Sterling Abrasives Ltd, Ahmedabad V. The Income tax Officer, Ward-8(1), Ahmedabad

ITA 867/AHD/2004

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1815 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-08-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 17-03-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Opportunity of being heard; Bad and doubtful debts; Liquidation
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI N.S. SAINI, A.M.) I.T.A. NO. 867/AHD./2004 ASSESSMENT YEAR : 2000-2001 STERLING ABRASIVES LTD., AHMEDABAD -VS.- INCOM E TAX OFFICER, WARD-8(1), AHMEDABAD (P.A. NO. AACCS 1266 P) (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI S.N. SOPARKAR RESPONDENT BY : SHRI GOVIND SINGHAL O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER :- THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) -XIV, AHMEDABAD DATED 18-12- 2003 FOR THE ASSESSMENT YEAR 2000-2001. VARIOUS GRO UNDS RAISED IN THIS APPEAL ARE AS UNDER: 1. YOUR APPELLANT MOST RESPECTFULLY SUBMITS THAT O N FACTS AND CIRCUMSTANCES OF CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN REJECTING THE CLAIM OF DEDUCTION OF RS.29,54,788/- BEING THE AMOU NT WRITTEN OFF AS IRRECOVERABLE AND CLAIMED AS BAD DEBTS. 2. YOUR APPELLANT FURTHER SUBMITS THAT IF THE SAID CLAIM WHOLLY OR PARTLY NOT ALLOWABLE AS BAD DEBTS, IT OUGHT TO HAVE BEEN ALLOW ED UNDER THE PROVISION OF SECTION 28(1) AS AN EXPENDITURE/ LOSS INCIDENTAL TO BUSINES S. 3. YOUR APPELLANT FURTHER SUBMITS THAT LEARNED COM MISSIONER OF INCOME TAX(APPEALS) HAS FURTHER ERRED IN SUMMARILY REJECTI NG THE CLAIM OF DEDUCTION OF RS.50,000/- U/S. 35(I)(II) OF THE ACT PAID TO THE S PASTICS SOCIETY OF TAMILNADU WITHOUT APPRECIATING THE FACT THAT NOTIFICATION NO. 1146(E) DT. 18.11.99 WAS ISSUED BY THE GOVT. OF INDIA, MINISTRY OF FINANCE (DEPARTMENT OF REVENU E) EXTENDING THE PERIOD FOR FURTHER 3 YEARS BEGINNING FROM A.Y. 2000-01 SPECIFYING THE SCHEMES OR PROJECT OR EQUIPMENTS FURNISHING AND RUNNING OF SPECIAL EDUCATION CENTERS FOR SPECIFIC CHILDREN AT URBAN CENTERS, AND WHICH WAS PLACED BEFORE HON'BLE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) FOR HIS KIND CONSIDERATION. STILL HOWE VER, LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS REJECTED THE SAID CLAIM OF DEDUCTION ONLY ON THE GROUND THAT THIS NOTIFICATION NO. 1146(E) DT. 18.11.99 WAS NOT BEFORE LEARNED ASSESSING OFFICER WHEN HE PASSED AN ASSESSMENT ORDER U/S. 143(3) OF T HE ACT DATED 26.03.2001. 2 2. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN GROUNDS NO. 1 & 2 OF THIS APPEAL ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS O F MANUFACTURING AND MARKETING OF BONDED ABRASIVES. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.40,53,710/- ALONGWITH AUDITORS REPORT IN FORM NOS. 3CA, 3CD UNDER SECTION 44AB OF THE INCOME TAX ACT, 1961 ALONGWITH TRADING ACCOU NT, PROFIT & LOSS ACCOUNT AND BALANCE- SHEET. ON VERIFICATION OF THE RETURN OF INCOME AND THE DETAILS FILED, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS WRITTEN OFF AN IRRECOVERABLE DEBT AMOUNTING TO RS.29,54,788/- OF M/S. VIRAL LAMINATES LTD. WITH REGARD TO THIS DEBT, BEFORE TH E A.O. IT WAS SUBMITTED THAT THE HON'BLE GUJARAT HIGH COURT VIDE ORDER DATED 19.11.1999 ORDE RED THE COMPANY M/S. VIRAL LAMINATES LTD. FOR WINDING UP. THEREFORE, THIS AMOUNT DUE FROM COM PANY M/S. VIRAL LAMINATES LTD. IS WRITTEN OFF. IN THE ASSESSMENT ORDER, THE A.O. HAS NOT ACC EPTED THIS CLAIM OF BAD DEBTS UNDER SECTION 36(I)(VII) OF THE INCOME TAX ACT, 1961 FOR THE FOLL OWING REASONS :- (I) INSPITE OF SPECIFIC REQUISITION OF INFORMATION, RELATING TO THE MACHINERIES SUPPLIED TO VIRAL LAMINATES THE ASSESSEE FAILED TO FURNISH THE SAME. (II)THE ASSESSEE HAS FAILED TO FURNISH OR PRODUCE A NY PROOF OF DETAILS REGARDING CORRESPONDENCE MADE WITH VIRAL LAMINATES LTD., FOR RECOVERY OF DEBTS. (III) THE DIRECTORS OF BOTH COMPANIES ARE SAME, HEN CE, IT WAS CLEARLY KNOWN TO THE ASSESSEE ABOUT THE FINANCIAL POSITION OF VIRAL LAMINATES, FROM WHOM SUCH A HUGE AMOUNT WAS TO BE RECOVERED. THIS C OULD BE ACCOUNTABLE DEVICE TO REDUCE THE TAX BURDEN OF THE ASSESSEE-COM PANY. (IV) IT IS VERY CLEAR FROM THE ORDER OF HON'BLE HIG H COURT DATED 19.11.1999 THE LIQUIDATOR ATTACHED TO THE HIGH COURT WILL PROC EED TO DO THE INVENTORY, VALUATION, ETC. AND THE LIQUIDATION PROCEEDINGS ARE PENDING. (V) ON VERIFICATION OF THE LAST RETURN OF INCOME, F ILED BY VIRAL LAMINATES FOR A.Y. 1995-96 IN CIRCLE-8, ON 28.11.1995, IT IS NOTI CED THAT THE ASSETS 3 INCLUDING PLANT AND MACHINERY AMOUNTING TO RS.1,45, 71,626/- ARE ALREADY IN POSSESSION OF VIRAL LAMINATES. FINALLY, ASSESSING OFFICER HELD THAT CLAIM OF ASSES SEE THAT AMOUNT IS NOT RECOVERABLE IS NOT ACCEPTED IN VIEW OF FACT THAT LI QUIDATION PROCEEDINGS IS PENDING THEREFORE, CHANCE OF RECOVERABILITY IS NOT RULED OUT. NO DETAILS HAS BEEN FURNISHED THAT ASS HAS WRITTEN OFF THE SAID AM OUNT. IT HAS BEEN REFLECTED IN THE DIRECTORS REPORT AND REDUCED FROM THE PROFIT AS AN EXTRA ORDINARY ITEM. 3. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) ASKED THE ASSESSEE TO GIVE THE POSITION OF COMMON DIRECTOR AND THEIR FAMI LY MEMBERS. AFTER VERIFYING THE SAME, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) NOTED T HAT SHRI NITIN S. PARIKH, ONE OF THE COMMON DIRECTORS, HAS 66.18% HOLDING ALONGWITH HIS FAMILY MEMBERS IN M/S. VIRAL LAMINATES LTD. SHRI NITIN S. PARIKH AND HIS FAMILY HAS SUBST ANTIAL INTEREST IN M/S. VIRAL LAMINATES LTD. BECAUSE HE HAS CONTROLLING SHARE IN THAT COMPANY. W ITH THIS OBSERVATION, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) UPH ELD THE ACTION OF A.O. FOR THE DETAILED REASONS GIVEN IN PARA 4.2, WHICH ARE AS UNDER :- 4.2. I HAVE GONE THROUGH THE OBSERVATION MADE BY T HE ASSESSING OFFICER AND THE SUBMISSION MADE BY THE COUNSEL OF APPELLANT . IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE APPELLANT HAS ALTOGETHER FAILED TO GIVE THE DETAILS OF THE MACHINERY WHICH WAS ASKED BY THE ASSESSING OFFI CER FROM THE APPELLANT. WHEREAS THE SAME COULD HAVE BEEN FURNISHED AS MR. N .S. PARIKH IS HAVING SUBSTANTIAL INTEREST IN VIRAL LAMINATES LTD. STILL THE APPELLANT PREFERRED NOT TO FILE THE SAME AND THE ASSESSING OFFICER HAS RIGHTLY DRAWN ADVERSE INFERENCE. I ALSO AGREE WITH THE OBSERVATION MADE BY THE ASSESSI NG OFFICER THAT THE INTENTION OF APPELLANT IS ENTIRELY TO REDUCE TAX LI ABILITY BY ENTERING INTO THIS ARRANGEMENTS OF SHAM NATURE. IT IS A MATTER OF COMM ON SENSE THAT WHEN THE MACHINERY OF SUCH A HUGE AMOUNT IS SOLD THE DETAILS THEREOF WILL NATURALLY BE ASKED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE INSTANT CASE, IT WAS ALSO NECESSARY BECAUSE BOTH THE COMPANIES ARE HAVING COMMON DIRECTORS AND THERE WAS MALAFIDE INTE NTION BEHIND THIS ARRANGEMENT OF CREATING SHAM TRANSACTION TO AVOID T HE TAX LIABILITY OF THE APPELLANT COMPANY. WHEN MR. N.S. PARIKH, ONE OF THE DIRECTORS, AND ITS FAMILY MEMBERS ARE HAVING SUBSTANTIAL INTEREST IN THE SHAR E HOLDING OF VIRAL LAMINATES LTD., IT CANNOT BE THE CASE THAT THE APPE LLANT COMPANY WILL TRANSFER MACHINERIES WITHOUT BOTHERING THE ASPECT OF GETTING THE SALE PROCEEDS FROM VIRAL LAMINATES LTD. THE ACTUAL POSITION OF VIRAL L AMINATES LTD. WAS FULLY KNOWN TO MR. N.S. PARIKH, THEREFORE, THE TOTAL ARRA NGEMENT OF CREATING THIS TRANSFER BY SELLING MACHINERY AND NOT FURNISHING TH E DETAILS AND THE SUBSEQUENT WRITE OFF OUT OF ITS ACCOUNTS IS JUST TO DUPE THE REVENUE WHICH 4 CANNOT BE ACCEPTED AND I, THEREFORE, AGREE WITH THE OBSERVATION MADE BY THE ASSESSING OFFICER AND ACCORDINGLY THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS CONFIRMED. 4. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER O F INCOME TAX(APPEALS), THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING ON BEHALF OF THE ASSESSEE SHRI S.N. SOPARKAR APPEARED AND CONTENDED THAT THE ASSESSEE-COMPANY HAD GIVEN MACHI NERY ON RENTAL/ LEASE IN THE YEAR 1993-94 ON 05.11.1993 AT A MONTHLY LEASE RENTAL OF RS.40,00 0/-. THIS LEASE RENT FOR THE PERIOD ENDED ON 31.03.1994 WAS FULLY REALIZED IN THE FINANCIAL YEAR 1994-95. THE SAID MACHINERY WAS CONTINUED ON LEASE WITH M/S. VIRAL LAMINATES LTD. TILL OCTOBE R, 1995 AND THE SAME WAS SOLD ON 31.10.1995 FOR A CONSOLIDATED PRICE OF RS.21,98,212/-. THE DET AILS OF THE SAME WERE VERY MUCH BEFORE THE ASSESSING OFFICER WHILE MAKING ASSESSMENT FOR THE A SSESSMENT RELEVANT TO THE ASSESSMENT YEAR 1996-97. THE LD. COUNSEL OF THE ASSESSEE FURTHER SU BMITTED THAT IN BOTH, I.E. ASSESSEE-COMPANY AND DEBTOR COMPANY, THERE ARE OTHER OUTSIDERS AS DI RECTORS, WHO ARE NOT RELATED WITH N.S. PARIKH GROUP SO ALSO THERE ARE OTHER OUTSIDERS AS SHAREHOL DERS IN BOTH THE COMPANIES. BOTH THE DEPARTMENTAL AUTHORITIES BELOW HAVE NOT DISCHARGED THEIR ONUS WHEN IT IS ALLEGED BY THEM THAT SALE OF MACHINERY BY THE ASSESSEE-COMPANY TO THE DE BTOR COMPANY WAS A SHAM TRANSACTION. IT WAS SUBMITTED THAT LEARNED COMMISSIONER OF INCOME T AX(APPEALS) HAS NOT CONSIDERED THE FACTUAL POSITION AS REGARD HUGE FUNDS OF N.S. PARIK H AND HIS FAMILY MEMBERS WERE ALSO LOST WHEN M/S. VIRAL LAMINATES LTD. WHICH ORDERED TO BE WOUND UP BY THE HON'BLE GUJRAT HIGH COURT. THE LD. COUNSEL OF THE ASSESSEE FURTHER EXPLAINED THAT THE AMOUNT OF RS.29,54,788/- WRITTEN OFF AS IRRECOVERABLE WAS COMPRISED OF LEASE RENT OF MACHIN ERY TO THE TUNE OF RS.7,56,576/- AND BALANCE OF RS.21,98,212/- IN RESPECT OF SALE OF MACHINERY. THE FINANCIAL POSITION OF M/S. VIRAL LAMINATES LTD. ON THE DATE OF GIVING MACHINERY ON HIRE AND SU BSEQUENT SALE WAS QUITE SOUND TO SAY AND STATE THAT AS PER AUDITED ACCOUNT AS PER BALANCE-SHEET AS ON 31.03.1994, 31.03.1995 OVER AND ABOVE PAID UP SHARE CAPITAL OF RS.24,50 LACS, THERE WAS B ALANCE IN GENERAL RESERVE A/C. OF RS.76.95 LACS AND RS.67.37 LACS AS ON 31.03.1994 AND 31.03.1 995 RESPECTIVELY AND GENERAL RESERVE AS ON 31.03.1996 WAS RS.11.93 LACS. THE LD. COUNSEL OF TH E ASSESSEE SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS REJECTED ON DOUBT AND SUSPICION. THERE FORE, THE A.O. BE DIRECTED TO ALLOW THE SAME AS BAD DEBT UNDER SECTION 36(I)(VII) OF THE INCOME TAX ACT. ALTERNATIVELY THE LD. COUNSEL OF THE 5 ASSESSEE SUBMITTED THAT IF THE SAID CLAIM CANNOT BE ALLOWED WHOLLY AND PARTIALLY AS BAD DEBT, THE A.O. BE DIRECTED TO ALLOW THE SAME AS EXPENDITURE/ LOSS INCIDENTAL TO BUSINESS. 6. ON THE OTHER HAND, SHRI GOVIND SINGHAL APPEARED FOR THE REVENUE CONTENDING THAT BEFORE ASSESSING OFFICER, THE ASSESSEE HAS NOT FURNISHED T HE LEASE DEED THROUGH WHICH THE MACHINERY/ASSETS IN QUESTION WERE LEASED OUT TO COM PANY M/S.VIRAL LAMINATES LTD. ON 5.11.1993. IN THE ASSESSMENT ORDER, ASSESSING OFFIC ER HAS MENTIONED THAT THE AMOUNT CLAIMED AS BAD DEBT IS NOT WRITTEN OFF IN THE BOOKS OF ACCOUN T. IT IS REFLECTED IN THE DIRECTORS REPORT AND REDUCED FROM THE PROFIT AS AN EXTRAORDINARY ITEM. N O DETAILS OF MACHINERY WHICH WAS LEASED OUT, TERMS OF LEASE ETC. WERE FURNISHED. EITHER BEFORE T HE ASSESSING OFFICER OR BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). HE FURTHER POI NTED OUT THAT SPECIFIC REQUISITION OF INFORMATION RELATING TO THE MACHINERIES SUPPLIED TO VIRAL LAMINATES LTD, THE ASSESSEE HAS NOT FURNISHED THE DETAILS INCLUDING THE LEASE DEED THRO UGH WHICH THESE WERE GIVEN ON RENT TO M/S. VIRAL LAMINATES LTD. NO CORRESPONDENCE REGARDING RE COVERY OF LEASE RENT WITH VIRAL LAMINATES LTD. WAS MADE. HE POINTED OUT THAT FINANCIAL POSITI ON OF M/S. VIRAL LAMINATES LTD. WAS KNOWN TO DIRECTOR SHRI NITIN S. PARIKH (WHO IS DIRECTOR IN B OTH THE COMPANIES), THEREFORE, THERE WAS MALAFIDE INTENTION BEHIND THIS ARRANGEMENT OF CREAT ING SHAM TRANSACTION TO AVOID TAX LIABILITY OF THE ASSESSEE-COMPANY. IT WAS CLEARLY KNOWN TO THE A SSESSEE ABOUT THE FINANCIAL POSITION OF M/S. VIRAL LAMINATES LTD., FROM WHOM SUCH A HUGE AMOUNT WAS TO BE RECOVERED. HE ALSO POINTED OUT THAT M/S. VIRAL LAMINATES LTD. WAS NOT IN A POSITIO N TO PAY THE LEASE RENT OF THE MACHINERY REGULARLY. APART FROM THIS, HE POINTED OUT THAT THE MACHINERY IN QUESTION WAS SOLD IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 1996-97. THE S ALE PRICE OF THE MACHINERY WAS REDUCED FROM THE BLOCK OF ASSETS THEREFORE, THE ENTIRE AMOUNT CA NNOT BE CLAIMED AS BAD DEBTS BECAUSE OUT OF RS.29,54,788/-, RS.21,98,213/- WAS SALE CONSIDERATI ON OF THE MACHINERY. UNDER SECTION 36(1)(VII), A DEBT OWING TO THE ASSESSEE CAN BE ALL OWED ONLY IF IT HAS BEEN TAXED IN THE EARLIER YEARS AND IT HAS AROSE IN THE COURSE OF BUSINESS OF ASSESSEE. IT IS NOT KNOWN WHETHER ASSESSEE IS IN THE BUSINESS OF LEASING. AS PER ASSESSEE, ONLY LEAS E RENT AMOUNT TO RS.7,56,575/- WAS TAXED IN THE EARLIER YEARS THEREFORE, UNDER SECTION 37(1)(VII) A T THE MOST THIS AMOUNT CAN BE CLAIMED. 7. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE COURSE OF THE HEARING, WE HAVE AS KED THE ASSESSEE TO FURNISH THE LEASE DEED 6 THROUGH WHICH MACHINERY/ASSETS IN QUESTION WERE LEA SED OUT TO M/S.VIRAL LAMINATES LTD.. NO LEASE IS FURNISHED BEFORE US. BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS NOT FURNISHED A COMPLETE DETAILS. THE DETAILS NOW FURNISHED BEFORE US INDICATES THAT AMOUNT OF RS.29,54,788/- INCLUDE RS.21,98,213/- SALE CONSIDERATION OF MACHIN ERY. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DETAILS OF ASSETS AND LIABI LITY OF THE COMPANY OF THE YEAR IN WHICH ASSESSEE SOLD THE MACHINERY TO M/S.VIRAL LAMINATES LTD.. WHE THER THE ASSESSEE HAS ENTERED INTO THIS LEASE TRANSACTION AS A DEVICE TO REDUCE THE TAX BURDEN CA NNOT BE DECIDED UNLESS COMPLETE DETAILS ARE FURNISHED. BEFORE THE ASSESSING OFFICER, NO COMPLET E DETAILS OF THE MACHINERY LEASED OUT WERE FURNISHED. WE THEREFORE, RESTORE THE ISSUE TO THE F ILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT BEFORE THE ASSESSING OFFICER, THE ASSESSEE SHO ULD FURNISH LEASE DEED THROUGH WHICH THE MACHINERY/ASSETS IN QUESTION WERE LEASED OUT, BALAN CE SHEET OF THE M/S.VIRAL LAMINATES LTD. OF FINANCIAL YEAR 1996-97 BECAUSE OF 31.10.1995, ASSES SEE SOLD THE MACHINERY LEASED TO M/S.VIRAL LAMINATES LTD. FOR THE CONSOLIDATED PRICE OF RS.21, 98,212/- COMPLETE DETAILS OF MACHINERY LEASED OUT, WHEN PURCHASE, ITS PRICE ETC. THE ASSESSING OF FICER MAY VERIFY WHETHER M/S.VIRAL LAMINATES LTD. HAS RECORDED THE PURCHASE OF SOLD MACHINERY IN THE BOOKS OF ACCOUNT FOR FY 1995-96. IN OUR OPINION, ASSESSEE CANNOT REFUSE TO FURNISH THE BALA NCE SHEET OF M/S.VIRAL LAMINATES LTD. FOR FINANCIAL YEAR 1995-96 BECAUSE IT HAS NOT FURNISHED THE LEASED DEED THROUGH WHICH THE MACHINERY WAS LEASED TO M/S.VIRAL LAMINATES LTD.. AFTER EXAMI NING ALL THE DETAILS, THE ASSESSING OFFICER WILL REJECT THE DISALLOWANCE OF RS.29,54,788/- AFR ESH IN ACCORDANCE WITH THE LAW AFTER GIVING OPPORTUNITY OF BEING HEARD TO BOTH THE PARTIES. 9. WITH REGARD TO THE GROUND NO. 3, THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT NOTIFICATION DATED 18.11.1999 ISSUED BY THE GOVERNM ENT OF INDIA, MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) EXTENDED THE PERIOD FOR FUR THER THREE YEARS BEGINNING WITH ASSESSMENT YEAR 2000-01 WAS NOT AVAILABLE WHEN A.O. FRAMED THE ASSESSMENT. THIS WAS PROCURED AND FILED BEFORE THE A.O. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ON THE FACTS AND CIRCUMSTANCES OF THE CASE OUGHT TO HAVE ADMITTED TH IS EVIDENCE OR ALTERNATIVELY RESTORED THE MATTER TO THE FILE OF A.O. WITH A DIRECTION THAT A. O. MAY EXAMINE THE SAME AND ALLOW THE CLAIM OF DEDUCTION OF THE ASSESSEE OF RS.50,000/- UNDER SECT ION 35(I)(II) OF THE INCOME TAX ACT, 1961. 10. THE LD. D.R. POINTED OUT THAT DEPENDING ON THIS NOTIFICATION DATED 18.11.1999, THE A.O. FRAMED THE ASSESSMENT ON 20.03.2004. HE POINTED OUT THAT NO SATISFACTORY REASON WAS GIVEN 7 BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEA LS) FOR NOT FILING THE SAME BEFORE THE A.O.. THEREFORE, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) RIGHTLY REFUSED TO ADMIT THE SAME. 11. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL SUBMISSIONS MADE BEFORE US. WE HAVE ALSO GONE THROUGH THE NOTIFICATION DATED 18.11 .1999 ISSUED BY THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE (DEPARTMENT OF REVENUE). IN VIE W OF THIS, IN OUR OPINION, IT WILL MEET THE END OF JUSTICE IF THIS MATTER IS RESTORED TO THE FI LE OF A.O. WITH THE DIRECTION THAT A.O. MAY EXAMINE THE NOTIFICATION AND CONSIDER THE CLAIM OF DEDUCTION UNDER SECTION 35(I)(II) OF THE ACT IN ACCORDANCE WITH LAW. THIS GROUND OF APPEAL IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, FOR STATISTICAL PURPOSE THE APPE AL OF THE ASSESSEE IS PARTLY ALLOWED AS INDICATED ABOVE. THE ORDER WAS PRONOUNCED IN THE COURT ON 18. 12. 2009 SD/- SD/- (N.S. SAINI) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :18/12/2009 COPY OF THE ORDER IS FORWARDED TO : 1) M/S. STERLING ABRASIVES LTD., 45/46, GIDC, ODHAV, A HMEDABAD, (2) ITO, WARD-8(1), AHMEDABAD 3) CIT(A)-XIV, AHMEDABAD (4) CIT-XIV, AHMEDABAD. (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER LAHA/SR.P.S. DEPUTY REGISTRAR, ITAT, AHMEDA BAD