M/s. Subhash Chemical Industries, Pune V. Asst. CIT, Circle-8, Pune

ITA 882/PUN/2013

• Counselvise Citation: 88224514 RSA 2013
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: PRAYAG JHA AW SHRI PRATIK J HA
• Keywords: Rejection of books of accounts; Depreciation; Opportunity of being heard; Corroborative evidences; Benefit of exemption

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1071/PN/2013 (ASSESSMENT YEAR : 2009-10) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-8, PUNE .. APPELLANT V/S M/S. SUBHASH CHEMICAL WING-2, S BLOCK, MIDC BHOSARI PUNE 411 026 .... RESPONDENT PERMANENT ACCOUNT NUMBER AABFS0275Q ITA NO. 882/PN/2013 (ASSESSMENT YEAR : 2009-10) M/S. SUBHASH CHEMICAL WING-2, S BLOCK, MIDC BHOSARI PUNE 411 026 .. APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-8, PUNE .... RESPONDENT PERMANENT ACCOUNT NUMBER AABFS0275Q ASSESSEE BY : SHRI PRAYAG JHA A/W SHRI PRATIK J HA REVENUE BY : SHRI B.C. MALAKAR DATE OF HEARING : 02.12.2014 DATE OF PRONOUNCEMENT : 18.12.2014 O R D E R PER R.K. PANDA, A.M. THESE ARE THE CROSS APPEALS. THE FIRST ONE IS FILE D BY THE REVENUE AND THE SECOND ONE IS FILED BY THE ASSESSEE AND ARE DIR ECTED AGAINST THE ORDER DATED 15 TH FEBRUARY 2013, OF THE LD. CIT(A)-V, PUNE, RELATING TO THE A.Y. 2009-10. FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2 M/S. SUBHASH CHEMICAL GROUND OF APPEAL NO.1 TAKEN BY THE REVENUE READS A S UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETIN G THE ADDITION MADE OF RS.45,57,854 BY THE A.O. ON ACCOUNT OF FALL IN GROSS PROFIT BY REJECTING THE BOOKS RESULTS OF THE ASSESS EE WHEN SEVERAL DISCREPANCIES WERE NOTICED BY THE A.O. LEADING TO R EJECTION OF BOOK RESULTS FOR WHICH NO SATISFACTORY EXPLANATION IS SEEN TO HAVE BEEN OFFERED BY THE ASSESSEE? 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF COSMETI C INGREDIENTS, SPECIALTY CHEMICALS, ESTER, ETC. IT FILED ITS RETURN OF INCOM E ON 26 TH SEPTEMBER 2009, DECLARING TOTAL INCOME OF RS.88,54,710. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE RE IS A FALL IN GROSS PROFIT RATIO AS COMPARED TO THE PRECEDING YEARS. FROM THE DETAILS FURNISHED BY THE ASSESSEE, HE NOTICED THE FALL IN GROSS PROFIT WHICH IS AS UNDER:- A.Y. TURNOVER +/- CHANGE IN STOCK (RS.) GROSS PROFIT (RS) % OF GROSS PROFIT 2005-06 2,99,71,499 94,41,022 31.50 2006-07 4,63,17,290 1,38,70,917 29.95 2007-08 6,24,76,159 1,81,52,735 29.06 2008-09 7,82,08,401 2,02,28,199 25.86 2009-10 12,68,97,740 2,84,35,558 22.41 3. ON BEING QUESTIONED BY THE ASSESSING OFFICER, THE A SSESSEE JUSTIFIED THE DROP IN GROSS PROFIT BY GIVING THE FOLLOWING REASON S:- I) SUBSTANTIAL INCREASE IN INPUT COST WITH NO MATCHING IN THE SALE PRICE. II) IN RESPECT OF IMPORTED RAW MATERIAL, BESIDES THE IN CREASE IN BASIC RATE THERE WERE LOSSES ON ACCOUNT OF CURRENCY DIFFERENCES. III) THE SALE PRICE OF MANY A NUMBER OF FINISHED PRODUCT S REMAINED STAGNANT THROUGHOUT THE YEAR. 3 M/S. SUBHASH CHEMICAL IV) CONTINUOUS INCREASE IN THE COST OF CERTAIN RAW MATE RIALS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER ANALYSED THE VARIOUS DETAILS FURNISHED BY THE ASSES SEE AND NOTED THAT IN THE BOOKS OF ACCOUNT CONSUMPTION OF FURNACE OIL WAS SHO WN IN MARCH 2009 ONLY FOR 1,90,913 KGS. ON BEING QUESTIONED BY THE ASSESS ING OFFICER THE ASSESSEE ACCEPTED THE MISTAKE IN RECORDING THE CONSUMPTION O F FURNACE OIL AND SUBMITTED THAT BY MISTAKE THE ACCOUNTANT HAS MADE E NTRY IN RECORDING OF CONSUMPTION OF FURNACE OIL ONLY IN THE MONTH OF MAR CH 2009 WHICH PERTAINS TO THE ENTIRE YEAR. IT WAS CLARIFIED THAT BIN CARDS HA VE BEEN MAINTAINED FOR RECORDING MOVEMENT OF STOCK ON DAY-TO-DAY BASIS. TH E ASSESSING OFFICER SIMILARLY NOTED THAT THERE IS DISCREPANCY IN THE CO NSUMPTION OF MYRISTIC ACID AMOUNTING TO 11735 KGS. ON BEING CONFRONTED, THE AS SESSEE RECONCILIED THE FIGURE AND SUBMITTED THAT LOSS OF 1099 KGS IS THE F INAL DIFFERENCE WHICH IS JUST 0.24% WHICH SHOULD BE CONSIDERED NEGLIGIBLE. THE AS SESSING OFFICER SIMILARLY NOTED THAT THE ASSESSEE HAS VALUED MAYASOL AT RS.52 5 PER KG., WHEREAS LAST SALE BILL FOR THE SAID MATERIAL WAS ONLY RS.210. TH US THE ASSESSEE, ACCORDING TO THE ASSESSING OFFICER, HAS INFLATED CLOSING STOC K OF THE ABOVE MATERIAL. THE ASSESSING OFFICER FURTHER OBSERVED THAT CLOSING STO CK OF TWO ITEMS NAMELY ISO PROPYL MYRISTATE (12,129 KGS.) AND CAPRYLIC CAPRIC TRIGLYCERIDE (2,032 KGS.) DID NOT FIGURE IN THE INVENTORY AT ALL. THE VALUE O F SUCH SHORTAGE WAS CALCULATED BY THE ASSESSING OFFICER AT RS.20,74,295 . HE, THEREFORE, REJECTED THE BOOK RESULTS AND RESORTED TO THE PROVISIONS OF SECTION 145(3) OF THE ACT ON THE GROUND THAT THE BOOK RESULTS DID NOT REFLECT THE CORRECT STATE OF AFFAIRS. THEREFORE, THE REASONS GIVEN BY THE ASSESSEE FOR TH E FALL IN GROSS PROFIT RATIO IS NOT ACCEPTABLE. HE NOTICED THAT THE GROSS PROFIT OF RS.2,84,35,558, ON THE TURNOVER OF RS.12,68,97,740, COMES TO 22.41% WHICH IS LOWER THAN THE GROSS PROFIT RATE OF 25.86% DECLARED IN THE IMMEDIATELY P RECEDING ASSESSMENT YEAR AND 29% SHOWN 2 YEARS EARLIER. HE, THEREFORE, ADOPT ED THE GROSS PROFIT RATE 4 M/S. SUBHASH CHEMICAL OF 26% AND MADE ADDITION OF RS.45,57,854, TO THE TO TAL INCOME OF THE ASSESSEE. 5. BEFORE THE LD. CIT(A) THE ASSESSEE MADE ELABORATE S UBMISSIONS GIVING POINTWISE REPLY TO THE DISCREPANCIES NOTICED BY THE ASSESSING OFFICER. VARIOUS DECISIONS WERE ALSO RELIED UPON TO THE PROPOSITION THAT THE BOOK RESULTS COULD NOT HAVE BEEN REJECTED UNDER THE FACTS AND CIRCUMST ANCES OF THE CASE. 6. BASED ON THE ARGUMENT ADVANCED BY THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER:- 13. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AS WELL AS REPLY OF THE APPELLANT. IN THIS CASE, IT IS SEEN THAT BOO KS OF ACCOUNT OF THE APPELLANT HAS BEEN REJECTED BY THE ASSESSING OFFICE R ON ACCOUNT OF FOLLOWING POINTS. (I) FALL IN GROSS PROFIT PERCENTAGE (II) VALUATION OF FINISHED GOODS INVENTORY. (III) CONSUMPTION OF FURNACE OIL. (IV) OMISSION OF IPM AND CCTG FROM INVENTORY. (V) MAINTENANCE OF STOCK REGISTER. (VI) CONSUMPTION OF MYRISTATE ACID. THE SAME ARE DISCUSSED AS UNDER: (I) FALL IN GROSS PROFIT PERCENTAGE : IN THIS REGARD, THE ASSESSING OFFICER HAS REPRODUCE D A COMPARATIVE CHART FROM A.Y. 2005-06 TO 2009-10 WHIC H WAS PROVIDED BY THE APPELLANT AND AFTER PERUSAL OF THE CHART HE NOTICED THAT G.P. % IN A.Y. 2009-10 HAS FALLEN TO 22.41% COMPARED TO 31 .50% IN A.Y. 2005-06. ON BEING CONFRONTED ON THE ISSUE, THE APPE LLANT GAVE FOLLOWING REASONS FOR FALL IN GROSS PROFIT. (A) SUBSTANTIAL INCREASE IN INPUT COST WITHOUT THE RE BEING MACHINERY INCREASE IN SALE PRICES. (B) CONTINUOUS INCREASE IN COST OF RAW MATERIALS, (C) EXCHANGE LOSS. THE APPELLANT HAS ALSO GIVEN EXAMPLES BY WAY OF QUO TING BILLS REGARDING INPUT COSTS AS WELL AS STAGNANT SALES PRI CES AND LOSS ON ACCOUNT OF FOREIGN EXCHANGE. .AS PER THIS SUBMISSIO N THERE IS RISE IN THE COST OF MYRISTATE ACID BY 21.25%, SEBACIC ACID BY 21.54%, PALMITIC ACID BY 13.77% AND IPA BY 19.26%. THE APPE LLANT BY WAY OF GRAPH HAS EXPLAINED THE INCREASE IN THE VALUE OF US DOLLARS FROM RS.39.88 IN APRIL 2008 TO 50.64 IN MARCH 2009. THIS PROVES BEYOND DOUBT THAT DUE TO EXCHANGE LOSS THERE WAS FALL IN G ROSS PROFIT. IT IS ALSO A KNOWN FACT THAT WITH INCREASE IN TURNOVER, G ROSS PROFIT DECLINES. IN THIS CASE, IT CAN BE SEEN THAT TURNOVER OF THE A PPELLANT HAS INCREASED FROM F 94, 41,022/- IN A.Y. 2005-06 TO RS .2,84,35,558/- IN A.Y. 2009-10. DUE TO THIS INCREASE, FALL IN GROSS P ROFIT WAS QUITE 5 M/S. SUBHASH CHEMICAL NATURAL AND THEREFORE CONSIDERING OVERALL POSITION IT CANNOT BE SAIDTHAT FALL IN GROSS PROFIT IS NOT EXPLAINED. (II) VALUATION OF FINISHED GOODS DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTICED THAT PARTICULAR ITEM OF FINISHED GO ODS KNOWN AS 'MAYSOL' WAS VALUED AT HIGHER PRICE. THE APPELLANT HAD ADOPTED RATE OF RS.S25/- KG FOR THE PURPOSE OF VALUATION OF CLOSING STOCK AS AGAINST LAST SALE PRICE WHICH WAS RS210/- KG. THE ASSESSING OFFICER NOTICED THAT AS A RESULT, CLOSING STOCK VALUATION WAS HIGHER BY RS 2,66,175/-. THE APPELLANT'S REPLY IS THAT THE PRODUCT IN QUESTION, 'MAYSOL' IS AN INTRODUCTORY PRODUCT AND THE MARKET PRICE OF THE SA ME IS YET TO BE STABILISED. THE APPELLANT FURTHER SUBMITTED THAT TH E DIFFERENCE IN VALUATION IS IN FAVOUR OF THE APPELLANT AND IT SHOU LD NOT BE USED AGAINST THE APPELLANT. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE A S WELL AS REPLY OF THE APPELLANT AND I FIND THAT THERE IS SUFFICIENT FORCE IN THE ARGUMENT OF THE APPELLANT THAT THE PRODUCE BEING NEW, SELLING P RICE WAS KEPT LOW TO ATTRACT NEW CUSTOMERS AS INTRODUCTORY OFFER. FURTHER, THE APPELLANT IS ALSO RIGHT WHEN IT ARGUED THAT THIS VALUATION BE ING HIGHER IT CANNOT BE UTILIZED AGAINST THE APPELLANT, I ALSO FIND THE REMARK OF THE ASSESSING OFFICER THAT IN SOME CASES VALUATION MIGH T BE LOWER JUST AS GUESS WORK AND NOTHING ELSE AS NO EVIDENCE IN THIS REGARD IS AVAILABLE ON RECORD. THEREFORE, OBSERVATION OF THE ASSESSING OFFICER BASED UPON HIGHER VALUATION OF 'MAYSOL' IS NOT JUSTIFIED. (III) CONSUMPTION OF FURNACE OIL : THE ASSESSING OFFICER NOTED THE ENTRY I N RESPECT OF CONSUMPTION OF FURNACE OIL WAS NOT RECORD ED PROPERLY AS NO CONSUMPTION OF FURNACE OIL WAS SHOWN TILL MARCH 200 9 AND IT WAS ONLY I THE MONTH OF MARCH 2009 THAT ENTRY REGARDING CONSUM PTION OF 1,90,913 KGS OF FURNACE OIL WAS RECORDED. THE ASSES SING OFFICER CONFRONTED THE APPELLANT ON THE ISSUE AND IT WAS EX PLAINED THAT DUE TO ACCOUNTANT'S MISTAKE, REGULAR ENTRY REGARDING CONSU MPTION OF FURNACE OIL WAS NOT MADE. HOWEVER, THE FACT THAT CONSUMPTIO N OF 1,90,913 KG OF FURNACE OIL REPRESENTS CONSUMPTION FOR THE ENTIR E YEAR CAN BE VERIFIED FROM 'BIN CARD'. THE ASSESSING OFFICER, ON THE BASIS OF THIS DISCREPANCY, NOTED THAT STATUS OF ACCOUNTS MAINTAIN ED BY THE APPELLANT IS NOT PROPER. IN THIS REGARD, IT CANNOT BE DENIED THAT THE APPELLANT SHOULD HAVE RECORDED THE CONSUMPTION OF F URNACE OIL ON REGULAR BASIS BUT AT THE SAME TIME IT MUST BE UNDER STOOD THAT THERE IS DIFFERENCE BETWEEN DISCREPANCY REGARDING ENTRY IN B OOKS OF ACCOUNT AND DISCREPANCY ITSELF. WHILE DISCREPANCY REGARDING ENTRY IS ALSO NOT DESIRABLE, IT DOES NOT PROVE ANYTHING OTHER THAN PU TTING A QUESTION MARK ON THE WAY BOOKS OF ACCOUNTS ARE MAINTAINED BY THE APPELLANT. HOWEVER, SUCH LAPSES PER SE CANNOT BE BASIS FOR REJ ECTING THE BOOKS OF ACCOUNTS. (IV) OMISSION OF IPM & CCTG FROM INVENTORY : IN THIS REGARD, THE APPELLANT'S CLARIFICATION IS PR OPERLY JUSTIFIED. THE ASSESSING OFFICER, IN PARA 7 & 8 OF THE ASSESSM ENT ORDER CAME TO THE CONCLUSION AFTER VERIFYING STOCK STATEMENT THAT STOCK OF ISO PROPYL MYRISTATE AND CAPRYLIC CAPRIC TRIGLYCERIDE VALUED A T RS.16,37,415/- AND RS.4,36,880/- WAS NOT SHOWN IN THE STOCK AND THEREFORE, PROFIT OF RS.20,74,295/- WAS UNDERSTATED. THE APPELLANT IN THIS REGARD HAS CLARIFIED THAT IN CHEMICAL JARGON ISO PROPYL MYRIST ATE IS KNOWN AS IPM AND CAPRYLIC CAPRIC TRIGLYCERIDE IS KNOWN AS CCTG WHICH ARE REFLECTED IN THE STOCK STATEMENT AS IPM AND CCTG. THE APPELLANT ALSO SUBMITTED 6 M/S. SUBHASH CHEMICAL THAT THE LEARNED ASSESSING OFFICER CAME TO THIS CON CLUSION WITHOUT CONFRONTING THE APPELLANT TO CLARIFY IT'S POSITION. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT AND IT IS SEEN THAT THE CONCLUSION IS BAS ED UPON ERRONEOUS FINDING OF THE ASSESSING OFFICER AS BOTH THE ITEMS/ ARE KN OWN UNDER THE HEAD IPM AND CCTG IN THE STOCK. FURTHER, THE APPELLANT IS ALSO RIGHT IN SAYING THAT BEFORE COMING TO SUCH CONCLUSION THE AS SESSING OFFICER WAS SUPPOSED TO GIVE OPPORTUNITY TO THE APPELLANT. THER EFORE, THIS OBSERVATION OF THE ASSESSING OFFICER CANNOT BE MADE BASIS OF REJECTION OF BOOKS OF ACCOUNTS. (V) MAINTENANCE OF STOCK REGISTER & CONSUMPTION OF MVRISTATE ACID THE ASSESSING OFFICER AS DISCUSSED IN PARA 3.3 OF T HE ASSESSMENT ORDER FOUND THAT THERE WAS EXCESS CONSUMPTION OF 'M YRISTATE ACID' TO THE TUNE OF 11,735 KG AND CAME TO THE CONCLUSION TH AT EVERYTHING WAS NOT TRANSPARENT IN RESPECT OF BOOKS OF ACCOUNTS MAI NTAINED BY THE APPELLANT. THE ASSESSING OFFICER, FURTHER CONCLUDED THAT EVEN AFTER RECONCILIATION THERE WAS DISCREPANCY IN THREE TYPE OF SCENARIOS I.E. AS PER AUDIT REPORT, AS PER BIN CARDS AND AS PER SHOW CAUSE NOTICE. THE THREE SCENARIOS MENTIONED BY THE ASSESSING OFFICER AND AS EXPLAINED BY THE APPELLANT ARE REPRODUCED AS UNDER FOR THE SAKE OF CLARITY: CONSUMP -TION AS PER TAR CONSUMPTION AS PER BIN CARD CONSUMPTION AS PER AO OPENING STOCK 566 566 566 * OUR STATEMENT SUBMITTED ON 24 AUG 2011 SHOWS THIS FIGURE AS 448035. CLEARLY A TOTALING MIKE BY THE AO TOTALING MISTAKE BY THE A.O. ADD: OPENING STOCK (REC) 400 400 400 PURCHASE AS PER BOOKS 448035 448035 457550 * 449001 449001 467216 ** ** TOTALING MISTAKE CONSUMPTION 440946 444997 447426 8055 4004 19790 LESS: CLOSING STOCK 875 875 875 7180 3129 18915 LESS: RECOVERED IN PROCESS 2030 2030 2030 5150 1099 16885 LESS: SALE DURING THE YEAR 5150 INCLUDED IN CONSUMPTION 5150 LOSS 0 1099 11735 %AGE TO 'CONSUMPTION 0 0.24% 2.51% FROM THE ABOVE CHART, IT IS SEEN THAT THERE IS DISC REPANCY TO THE EXTENT OF 1099 KG. HOWEVER, IT MUST BE APPRECIATED THAT LO SS OF 1099 KG IS ONLY 0.24% WHICH IS QUITE NEGLIGIBLE AND THEREFORE, IT CANNOT BE SAID THAT THERE IS ANY MAJOR DISCREPANCY WARRANTING REJE CTION OF BOOKS OF ACCOUNTS. 7 M/S. SUBHASH CHEMICAL 14. TO SUM UP, IT IS SEEN THAT ASSESSING OFFICER HA S POINTED CERTAIN DISCREPANCIES IN THE BOOKS OF ACCOUNT, BEFORE COMIN G TO THE CONCLUSION THAT BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT ARE LIABLE TO BE REJECTED U/S. 145(3) OF INCOME-TAX ACT . HOWEVER, AFTER ANALYSIS OF THE ABOVE ISSUES WHICH LED TO SUCH CONCLUSION, IT IS SEEN THAT MOST OF THE ISSUES HAVE BEEN SUITABLY ADDRESSED BY THE APPELLANT AND THE DISCREPANCY OF RS.1099 KG BEING LOSS IN MYR ISTATE ACID BEING JUST 0.24% IS ACCEPTABLE. THE FALL IN GROSS PROFIT IS ALSO EXPLAINED BY THE APPELLANT WITH PROPER FACTS AND REASONING. THEREFORE, CONSIDERING THE TOTALITY OF FACTS, I AM OF THE VIEW THAT THE AS SESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE BOOKS OF ACCOUNTS U/ S. 145(3) OF INCOME- TAX ACT AND MAKING ADDITION OF RS.45,57,854/- ON AC COUNT OF FALL IN GROSS PROFIT. ACCORDINGLY, THE ACTION OF THE ASSESS ING OFFICER IN THIS REGARD CANNOT BE UPHELD AND HE IS DIRECTED TO DELETE THE ADDITION OF RS. 45,57,854/-. THUS, THE GROUND IS ALLOWED. 7. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O. AND THE LD. CIT(A) A ND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED UPON BY BOTH THE SIDES. WE FIND THAT THE ASSESSING OFFICER IN THE INSTANT CASE REJECTED THE BOOK RESULTS AND ESTIMATED THE GROSS P ROFIT AT 26% OF THE TURNOVER ON THE GROUND THAT THERE ARE CERTAIN DEFEC TS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE LIKE NON-CONSIDERATION O F CERTAIN ITEMS IN THE CLOSING STOCK, UNDER VALUATION AND OVER VALUATION O F CERTAIN ITEMS, DISCREPANCIES IN CONSUMPTION OF MYRISTATE ACID AND CONSUMPTION OF FURNACE OIL ONLY IN THE MONTH OF MARCH 2009. HE, THEREFORE, EST IMATED THE GROSS PROFIT @ 26% AS AGAINST 22.41% GROSS PROFIT DECLARED BY THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR. WE FIND THE LD. CIT(A) DE LETED THE ADDITION ON THE BASIS OF VARIOUS SUBMISSIONS MADE BEFORE HIM. SO FA R AS THE OVER VALUATION OF ONE OF THE ITEMS SUCH AS MAYASOL AT RS.524/- PER KG . AS AGAINST THE LAST SALE BILL FOR THE MATERIAL AT RS.210/- PER KG. IS CONCER NED, HE ACCEPTED THE ARGUMENT OF THE ASSESSEE THAT THE PRODUCT BEING NEW , SELLING PRICE WAS KEPT LOW TO ATTRACT NEW CUSTOMERS AS INTRODUCTORY OFFER AND OVER VALUATION OF STOCK 8 M/S. SUBHASH CHEMICAL CANNOT BE UTILIZED AGAINST THE ASSESSEE. THE LD. D. R. COULD NOT CONTROVERT THE ABOVE FINDING GIVEN BY THE LD. CIT(A). 9. INSOFAR AS THE CONSUMPTION OF FURNACE OIL ONLY IN T HE MONTH OF MARCH 2009 IS CONCERNED, IT WAS SHOWN TO US DURING THE COURSE OF HEARING THAT SUCH CONSUMPTION OF 1,90,913 KGS. OF F URNACE OIL REPRESENTS CONSUMPTION FOR THE ENTIRE YEAR. THE LD. COUNSEL DREW THE ATTENTION OF THE BENCH TO THE BIN CARDS WHICH SHOW THE OPENING STOCK, PURCHASES, CONSUMPTION AND CLOSING STOCK OF SUCH IT EMS. SUCH DETAILS ARE PLACED AT PAGE-1 TO 19 OF THE PAPER BOOK. THE E NTIRE PURCHASE OF FURNACE OIL IS FROM BHARAT PETROLEUM CORP. LTD., EX CEPT RS.61,202, PURCHASED ON 1 ST SEPTEMBER 2008 FROM ONE SHRI MOTILAL MULTAMAL & SONS. FURTHER, ALL THE PAYMENTS HAVE BEEN MADE BY A CCOUNT PAYEE CHEQUES. THEREFORE, WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT DUE TO SOME CLERICAL MISTAKE IN GIVING DETAILS TO THE ASSESSING OFFICER THE SAME CANNOT BE HELD AGAIN ST THE ASSESSEE ESPECIALLY WHEN THE ENTIRE PURCHASES EXCLUDING ONE ITEM IS FROM A PSU AND ALSO PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE C HEQUES. THE LD. CIT(A) HAS ACCEPTED THIS AND, THEREFORE, IN THE ABS ENCE OF ANY CONTRARY MATERIAL, WE DO NOT FIND ANY INFIRMITY IN THE SAME. 10. INSOFAR AS THE OMISSION OF ISO PROPYL MYRISTATE AND CAPRYLIC CAPRIC TRIGLYCERIDE ARE CONCERNED, WE FIND THAT THE ASSESS EE HAS CLARIFIED BEFORE THE LD. CIT(A) THAT IN CHEMICAL JARGON ISO PROPYL MYRIS TATE IS KNOWN AS IPM AND COPRIC TRIGLYCERIDE IS KNOWN AS CAPRYLIC CAPRIC TRI GLYCERIDE. THE LD. CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT BOTH THE ITEMS ARE SHOWN UNDER THE HEAD ISO PROPYL MYRISTATE AND CAPRYLIC CAPRIC TRIGLYCERI DE IN THE STOCK AND THE ASSESSING OFFICER WAS SUPPOSED TO GIVE OPPORTUNITY BEFORE REJECTING THE 9 M/S. SUBHASH CHEMICAL BOOKS OF ACCOUNT ON THIS ISSUE. THE LD. D.R. COULD NOT CONTROVERT THE ABOVE FACTUAL FINDING GIVEN BY THE LD. CIT(A). 11. INSOFAR AS THE MAINTENANCE OF STOCK REGISTER AND CO NSUMPTION OF MYRISTATE ACID ARE CONCERNED, WE FIND IT WAS THE CA SE OF THE ASSESSING OFFICER THAT THERE WAS AN EXCESS CONSUMPTION OF MYRISTATE A CID TO THE TUNE OF 11,735 KGS. EVEN AFTER RECONCILIATION, THERE WAS SOME DISC REPANCY. HOWEVER, THE LD. CIT(A) AFTER CONSIDERING VARIOUS DETAILS FURNISHED BY THE ASSESSEE NOTED THAT SUCH LOSS IS ONLY 1,099 KGS. WHICH IS ONLY 0.24% OF THE CONSUMPTION AND THIS IS QUITE NEGLIGIBLE UNDER THE FACTS AND CIRCUMSTANC ES OF THE CASE. THE LD. D.R. ALSO COULD NOT CONTROVERT THE ABOVE FINDINGS. 12. APART FROM THE ABOVE, WE FIND THAT THERE IS SUBSTAN TIAL ADDITION OF FIXED ASSETS DURING THE YEAR AMOUNTING TO RS.71.79 LAKHS FOR WHICH THE DEPRECIATION HAS ALSO GONE UP. SINCE THE ASSESSEE H AS POINTWISE REBUTTED THE VARIOUS DISCREPANCIES NOTICED BY THE A SSESSING OFFICER WHICH WAS APPRECIATED BY THE LD. CIT(A), THEREFORE, IN ABSENCE OF ANY DISTINGUISHABLE FEATURES BROUGHT TO OUR NOTICE BY T HE LD. D.R. AGAINST THE FACTUAL FINDING BY THE LD. CIT(A), WE DO NOT FI ND ANY INFIRMITY IN HIS ORDER DELETING THE ADDITION. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS UPHELD ON THIS ISSUE AND THE GROUND RAISED BY THE R EVENUE IS DISMISSED. 13. GROUND OF APPEAL NO.2 RAISED BY THE REVENUE AND GRO UNDS OF APPEAL RAISED BY THE ASSESSEE, ARE AS UNDER:- GROUND NO.2 IN REVENUES APPEAL WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN GIVING PART RELIEF TO THE ASSESSEE OUT OF 10 M/S. SUBHASH CHEMICAL THE ADDITION MADE OF RS.8,70,938 FOR DISALLOWANCE O F COMMISSION PAYMENT WHEN NO DOCUMENTARY EVIDENCE FOR SERVICES R ENDERED BY THE CONCERNED PERSON WAS SUBMITTED. FURTHER, THE LD. CI T(A) HAS NOT GIVEN ANY FINDING ON THE ALLOWABILITY OF COMMISSION TO TH E PARTIES OTHER THAN THE RELATED PARTIES . GROUND NO.1 TO 3 IN ASSESSEES APPEAL 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT COMM ISSION WAS PAID TO SMT. RENU KAPOOR, GITA KAPOOR, GAZAL KAPOOR PURELY FOR BUSINESS PURPOSE AND THE EXPENSES WAS GENUINE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THOUGH THE PA RTIES WERE LADIES, THEY WERE QUALIFIED PROFESSIONALS IN THE APPELLANT S LINE OF BUSINESS AND COMMISSION WAS PAID TO THEM FOR PROCURING BUSINESS TO THE APPELLANT FROM M/S. MARICO INDUSTRIES LTD., APPELLANTS IMPOR TANT CUSTOMER . 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE A.O . HAD MADE DISALLOWANCE OF RS.4,24,620 OUT OF COMMISSION WITHO UT GRANTING THE APPELLANT SUFFICIENT AND SPECIFIC OPPORTUNITY O F BEING HEARD AND TO PRODUCE SUPPORTING EVIDENCES AND THE DISALLO WANCE BE DELETED. 14. THE ISSUE ARISING OUT OF THE ABOVE GROUNDS RELATE T O PARTIAL RELIEF GIVEN BY THE LD. CIT(A) BY SUSTAINING AN AMOUNT OF RS.4,2 5,620, OUT OF THE DISALLOWANCE OF RS.8,98,188 BY THE ASSESSING OFFICE R. 15. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSING O FFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, OBSERVED THAT THE ASSESSEE HAS SHOWN EXPENDITURE OF RS.8,98,188, AS SALES COMMISSION UND ER THE HEAD SELLING EXPENSES. FROM THE VARIOUS DETAILS FURNISHED BY TH E ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT COMMISSION OF RS.4,71,800, HA S BEEN SHOWN IN THE NAME OF VARIOUS PERSONS OF KAPOOR FAMILY INCLUDING SOME LADIES. HE, THEREFORE, ASKED THE ASSESSEE TO FURNISH EVIDENCE T O SUBSTANTIATE THE SERVICES RENDERED BY THEM. HE ALSO ASKED THE ASSESSEE TO EXP LAIN THE COMMISSION PAID TO VARIOUS OTHER PERSONS SUCH AS SHRI KOLTE, S HRI SUNIL SALVI, ETC. IT WAS EXPLAINED BY THE ASSESSEE THAT THE KAPOORS WERE IN THE BUSINESS PROVIDING SERVICE TO THE ASSESSEE FOR THE LAST MORE THAN 10 Y EARS AND ARE INSTRUMENTAL IN CLINCHING DEALS WITH BIG BUSINESS HOUSES. THEY H AVE THEIR OWN PANS AND 11 M/S. SUBHASH CHEMICAL CONFIRMED ADDRESS. FURTHER, TAX HAS BEEN DULY DEDUC TED AT SOURCE UNDER SECTION 194H OF THE ACT AND THE SALES COMMISSION AM OUNTS TO A MEAGER AMOUNT OF 0.69% OF THE TOTAL TURNOVER. IT WAS EXPLA INED THAT THE COMMISSION PAID TO B.K. KAPOOR AND HIS THREE OTHER FAMILY MEMB ERS IS IN RESPECT OF SALES MADE TO MARICO LTD. AMOUNTING TO RS.66,59,800. ACCO RDING TO THE ASSESSING OFFICER, SUCH COMMISSION PAID TO THE KAPOOR FAMILY IS @ 7.08% OF SALES TO MARICO LTD. THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT SALES COMMISSION IS HARDLY 0.69% OF THE TURNOVER IS BASELESS. APART FROM THIS, HE N OTICED THAT AT LEAST TWO OF THE FAMILY MEMBERS OF KAPOOR FAMILY NA MELY GITA KAPOOR AND GAZAL KAPOOR WERE IN THEIR EARLY 20S DURING THE REL EVANT PREVIOUS YEAR AND, THEREFORE, HE REJECTED THE CLAIM OF THE ASSESSEE TH AT KAPOOR FAMILY ARE THE BACK BONE OF THEIR SALES FOR THE LAST TEN YEARS. FU RTHER NO EVIDENCE WAS FURNISHED BEFORE HIM TO SUBSTANTIATE THAT RENU KAPO OR, GITA KAPOOR AND GAZAL KAPOOR WHO HAVE BEEN PAID RS.1,69,282, RS.1,4 8,122 AND RS.63,480 RESPECTIVELY HAVE RENDERED ANY SERVICES FOR SALES M ADE OF HERBAL PROTEIN TO MARICO LTD. HE FURTHER NOTED THAT B.K. KAPOOR HAS G OT ONLY 10% OF THE TOTAL COMMISSION OF RS.4,71,800/- WHEREAS THE COMMISSION AMOUNTING TO RS.3,80,884 HAS BEEN PAID TO THE THREE LADIES. HE, THEREFORE, DISALLOWED THE ENTIRE COMMISSION OF RS.4,71,800/- PAID TO THE KAPO ORS. SO FAR AS THE REMAINING AMOUNT IS CONCERNED, THE A.O. ALLOWED COM MISSION OF RS.27,250/- PAID TO ONE M/S. DEV INTERNATIONAL AND DISALLOWED T HE BALANCE AMOUNT FOR WANT OF EVIDENCE RENDERING ANY SERVICES. THUS, THE A.O. DISALLOWED COMMISSION AMOUNTING TO RS.8,70,938/-. 16. BEFORE THE LD. CIT(A), THE ASSESSEE ARGUED THAT THE PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES AND TAX HAS BEEN DULY DEDUCTED AND SUCH COMMISSION HAS BEEN MADE FOR SERVICES RENDERED BY T HE KAPOOR FAMILY AND THE OTHER PARTIES. VARIOUS DECISIONS WERE ALSO RELI ED UPON. 12 M/S. SUBHASH CHEMICAL 17. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE, TH E LD. CIT(A) DELETED THE DISALLOWANCE OF COMMISSION OF RS.4,46,3 18 AND SUSTAINED DISALLOWANCE OF RS.4,24,620 BEING COMMISSION PAID T O THE THREE LADY MEMBERS. THE RELEVANT OBSERVATION OF THE LD. CIT(A) AT PARA-17 TO 19 OF THE ORDER, READS AS UNDER:- 'I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. FROM THE DETAILS FILED, THE BREAKUP OF C OMMISSION IS AS UNDER: NAME ADDRESS RATE OF COMMISSION TOTAL COMMISSION CHEMPHAR B.K. KAPOOR WZ-85, INDUSTRIAL AREA, KIRTI NAGAR, NEW DELHI 110015 B406, DHEERAJ KIRTI CO. OP. HOUSING SOCIETY LTD. OFF LINK ROAD, EVERSHINE, MALAD (W), MUMBAI 400 064 2.50% 40-P KG. 158763/- 47180/- RENU KAPOOR ----SAME AS ABOVE---- 40 P. KG. 18872 0/- GEETA KAPOOR ----SAME AS ABOVE---- 40 P. KG. 1651 30/- GAZAL KAPOOR ----SAME AS ABOVE---- 40 P. KG. 7077 0/- KOLTE SALVI SUNIL DEV INTERNATIONAL A-3 V.B. WAJE APARTMENTS, BEHIND RAMAYAN BUNGLOW, TILAK WADI, NASHIK 422 002 F1-504, SUCCESS TOWERS STATE BANK NAGAR, PANCHAVATI, PASHAN, PUNE 411 008 A-302, BLUE BELL, ROYAL COMPLEX, EKSAR ROAD BORIVALI (W), MUMBAI 400 092 3-P KG. 2% 5-P KG. 100000/- 140375/- 27250/- TOTAL COMMISSION PAID 8,98,188/- 18. I. IT IS SEEN THAT THE COMMISSION AMOUNT HAS BE EN PAID BY CHEQUE ON WHICH TDS IS DEDUCTED. THE AMOUNT IS CALCULATED ON THE BA SIS OF RATE AS MENTIONED ABOVE IN RESPECT OF SALES MATERIALIZED ON THE RESPE CTIVE ITEMS. IT IS ALSO NOT A CASE WHERE AMOUNT OF COMMISSION HAS COME .BACK TO THE AP PELLANT IN ANY MANNER. YES, THE APPELLANT COULD HAVE MAINTAINED MORE EVIDENCES LIKE AGREEMENTS AND OTHER CORRESPONDENCE IN IT'S POSSESSION TO SUBSTANTIATE I T'S CLAIM REGARDING PAYMENT OF COMMISSION BUT ABSENCE OF THE SAME CANNOT BE VIEWED ADVERSELY AS COMMISSION AMOUNT IS SMALL COMPARED TO TURNOVER OF THE APPELLA NT AND PROFIT SHOWN IN THE RETURN OF INCOME. HOWEVER, COMMISSION PAYMENT TO LA DY MEMBERS OF SHRI. B. K. KAPOOR FAMILY THE SENSE THAT THERE IS NO EVIDENCE OF ANY SERVICES RENDERED BY THOSE LADY MEMBERS. THE APPELLANT CLAIMS THAT THE L ADY MEMBERS ARE QUALIFIED 13 M/S. SUBHASH CHEMICAL PERSONS IN THIS LINE OF BUSINESS AND HAVE HELPED SHRI. B. K. KAPOOR IN HIS RESEARCH AND ESTABLISHING RELATIONSHIP WITH MARICO INDUSTRIES LTD., BUT THE S AME IN ITSELF DOES NOT JUSTIFY COMMISSION TO THEM. IN THIS CASE, IT IS SEEN THAT THE ORDER FROM MARICO INDUSTRIES LTD., HAS NOT BEEN PROCURED ON AC COUNT OF EFFORTS MADE BY THESE LADY MEMBERS. IT IS ALSO SEEN THAT COMMISSION TO KA POOR FAMILY HAS BEEN CALCULATED AS UNDER: MARICO -11795* 40 = 471800.00 NAME % CORNM TDS(10.3%) PAYABLE B. K. KAPOOR 10% 47180 4860 42320.00 RENU KAPOOR 40% 188720 19438 169282.00 GEETI KAPOOR 35% 165130 17008 148122.00 GAZAL KAPOOR 15% 70770 7290 63480.00 100% 471800 48596 423204.00 THE ABOVE BIFURCATION OF COMMISSION HAS BEEN MADE O N THE INSTRUCTIONS GIVEN BY SHRI. B. K. KAPOOR. THE LOGIC OF WHICH IS NOT UNDERSTANDABLE EXCEPT FOR THE FACT THAT THIS BIFURCATION HAS HELPE D CAPITAL BUILDING IN THE CASE OF LADY MEMBERS WHO HAVE ALSO ENJOYED BASI C EXEMPTION BENEFIT SEPARATELY. THEREFORE, COMMISSION IN THE HA NDS OF SMT. RENU KAPOOR AT RS.1,88,720/-, GEETA KAPOOR RS.1,65,1307 - AND GAZAL KAPOOR RS. 70,770/- CANNOT BE ALLOWED. ACCORDINGLY, DISALLOWANCE OF COMMISSION OF RS.4,24,620/- (1,88,720 + 1,65,130 + 70,770) IS UPHELD. THE APPELLANT GETS RELIEF OF RS.4,46,318/-( 8,70,938 - 4,24,620). THUS, THE GROUND IS PARTLY ALLOWED. 18. AGGRIEVED WITH SUCH PART RELIEF GIVEN BY THE LD. CI T(A), THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. 19. THE LD. D.R. STRONGLY OPPOSED THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THE LD. CIT(A) HAD ACCEPTED THAT NO DOCUMENTAR Y EVIDENCE LIKE AGREEMENT AND RELEVANT CORRESPONDENCE HAS BEEN MAIN TAINED BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM, HOWEVER, HE HAS ALLOWED THE COMMISSION PAID TO SUNIL SALVI, CHEMPHER KOLTE, ETC. WITHOUT B RINGING ON RECORD THE EVIDENCE OR BASIS FOR ALLOWING THE CLAIM. FURTHER, WHEN HE HAS DISALLOWED THE COMMISSION PAID TO THE LADY MEMBERS OF THE KAPOOR F AMILY ON THE GROUND THAT NO EVIDENCE WHATSOEVER WAS PRODUCED, THEREFORE , HE WAS NOT JUSTIFIED IN ALLOWING THE COMMISSION PAID TO B.K. KAPOOR. FURTHE R, THE ORDER OF THE LD. 14 M/S. SUBHASH CHEMICAL CIT(A) IS SILENT ON COMMISSION DISALLOWED BY THE AS SESSING OFFICER IN RESPECT OF OTHER PARTIES I.E., CHAMPHER KOLTE AND SUNIL SAL VI, ETC. HE, THEREFORE, SUBMITTED THAT THE ORDER OF THE LD. CIT(A) IS NOT J USTIFIED. 20. THE LD. COUNSEL, ON THE OTHER HAND, DREW THE ATTENT ION OF THE BENCH TO PAGE-150 OF THE PAPER BOOK AND SUBMITTED THAT FULL DETAILS OF COMMISSION PAID TO VARIOUS PARTIES ARE GIVEN. REFERRING TO THE VARIOUS CORRESPONDENCE BETWEEN B.K. KAPOOR AND THE ASSESSEE, HE DREW THE A TTENTION OF THE BENCH TO THE NATURE OF SERVICES RENDERED BY SHRI B.K. KAPOOR . HE SUBMITTED THAT NONE OF THE PARTIES TO WHOM COMMISSION HAS BEEN PAID ARE RELATED TO THE ASSESSEE. THE COMMISSION HAS BEEN PAID ON THE BASIS OF SPECIFIC PERCENTAGE OF THE TURNOVER, PAYMENT HAS BEEN MADE BY ACCOUNT P AYEE CHEQUE AND TDS HAS BEEN DEDUCTED. THEREFORE, THERE WAS NO JUSTIFIC ATION ON THE PART OF THE ASSESSING OFFICER TO DISALLOW COMMISSION. HE SUBMIT TED THAT THE LD. CIT(A) INSTEAD OF DELETING THE ENTIRE ADDITION HAS SUSTAIN ED THE COMMISSION PAID TO THE LADY MEMBERS OF THE KAPOOR FAMILY WHICH IS NOT JUSTIFIED. HE ACCORDINGLY SUBMITTED THAT FULL RELIEF SHOULD BE GRANTED TO THE ASSESSEE. 21. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE A.O. AND THE LD. CIT(A) A ND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THAT THE ASSESSEE HAS GIVEN ONLY THE DETAILS OF COMMISSION PAID TO THE KAPOOR FAMILY MEMBERS. SIMILARLY, HE HA S GIVEN ONLY THE DETAILS OF SALES COMMISSION PAID TO CHEMPHER, KOLTE, SUNIL SALVI AND DEV INTERNATIONAL. WE FIND THAT IN THE CASE OF DEV INTE RNATIONAL, THE ASSESSING OFFICER ACCEPTED THE COMMISSION OF RS.27,250 ON THE GROUND THAT THE ASSESSEE HAS FILED THE DEBIT NOTE. HOWEVER, HE REJE CTED THE BALANCE AMOUNT OF RS.8,79,938, ON THE GROUND THAT NO EVIDENCE REGA RDING ANY SERVICES RENDERED BY THE PERSONS WERE GIVEN. ALTHOUGH SUCH P AYMENTS HAVE BEEN 15 M/S. SUBHASH CHEMICAL MADE BY ACCOUNT PAYEE CHEQUE AND DUE TAX HAS BEEN D EDUCTED AND NONE OF THE PARTIES ARE RELATED TO THE ASSESSEE, HOWEVER, W E FIND NO DOCUMENTARY EVIDENCE REGARDING ANY SERVICES RENDERED BY THE ABO VE PARTIES EXCEPT IN THE CASE OF B.K. KAPOOR ARE FURNISHED BEFORE US. IT IS THE SETTLED PROPOSITION OF LAW THAT FOR ALLOWING ANY EXPENDITURE AS DEDUCTION, THE ONUS IS ALWAYS ON THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO THE SATIS FACTION OF THE A.O. THAT SUCH EXPENDITURE IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN THE INSTANT CASE, ALTHOUGH CERTAIN DET AILS ARE GIVEN SHOWING THE IDENTITY OF THE PAYEE, NATURE OF PAYMENT, ETC., HOW EVER, NO DETAILS REGARDING RENDERING OF ANY SERVICE WAS GIVEN EXCEPT IN THE CA SE OF SHRI B.K. KAPOOR. THEREFORE, COMMISSION PAID TO SHRI B.K. KAPOOR AMOU NTING TO RS.47,180/- IS TO BE ALLOWED AND THE ORDER OF THE CITA TO THIS EXT ENT IS UPHELD. HOWEVER, FOR THE REMAINING COMMISSION NO EVIDENCE OR DETAILS REG ARDING RENDERING OF ANY SERVICES BY THE PARTIES ARE FURNISHED FOR WHICH IT CANNOT BE ALLOWED AS DEDUCTION MERELY BECAUSE THESE ARE PAID BY CHEQUES, TDS HAS BEEN DEDUCTED AND THEY ARE NOT RELATED TO THE ASSESSEE. THE ASSESSEE HAS TO PROVIDE SOME EVIDENCE FOR RENDERING OF ANY SERVICE BY THEM TO THE ASSESSEE. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER TO RESTORE T HE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATIS FACTION REGARDING THE NATURE OF SERVICE RENDERED BY THE PARTIES. THE ASSE SSING OFFICER SHALL DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER P ROVIDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND OF APPEAL NO.2 RAISED BY THE REVENUE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES WHEREAS THE GROUNDS RAISED BY THE ASSESSEE ARE ALLO WED FOR STATISTICAL PURPOSES. 16 M/S. SUBHASH CHEMICAL 22. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED F OR STATISTICAL PURPOSES AND ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER 2014. SD/- (R.S. PADVEKAR) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER PUNE, DATED: 18 TH DECEMBER 2014 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, PUNE CITY CONCERNED; (5) THE DR, ITAT, PUNE; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR) ITAT, PUNE