOSES OF THE COMPANY. THERE CAN BE NO DENIAL THAT BESIDES BUSINESS CALLS, THERE HAVE BEEN CALLS FOR T HE NON BUSINESS PURPOSES OF THE COMPANY. I AM INCLINED TO THE ARGUMENTS OF T HE AO THAT THE CALLS WERE MADE FOR THE PERSONAL/NO-BUSINESS PURPOSES OF THE COMPANY AND ACCORDINGLY, I CONFIRM THE ADDITION OF RS.1,00,390/ -. 9. IN SUPPORT OF APPEAL, THE LD. AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS A LIMITED COMPANY AND THEREFO RE THE IMPUGNED DISALLOWANCE WAS COMPLETELY UNWARRANTED IN VIEW OF THE DECISION OF T HE HONBLE GUJARAT HIGH COURT IN SAYAJI IRON AND ENGINEERING CO. V. CIT, 253 ITR 749 (GUJ). 10. IN REPLY, THE LD. DR SUBMITTED THAT THE ORDER P ASSED BY THE LD. CIT(A). 11. WE HAVE HEARD BOTH THE PARTIES. THE LD. DR COUL D NOT POINT OUT AS TO HOW THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE M ATTER CITED BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS NOT APPLICABLE. THE ISSUE IS SQUARELY COVERED AGAINST 4 ITA NO.836 AND 1276/DEL/2005 THE REVENUE BY THE AFORESAID JUDGMENT. IN THIS VIEW OF THE MATTER, THE IMPUGNED DISALLOWANCE IS DELETED. GROUND NO. 7 IS ALLOWED. ITA NO. 1276: DEPARTMENTS APPEAL 12. GROUND NO. 1 TAKEN BY THE DEPARTMENT READS AS U NDER: 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETING ADDITION OF RS.19,75,000/- MADE ON ACCOUNT OF UNEXPLAINED LOAN IN THE NAME OF MCSPL, WITHOUT APPRECIATING:- (I) THAT FRESH EVIDENCE CANNOT BE ADMITTED UNDER RU LE 46A WHEN INSPITE OF SUFFICIENT OPPORTUNITY, SUCH EVIDENCE WA S NOT FILED AT THE TIME OF ASSESSMENT. (II) THAT THE ASSESSEE TOOK CONTRADICTORY STAND AT DIFFERENT TIME, INITIALLY IT WAS STATED TO BE LOAN FROM MCSPL AS SHOWN IN BAL ANCE SHEET, SUBSEQUENTLY STATED IT TO BE ADVANCE AGAINST PURCHA SE MADE FOR MCSPL. (III) THAT THE BANK ACCOUNT DULY VERIFIED BY SANJEE V WAS FILED IN SUPPORT THAT IT WAS A LOAN. (IV) THAT NO EVIDENCE WAS FILED AS TO THE REJECTION OF SALES BY BEL AND IT WAS ACCOUNTED FOR. (V) THAT THE ASSESSEE FAILED TO EXPLAIN THE REPAYME NT OF THE ALLEGED LOAN WHEN AS PER BANK STATEMENT, IT WAS TRANSFERRED TO THE ACCOUNTS OF DIFFERENT PERSONS. (VI) THAT THE SUBMISSIONS OF THE ASSESSEE WERE ACCE PTED WITHOUT GIVING REASONS IN THE ORDER PASSED BY THE LD. CIT(A). 13. IN THE BALANCE-SHEET OF THE ASSESSEE COMPANY, U NSECURED LOAN OF RS.19,75,000/- WAS SHOWN AS OUTSTANDING IN THE NAME OF MCSPL (MILL ENNIUM COMPONENTS & SYSTEMS PVT. LTD.). THE ASSESSEE WAS CALLED UPON BY THE AO TO FI LE CONFIRMATION DURING THE COURSE OF 5 ITA NO.836 AND 1276/DEL/2005 ASSESSMENT PROCEEDINGS. THE ASSESSEE FILED A COPY O F BANK STATEMENT WHERE AN ENTRY FOR ISSUE OF CHEQUE OF RS.19,75,000/- WAS DULY RECORDED . THE AO ISSUED SUMMONS U/S 131 TO MCSPL IN RESPONSE TO WHICH SHRI VIRENDER SINGH, DIR ECTOR OF THE SAID COMPANY APPEARED BEFORE THE AO AND HIS STATEMENT WAS RECORDED IN WHI CH HE ADMITTED THAT THE SAID CHEQUE OF RS.19,75,000/- WAS ISSUED TO THE ASSESSEE-COMPAN Y AGAINST PURCHASES AND NOT AS A LOAN. THEREFORE, THE FIRST GROUND ON WHICH THE AO D OUBTED THE GENUINENESS OF THE TRANSACTION WAS WITH REGARD TO THE NATURE OF TRANSA CTION, I.E., WHETHER IT WAS IN THE NATURE OF LOAN OR IN THE NATURE OF ADVANCES RECEIVED AGAIN ST PURCHASES TO BE MADE BY MCSPL. THE AO FURTHER FOUND THAT THE BANK STATEMENT WAS SI GNED BY SHRI SANJEEV BUT SHRI SANJEEV SUBSEQUENTLY DENIED HIS SIGNATURE ON THE SA ID DOCUMENT. THIS WAS ANOTHER GROUND ON WHICH THE AO DOUBTED THE GENUINENESS OF T HE TRANSACTION. HE ACCORDINGLY TREATED THE IMPUGNED SUM AS UNEXPLAINED AND CONSEQU ENTLY ADDED THE SAME, WHICH, ON APPEAL, HAS BEEN DELETED BY THE CIT(A). 14. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A) , THE DEPARTMENT IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL, THE LD. DR RELIED UPON THE ORDER PASSED BY THE AO. 15. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CO NSIDERED THEIR SUBMISSIONS. THE LD. CIT(A) HAS DELETED THE IMPUGNED ADDITION WITH THE F OLLOWING OBSERVATIONS: 3.8 I HAVE CONSIDERED THE MATERIAL PLACED ON RECOR D. I AM OF THE OPINION THAT THE RECEIPT OF RS.19,75,000/- STANDS D ULY EXPLAINED BY THE APPELLANT WITH SUPPORTING EVIDENCES. THE NATURE OF TRANSACTION WAS THAT THE AMOUNT WAS GIVEN BY MCSPL TO THE APPELLANT TOWA RDS PURCHASES, WHICH REMAINED UNUTILIZED BY THE APPELLANT. WHETHER THE SAME WAS SHOWN UNDER THE GROUP CURRENT LIABILITIES IN ITS BALANC E SHEET OR UNDER THE GROUP UNSECURED LOANS BY THE APPELLANT, THE GENUINENESS OF THE TRANSACTION CANNOT BE DOUBTED IN THE WAKE OF THE EXPLANATION AN D EVIDENCES ADDUCED 6 ITA NO.836 AND 1276/DEL/2005 BY THE APPELLANT. THE USE OF A PARTICULAR OR DIFFER ENT NOMENCLATURE GIVEN TO A TRANSACTION CANNOT DECIDE THE TRUE NATURE OF TRAN SACTION AND THE PURPOSE FOR WHICH IT ACTUALLY TOOK PLACE. THUS, I FIND THAT THERE WAS NO JUSTIFICATION IN MAKING THE ADDITION U/S 68 OF THE ACT. ACCORDING LY, THE SAID ADDITION IS DELETED. 16. THE LD. DR COULD NOT POINT OUT AS TO HOW THE AF ORESAID FINDINGS RECORDED BY THE LD. CIT(A) WERE INCORRECT OR ERRONEOUS ON FACTS OR IN L AW. THE FACT THAT THE SAID SUM OF RS.19,75,000/- WAS RECEIVED BY CHEQUE HAS NOT DISPU TED BY THE REVENUE. THE LD. CIT(A) HAS GIVEN DUE OPPORTUNITY TO THE AO TO REBUT THE SU BMISSIONS MADE BY THE ASSESSEE BEFORE HIM, I.E., THE CIT(A). THE AO, AFTER VERIFIC ATION, COULD NOT HOWEVER CONTROVERT OR REBUT THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE T HE CIT(A). THE ORDER PASSED BY THE LD. CIT(A) IS REASONABLE AND IN CONFORMITY WITH LAW . HIS ORDER IN THIS BEHALF IS THEREFORE CONFIRMED. GROUND NO. 1 TAKEN BY THE REVENUE IS DIS MISSED. 17. GROUND NO.2 TAKEN BY THE DEPARTMENT READS AS UN DER: 2. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DEL ETED RS.6,03,340/- ADDED ON ACCOUNT OF UNEXPLAINED LOAN IN THE NAME OF SH. S.S. CHADHA, WITHOUT APPRECIATING:- (I) THAT FRESH EVIDENCE CANNOT BE ADMITTED UNDER RU LE 46A WHEN INSPITE OF SUFFICIENT OPPORTUNITY, SUCH EVIDEN CE WAS NOT FILED AT THE TIME OF ASSESSMENT. (II) THAT THE ONUS TO PROVE THE GENUINENESS, IDENTI TY AND CAPACITY OF THE LENDER IS ON THE ASSESSEE WHICH HAS NOT BEEN DISCHARGED. (III) THAT THE ASSESSEE FAILED TO PROVE THE SOURCES OF INVESTMENT. (IV) THAT THE DELETION MADE BY THE LD. CIT (A) IS W ITHOUT GIVING ADEQUATE REASONS. 7 ITA NO.836 AND 1276/DEL/2005 18. THE ASSESSEE-COMPANY HAD RAISED UNSECURED LOAN OF RS.9,93,000/- FROM SHRI S.S. CHADHA DURING THE YEAR UNDER APPEAL OUT OF WHICH RS .3,89,360/- WAS REPAID DURING THE YEAR ITSELF. THE OUTSTANDING BALANCE OF RS.6,03,340 /- WAS ADDED BY THE AO U/S 68 OF THE IT ACT AS THE ASSESSEE HAD FAILED TO FURNISH THE BA NK STATEMENT OF SHRI CHADHA. ON APPEAL, THE LD. CIT(A) APPEAL HAS DELETED THE IMPUG NED ADDITION FOR THE REASONS GIVEN IN THE APPELLATE ORDER. 19. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A) , THE DEPARTMENT IS NOW IN APPEAL BEFORE THE TRIBUNAL. IN SUPPORT OF APPEAL, THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 20. IN REPLY THE LD. AR FOR THE ASSESSEE SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 21. WE HAVE HEARD BOTH THE PARTIES. THE LD. CIT(A) HAS DELETED THE IMPUGNED ADDITION WITH THE FOLLOWING OBSERVATIONS: 4.7 I HAVE CAREFULLY GONE THROUGH THE WHOLE ISSUE WITH REFERENCE TO THE ASSESSMENT ORDER AND OTHER CONTENTIONS OF BOTH THE PARTIES READ WITH DOCUMENTS AND ADDITIONAL EVIDENCE FILED. FOR THE RE ASONS AND SUBMISSIONS MADE BY THE LD. COUNSEL I AM OF THE CONSIDERED VIEW THAT THERE EXISTED REASONABLE CAUSE WHICH PREVENTED IT FROM FILING THE BANK STATEMENT/BANK CERTIFICATE DURING ASSESSMENT PROCEEDINGS. I ALSO F IND THAT THE AO HAS ALSO NOT REALLY OBJECTED TO THE ADMISSION OF THE BANK CE RTIFICATE/STATEMENT OF MR. CHADHA AS ADDITIONAL EVIDENCE. THEREFORE, THE B ANK CERTIFICATE DATED 17.05.2004 IS ADMITTED AS AN ADDITIONAL EVIDENCE. 4.8 FURTHER, I FIND THAT UNDISPUTEDLY MR. CHADHA IS THE DIRECTOR OF THE APPELLANT COMPANY AND IS ASSESSED TO INCOME TAX AND THEREFORE, HIS IDENTITY STOOD PROVED. A CONFIRMATION OF LOAN WAS A LSO FURNISHED DURING THE ASSESSMENT PROCEEDINGS ALONG WITH THE DETAILS OF BA NK ACCOUNT FROM WHERE THE PAYMENTS THROUGH CHEQUES WERE MADE TO THE APPEL LANT COMPANY. FURTHER, THE BANK CERTIFICATE DATED 17.05.2004 CERT IFIES THAT THE SAID THREE CHEQUES WERE ISSUED FROM THE ACCOUNT OF MR. CHADHA AND WERE CREDITED, 8 ITA NO.836 AND 1276/DEL/2005 THROUGH TRANSFER, IN THE BANK ACCOUNT OF THE APPELL ANT COMPANY. FROM THESE EVIDENCES, THE IDENTITY, GENUINENESS AND CRED ITWORTHINESS STANDS PROVED BY THE APPELLANT. IN VIEW OF THE SAME, I HAV E NO HESITATION IN HOLDING THAT THE LOAN TRANSACTIONS STANDS PROVED AN D ACCORDINGLY, THE ADDITION OF RS.6,03,340/- MADE U/S 68 IS DELETED. 22. IT IS APPARENT THAT THE LD. CIT(A) HAS ADMITTED ADDITIONAL EVIDENCE IN THE FORM OF BANK STATEMENT, CERTIFICATE, ETC., AFTER GIVING REA SONABLE OPPORTUNITY TO THE AO. THE AO, AFTER VERIFICATION, DID NOT RAISE ANY VALID OBJECTI ON AS TO THEIR GENUINENESS. THE ACTION OF THE LD. CIT(A) IN ADMITTING THE ADDITIONAL EVIDENCE IS THUS IN ORDER. THE FINDINGS RECORDED BY THE LD. CIT(A) IN PARA 4.8 OF HIS APPELLATE ORDE R HAVE NOT BEEN REBUTTED BY THE LD. DR. IN THIS VIEW OF THE MATTER, THE FINDING OF THE LD. CIT(A) THAT THE ASSESSEE HAS ESTABLISHED THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR T OGETHER WITH GENUINENESS OF THE TRANSACTION IS ALSO IN ORDER. HIS ORDER IN THIS BEH ALF IS THEREFORE CONFIRMED. GROUND NO. 2 TAKEN BY THE DEPARTMENT IS DISMISSED. 23. GROUND NO. 3 TAKEN BY THE DEPARTMENT READS AS U NDER: 3. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N DELETING RS.52,54,666/- OUT OF TOTAL COMMISSION DISALLOWED AT RS.54,66,266/ - BY THE AO WITHOUT APPRECIATING:- (I) THAT FRESH EVIDENCE CANNOT BE ADMITTED UNDER RU LE 46A WHEN INSPITE OF SUFFICIENT OPPORTUNITY, SUCH EVIDEN CE WAS NOT FILED AT THE TIME OF ASSESSMENT. (II) THAT ANY REFERENCE TO REMAND REPORT IN THE ORD ER IS MISLEADING AS THE LD. CIT(A) DID NOT PASS ANY REMAN D ORDER AS PRESCRIBED. (III) THAT THE LD. CIT(A) IS EMPOWERED TO MAKE ANY ENQUIRY ON THE EVIDENCE SUBMITTED BY THE ASSESSEE BUT IT IS WI THOUT JURISDICTION 9 ITA NO.836 AND 1276/DEL/2005 TO REQUIRE AO TO MAKE INVESTIGATIONS/ENQUIRIES AS I S EQUIVALENT REASSESSMENT PROCEEDINGS. (IV) THAT THE ONUS TO PROVE THE GENUINENESS OF COMM ISSION EXPENSES IS ON THE ASSESSEE AND CANNOT BE SHIFTED O N THE AO. (V) THAT THE ASSESSEE TOTALLY FAILED TO PROVE THE G ENUINENESS OF SUCH EXPENDITURE AT THE TIME OF ASSESSMENT STATING THAT THERE IS NO EVIDENCE IN SUPPORT IN VIEW OF FIRE AT THE BUSINESS PREMISES. (VI) THAT THE ASSESSEE TOTALLY FAILED TO PROVE THE GENUINENESS OF SUCH EXPENDITURE AT THE TIME OF ASSESSMENT STATING THAT THERE IS NO EVIDENCE IN SUPPORT IN VIEW OF FIRE AT THE BUSINESS PREMISES. (VII) THAT THE PAYMENT TO PTES WAS NOT PROVED AS IT S ROLE SERVICES AND GENUINENESS AND ANY SUCH REMITTANCE WI THOUT PROPER TDS IS LIABLE TO BE DISALLOWED. (VIII) THAT THE LD. CIT(A) HIMSELF CONFIRMED DISALL OWANCE OF COMMISSION PAYMENT TO EIGHT AGENTS UNDER SIMILAR FA CTS AND CIRCUMSTANCES. (IX) THAT THE LD. CIT(A) DID NOT DISCUSS THE CASE O F B.N. RAMPAL TO WHOM A PAYMENT OF RS.3,30,000/- WAS MADE, BUT TH E SAME STANDS DELETED. 24. AS STATED EARLIER, GROUND NOS. 2 AND 3 TAKEN BY THE ASSESSEE IN ITS APPEAL ARE INTERLINKED WITH THE AFORESAID GROUND TAKEN BY THE DEPARTMENT. GROUND NOS. 2 AND 3 TAKEN BY THE ASSESSEE READ AS UNDER: 2.1 THAT IN VIEW OF THE FINDINGS GIVEN IN PARA 5.7 OF THE APPEAL ORDER FROM WHERE IT IS APPARENT THAT THE DISALLOWANCE OF COMMISSION OF RS.3,30,000/- PAID TO SH. B.N. RAMPAL STANDS ALLOWE D., THE OMISSION OF SPECIFIC DISCUSSION OF THIS ISSUE IN THE BODY OF AP PEAL ORDER DESERVES TO BE CORRECTED BY SPECIFICALLY DEALING WITH THIS ISSUE I N THE APPEAL ORDER. 10 ITA NO.836 AND 1276/DEL/2005 2.2 THAT WITHOUT PREJUDICE, THE PAYMENT OF COMMISSI ON OF RS.3,30,000/- TO SH. B.N. RAMPAL DESERVES TO BE ALL OWED. 2.3 THAT, WITHOUT PREJUDICE, IN CASE IT IS TO BE HE LD THAT THIS ISSUE CANNOT BE DEEMED TO HAVE BEEN DECIDED BY THE LD. CI T(A), THEN HE SHOULD BE DIRECTED TO DECIDE THIS ISSUE, AS PER LAW AND FA CTS. 3.1 THAT, UNDER THE FACTS AND CIRCUMSTANCES, THE LD . CIT(A) ERRED IN LAW AS WELL AS ON MERITS IN NOT TOUCHING AND DECIDI NG THE GROUND NO.7 TAKEN BEFORE HIM WHEREBY DEDUCTION OF COMMISSION EX PENSES OF RS.3,00,000/- WAS CLAIMED BEING PAID TO SH. B.N. RA MPAL, WHICH WAS WRONGLY DEBITED UNDER THE HEAD TRAVELING EXPENSES. 3.2 THAT, WITHOUT PREJUDICE, THE DEDUCTION FOR COMM ISSION OF RS.3,00,000/- DESERVES TO BE ALLOWED IN LAW AS WELL AS ON MERITS. 25. THE ASSESSEE CLAIMED TO HAVE PAID A SUM OF RS.5 7,77,266/- AS COMMISSION TO VARIOUS PERSONS OUT OF WHICH THE AO DISALLOWED A SU M OF RS.54,66,266/- FOR THE REASONS GIVEN BY HIM IN THE ASSESSMENT ORDER. ON APPEAL THE LD. CIT(A) HAS DELETED THE DISALLOWANCE TO RS.54,66,266/- FOR REASONS GIVEN BY HIM IN HIS APPELLATE ORDER. 26. AGGRIEVED BY THE ORDER PASSED BY THE LD. CIT(A) , THE DEPARTMENT IS NOW IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF APPEAL, THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 27. IN REPLY, THE LD. AR FOR THE ASSESSEE REITERATE D THE SUBMISSIONS WHICH WERE EARLIER MADE BY HIM BEFORE THE LD. CIT(A). HE ALSO SUPPORTE D THE ORDER PASSED BY THE LD. CIT(A). IN BRIEF, HIS CASE WAS THAT THE ASSESSEE-COMPANY HA D A BRANCH OFFICE IN SINGAPORE BY WHICH COMMISSION AMOUNTING TO RS.34,27,666/- WAS PA ID ANOTHER COMPANY KNOWN AS MILLENNIUM COMPONENT SYSTEMS P. LTD. SINGAPORE (PTE ) FOR THE SERVICES RENDERED BY PTE IN SINGAPORE. IT WAS FURTHER SUBMITTED THAT THE SAI D COMPANY, NAMELY PTE, AND THE ASSESSEE-COMPANY WERE TOTALLY INDEPENDENT OF EACH O THER AND HAD NO RELATIONSHIP OF ANY NATURE WHATSOEVER EXCEPT BUSINESS DEALINGS. HE CONT ENDED THAT THE IMPUGNED PAYMENTS 11 ITA NO.836 AND 1276/DEL/2005 WERE MADE BY THE BRANCH OFFICE OF THE ASSESSEE-COMP ANY IN SINGAPORE TO PTE IN SINGAPORE AND THEREFORE THE ASSESSEE COMPANY WAS NO T REQUIRED TO DEDUCT ANY TAX AT SOURCE IN TERMS OF SECTION 195 AS IT HAD NOT REMITT ED THE IMPUGNED SUM FROM INDIA. 28. WE HAVE HEARD BOTH THE PARTIES, THE LD. CIT(A) HAS DELETED THE IMPUGNED DISALLOWANCE WITH THE FOLLOWING OBSERVATIONS: 5.1.13 I HAVE CAREFULLY GONE THROUGH ALL THE ASPEC TS OF THE ISSUE UNDER CONSIDERATION. THE APPELLANT COMPANY IS HAVING A BR ANCH OFFICE AT SINGAPORE. IT IMPORTS ICS WHICH ARE SOLD TO BEL SINGAPORE, BEL GHAZIABAD, BEL PANCHKULA AND BEL BANGALORE. THE FACT THAT MILLENNIUM COMPONENT S YSTEMS PTE. LTD., SINGAPORE (PTE) IS AN INDEPENDENT ENTITY IS CLEARLY BORNE FRO M THE DOCUMENTS FURNISHED BY THE APPELLANT IN THIS REGARD. MERELY BECAUSE THE NA MES OF THE TWO CONCERNS APPEAR SIMILAR, THE TWO DIFFERENT ENTITIES CANNOT B E SAID TO BE INTER-RELATED. THE DEFICIENCIES AS POINTED OUT BY THE AO, REGARDING TH E DATE OF AGREEMENT, SIGNATURE, ETC. AND DOUBTS RAISED ON GENUINENESS OF THE UNSIGN ED COPY OF INVOICE FURNISHED DESPITE FIRE, ETC. HAVE BEEN SQUARELY REBUTTED BY T HE APPELLANT. IN CONTENT THE AGREEMENT DATED 25.3.2001 WAS EFFECTIVE FROM 1.7.20 00 AND THERE IS NO INFIRMITY IN PUTTING A VERBAL AGREEMENT INTO WRITING ON PLAIN PIECE OF PAPER AT A LATER DATE. THE CONFIRMATION OF PTE LTD. ADMITTED AS ADDITIONAL EVIDENCE CLEARLY TESTIFIES THE FACT OF COMMISSION PAID BY THE APPELLANT TO PTE LTD . MOREOVER, THE CORRESPONDENCE AND OTHER DOCUMENTS PLACED ON RECORD BY THE APPELLANT REVEAL THE NATURE AND EXTEND OF SERVICES ACTUALLY RENDERED BY PTE LTD. FOR WHICH IT WAS PAID COMMISSION BY THE APPELLANT. I FIND THAT PTE LTD. W AS INSTRUMENTAL FOR PROCURING SALE ORDERS FROM BEL IN TWO WAYS. IN SOME CASES, EN QUIRES AND THE CONSEQUENTIAL ORDERS WERE PROCURED BY PTE LTD. DIRECTLY IN ITS OW N NAME AND WERE FORWARDED TO THE APPELLANT FOR EXECUTION. IN OTHER CASES, PTE LT D. DIRECTLY PROCURED ORDERS IN THE NAME OF APPELLANT BY REPRESENTING THE APPELLANT AS ITS AGENT. IT WAS ON SUCH SALES ORDERS THAT THE COMMISSION WAS ALLOWED BY THE APPELLANT AS ITS COMPANY TO PTE LTD. TO THE EXTENT THOSE WERE EXECUTED. A DETAI LED CHART OF SUCH ORDERS AND THE COMMISSION PAID THEREON WAS ALSO FURNISHED AND EXAMINED. I AM ALSO IN AGREEMENT WITH THE CONTENTION OF THE LD. AR THAT IT IS THE PREROGATIVE OF THE APPELLANT AND PTE LTD. TO DECIDE AND MUTUALLY AGREE AS TO HOW MUCH OF THE 12 ITA NO.836 AND 1276/DEL/2005 PAYMENT IS TO BE MADE AT ANY GIVEN POINT OF TIME. THUS, BY NOT MAKING FULL PAYMENT EVEN WHEN SUFFICIENT BALANCE WAS AVAILABLE IN THE BANK CANNOT BE VIEWED ADVERSELY. I AM FURTHER OF THE CONSIDERED OPINION T HAT FURNISHING OF THE DETAILS OF SHAREHOLDERS, DETAILS OF DIRECTORS AND OTHER PERSON ALIZED DETAILS OF PTE LTD., A THIRD PARTY, WAS NOT WITHIN THE DOMAIN OF THE APPELLANT A ND IF THE OTHER PARTY, WAS NOT WITHIN THE DOMAIN OF THE APPELLANT AND IF THE OTHER PARTY REFUSED TO DIVULGE ITS INFORMATION OF PRIVILEGED NATURE, NO FAULT CAN LIE WITH THE APPELLANT FOR NOT FURNISHING SUCH DETAILS. 5.1.14 IN VIEW OF THE ABOVE I AM OF THE CONSIDERED OPINION THAT THE APPELLANT HAS SUCCEEDED IN DISCHARGING HIS ONUS OF PROVING THE GENUINENESS OF THE COMMISSION PAID AS WELL AS THE FACT OF RENDERING SE RVICES BY THE PTE LTD. ACCORDINGLY, I FIND NO JUSTIFICATION IN THE DISALLO WANCE, WHICH AO IS DIRECTED TO DELETE. IN RESULT, THE APPELLANT GETS A RELIEF OF R S.34,27,666/- 29. THE LD. DR COULD NOT REBUT ANY OF THE AFORESAID FINDINGS RECORDED BY THE LD. CIT(A). IMPUGNED DISALLOWANCE OF COMMISSION MADE BY THE AO HAS BEEN DELETED BY THE LD. CIT(A) FOR THE DETAILED REASONS GIVEN IN HIS AP PELLATE ORDER. THE ASSESSEE HAD FILED CONFIRMATIONS FROM COMMISSION PAYEES, BANK CERTIFIC ATES, DETAILS OF ORDERS OBTAINED AND DETAILS OF SERVICES RENDERED BY COMMISSION PAYEES. THE LD. CIT(A) HAD FORWARDED ALL THESE PIECE OF EVIDENCE TO THE AO FOR EXAMINATION, VERIFICATION AND SUBMISSION OF REMAND REPORT. IT IS THUS CLEAR THAT THE LD. CIT(A) HAD GI VEN OPPORTUNITY TO THE AO TO EXAMINE THEM AND SUBMIT HIS REMAND REPORT ACCORDINGLY. THE AO VERIFIED THE EVIDENCE SO FORWARDED BY THE LD. CIT(A) AND SUBMITTED HIS REMAN D REPORT BEFORE THE LD. CIT(A) WHICH WAS DULY CONSIDERED BY THE LD. CIT(A). THE LD. CIT( A) HAS GIVEN COGENT REASONS FOR DELETING THE IMPUGNED DISALLOWANCE. WE ARE IN AGREE MENT WITH THE SAME. HIS ORDER IN THIS BEHALF IS THEREFORE CONFIRMED. 30. WE SHALL NOW TAKE UP GROUND NOS. 2 AND 3 TAKEN BY THE ASSESSEE IN ITS APPEAL. THE LD. CIT(A) HAS CONFIRMED THE IMPUGNED DISALLOWA NCE FOR THE REASONS GIVEN IN HIS APPELLATE ORDER. THE ORDER OF THE LD. CIT(A) IS QUI TE REASONABLE ON THE FACTS OF THE CASE 13 ITA NO.836 AND 1276/DEL/2005 AND THEREFORE DOES NOT REQUIRE ANY INTERFERENCE. GR OUND NOS. 2 AND 3 TAKEN BY THE ASSESSEE ARE DISMISSED. 31. IN VIEW OF THE FOREGOING, APPEAL FILED BY THE A SSESSEE IS PARTLY ALLOWED WHILE THE APPEAL FILED BY THE REVENUE IS DISMISSED. SD/- SD/- (R.P. TOLANI) (D. K. SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 30/07/2014 ORDER PRONOUNCED ON 30.07.2014 SD/- SD/- (I C SUDHIR) (D. K. SRI VASTAVA) JUDICIAL MEMBER ACCOUNTANT MEMBER *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR