Rahee Track Technologies Pvt Ltd, Howrah V. D.C.I.T CC - XXI,Kolkata, Kolkata

ITSSA 8/KOL/2015

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2603 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 14-01-2015
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: MANISH TIWARI
• Keywords: Search and seizure; Reason to believe
• Section: 43B; 143(3); 142(1); 153A; 148; 132; 139

Judgement Text

1 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA [BEFORE SHRI M. BALAGANESH, AM & SHRI S.S. VISWANE THRA RAVI, JM] I.T(SS).A NOS. 08 TO 13/KOL/2015 ASSESSMENT YEARS: 2006-07 TO 2011-12 RAHEE TRACK TECHNOLOGIES PVT. LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, (PAN: AAGCS1931D) CENTRAL CIRCLE-XXI, KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 04.10.2016 DATE OF PRONOUNCEMENT: 07.10.2016 FOR THE APPELLANT: SHRI MANISH TIWARI, FCA FOR THE RESPONDENT: SHRI G. MALLIKARJUNA, CIT, DR ORDER PER BENCH: ALL THESE APPEALS BY ASSESSEE ARE ARISING OUT OF SE PARATE ORDERS OF CIT(A)-21, KOLKATA DATED 27.11.2014. ASSESSMENT WAS FRAMED BY DCIT, CC-XXI, KOLKATA U/S.153A/143(3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) FOR AYS 2006-07 TO 2011-12 VIDE HIS SEPARATE ORDERS DATED 31.03.2014. SINCE GROUNDS ARE COMMON EXCEPT VARIANCE IN AMOUNT AND FOR THE SAKE OF BREVI TY, WE DISPOSE OF ALL THE APPEALS BY THIS CONSOLIDATED ORDER. 2. THE FIRST ISSUE TO BE DECIDED IN THESE APPEALS IS THAT AS TO WHETHER THE LD CITA IS JUSTIFIED IN UPHOLDING THE VARIOUS DISALLOWANCES OF EXPENSES SUCH AS COMMISSION, PF/ ESI , FRINGE BENEFIT TAX U/S 40(A) AND BONUS U/S 43B OF T HE ACT IN THE SEARCH ASSESSMENTS FRAMED U/S 153A OF THE ACT IN THE ABSENCE OF ANY INCRIMINA TING MATERIAL FOUND DURING THE COURSE OF SEARCH TO THAT EFFECT. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THERE W AS A SEARCH AND SEIZURE OPERATION CONDUCTED U/S 132 OF THE ACT ON 22.9.2011 IN THE RESIDENTIAL AND OFFICE PREMISES OF THE RAHEE GROUP. THE GROUP IS PRIMARILY ENGAGED IN THE BUSINESS OF R AILWAY INFRASTRUCTURE, RAILWAY TRACK PRODUCT MANUFACTURER (TRACK INSTALLATION AND BRIDGE ) . THE HISTORICAL BACKGROUND OF THE ASSESSEEE REMAINS THAT M/S SHALIMAR FASTENING PVT L TD INCORPORATED ON 15.2.2002 WAS RENAMED AS RAHEE TRACK TECHNOLOGIES PVT LTD FROM 5. 7.2005. IT MANUFACTURES RAILWAY 2 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 PRODUCTS LIKE TURNOUTS, CARVED SWITCH, IMPROVED SWI TCH, EXPANSION POINTS, STEEL SLEEPER, CROSSING AND SWITCH DEVICES FOR RAILWAY TRACKS INCL UDING HIGH SPEED. CONSEQUENT TO THE SEARCH, NOTICES U/S 153A OF THE ACT WAS ISSUED AND ASSESSMENTS WERE FRAMED U/S 153A OF THE ACT FOR THE ASST YEARS 2006-07 TO 2011-12 BY MA KING THE FOLLOWING DISALLOWANCES :- (A) DISALLOWANCE OF COMMISSION FOR ASST YEARS 2006-07 T O 2011-12 (B) DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PF / ESI FOR ASST YEARS 2006-07, 2007- 08 , 2008-09 AND 2011-12 (C) DISALLOWANCE OF FBT LIABILITY U/S 40(A) FOR ASST YE ARS 2008-09 AND 2009-10 (D) DISALLOWANCE OF BONUS U/S 43B FOR ASST YEARS 2010-1 1 AND 2011-12 2.2. THE ASSESSEE STATED THAT THE ORIGINAL ASSESSM ENTS FOR THE ASST YEARS 2006-07 TO 2009- 10 WERE COMPLETED U/S 143(3) OF THE ACT AS ON THE D ATE OF SEARCH. HENCE THOSE YEARS WOULD FALL UNDER THE CATEGORY OF UNABATED ASSESSMENTS AND HENCE THE INCOME ASSESSED ORIGINALLY THEREON COULD NOT BE DISTURBED UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH RELATABLE TO THOSE ASSESSMENT YEARS. IT WAS ARGUED THAT ADMITTEDLY NO INCRIMINATING MATERIALS WERE FOUND FOR THOSE ASSESSMENT YEARS IN THE COURSE OF SEARCH AND ACCORDINGLY PLEADED NOT TO DISTURB THE ORIGINALLY ASSESSED INCO ME. THE LD AO HOWEVER DID NOT HEED TO THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO FR AME THE ASSESSMENTS U/S 153A OF THE ACT BY MAKING REGULAR DISALLOWANCE OF EXPENSES ON THE P LEA THAT THE ASSESSMENTS TO BE FRAMED U/S 153A OF THE ACT CLEARS ALL THE DECKS AND WOULD ENABLE THE LD AO TO ASSESS OR REASSESS THE TOTAL INCOME AS PER THE PROVISIONS OF THE ACT IRRES PECTIVE OF INCRIMINATING MATERIALS FOUND IN THE SEARCH. THIS ACTION OF THE LD AO WAS ALSO CO NFIRMED BY THE LD CITA. AGGRIEVED, THE ASSESSEE IS IN APPEALS BEFORE US. 2.3. THE LD AR STATED THAT THE ASSESSMENTS FOR THE ASST YEARS 2006-07 TO 2009-10 WERE ORIGINALLY COMPLETED U/S 143(3) OF THE ACT ON 31.12 .2008 , 31.12.2009, 16.12.2010 & 21.12.2011 RESPECTIVELY, IN SUPPORT OF WHICH, HE PL ACED THE RELEVANT ASSESSMENT ORDERS ON RECORD. HE REITERATED THE SUBMISSIONS MADE BEFORE THE LD CITA WITH REGARD TO FRAMING OF ADDITIONS IN SECTION 153A ASSESSMENTS WITHOUT ANY I NCRIMINATING MATERIAL FOUND THEREON. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS IN S UPPORT OF HIS CONTENTIONS:- 3 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 (A) CIT VS VEERPRABHU MARKETING LTD REPORTED IN (20 16) 73 TAXMANN.COM 149 (CAL HC) (B) DECISION OF THIS TRIBUNAL IN THE CASE OF ACIT V S KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 (C ) CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 ( DELHI HC) (D)CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAV A SHEVA) LTD AND ALL CARGO GLOBAL LOGISTICS LTD REPORTED IN (2015) 374 ITR 645 ( BOM) 2.4. IN RESPONSE TO THIS, THE LD DR ARGUED THAT TH E EXPRESSION INCRIMINATING MATERIAL IS NOT FOUND IN THE PROVISIONS OF THE ACT AND IT IS ON LY THE HONBLE COURTS WHICH HAD IMPORTED THOSE WORDS WHILE RENDERING THE DECISIONS. HE STATE D THAT THE HONBLE COURTS ARE DIVIDED ON THIS ISSUE AND PLACED RELIANCE ON THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT CO VS DCIT REPOR TED IN (2014) 49 TAXMANN.COM 98 (KAR HC) WHEREIN IT WAS HELD THAT SEARCH ASSESSMENTS COULD BE FRAMED EVEN WITHOUT THE EXISTENCE OF INCRIMINATING MATERIALS FOUND IN THE C OURSE OF SEARCH. HE ARGUED THAT THE BASIC FOUNDATION FOR CONDUCTING THE SEARCH IS GOVER NED BY THE PROVISIONS OF SECTION 132 OF THE ACT WHICH HAS TO BE READ HARMONIOUSLY WITH SECT ION 153A OF THE ACT. THERE ARE THREE CONDITIONS BASED ON WHICH A SEARCH ACTION COULD BE INITIATED U/S 132 OF THE ACT ON AN ASSESSEE. THEY ARE :- SECTION 132(1) - IF THE CONCERNED AUTHORITY HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS REASON TO BELIEVE THAT - (A) WHERE A PERSON FAILS TO PRODUCE THE BOOKS OF ACCOUN TS AND OTHER DOCUMENTS IN RESPONSE TO NOTICE U/S 142(1) OR SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR (B) WHERE A PERSON FAILS TO COMPLY WITH THE REQUIREMENT S OF SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR (C) WHERE A PERSON IS IN POSSESSION OF ANY MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH ASSETS REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN , OR WOULD NOT BE, DISCLOSED FOR THE PURPOSES OF THE ACT (HEREINAFTER REFERRED TO AS THE UNDISCLOSED INCOME OR PROPERTY) ; THEN THE OFFICER , SO AUTHORIZED COULD CONDUCT A SE ARCH AND PROCEED AS PER THE REQUIREMENTS LAID DOWN IN THE SAID SECTION. HE ARGUED THAT THE AFORESAID THREE PRIMARY CONDITIONS FOR 4 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 INVOKING SEARCH PROCEEDINGS CANNOT BE GIVEN A GO BY WHILE FRAMING SECTION 153A ASSESSMENTS AND THE INSTANT CASE FALLS UNDER SECTIO N 132(1)(C ) OF THE ACT. THE PROVISIONS OF SECTION 153A OF THE ACT USE THE E XPRESSION ASSESS OR REASSESS TOTAL INCOME AND HENCE THE SEARCH ASSESSMENT COULD BE FR AMED U/S 153A OF THE ACT IRRESPECTIVE OF ANY INCRIMINATING MATERIALS. 2.5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND IT WOULD BE NECESSARY TO ADDRESS THE PRELIMINARY ISSUE OF WHETHER THE ADDITION COULD BE FRAMED U/S 153A OF THE ACT IN RESPECT OF A CONCLUDED PROCEEDING WITHOUT THE EXISTENCE OF ANY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH. THE SCHEME OF THE ACT PROVIDES FOR ABATEMENT OF PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. IT IS NOT IN DISPUTE THAT T HE ASSESSMENTS FOR THE ASST YEARS 2006-07 TO 2009-10 WERE ORIGINALLY COMPLETED U/S 143(3) OF THE ACT AND HENCE IT FALLS UNDER CONCLUDED PROCEEDING , AS ON THE DATE OF SEARCH. HENCE THE L EGISLATURE DOES NOT DIFFERENTIATE WHETHER THE ASSESSMENTS ORIGINALLY WERE FRAMED U/S 143(1) O R 143(3) OR 147 OF THE ACT. HENCE UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND DU RING THE COURSE OF SEARCH RELATABLE TO THOSE CONCLUDED YEARS, THE STATUTE DOES NOT CONFER ANY POWER ON THE LD AO TO DISTURB THE FINDINGS GIVEN THEREON AND INCOME DETERMINED THEREO N, AS FINALITY HAD ALREADY BEEN REACHED THEREON, AND THOSE PROCEEDINGS WERE NOT PENDING ON THE DATE OF SEARCH TO GET THEMSELVES ABATED. THE PROVISIONS OF SECTION 153A OF THE ACT ARE REPRODUCED HEREUNDER FOR THE SAKE OF CONVENIENCE :- [ ASSESSMENT IN CASE OF SEARCH OR REQUISITION. 77 153A. 78 [(1)] NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 , SECTION 147 , SECTION 148 , SECTION 149 , SECTION 151 AND SECTION 153 , IN THE CASE OF A PERSON 79 WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003, THE ASSESSING OFFICER SHALL (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, THE RETURN OF INCOME IN RE SPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS REFERRED TO IN CLAUSE ( B), IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISH ED UNDER SECTION 139 ; (B) ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSE SSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH SUCH SEARCH IS CONDUCTED OR REQUISITION IS MADE : 5 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 PROVIDED THAT THE ASSESSING OFFICER SHALL ASSESS OR REASSES S THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH SIX ASS ESSMENT YEARS: 2.6. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TR IBUNAL IN THE CASE OF ACIT VS KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9. 12.2015 REPORTED IN 2016-TIOL-167- ITAT-KOL HAD EXPLAINED THE AFORESAID PROVISIONS AS BELOW:- 6.4. IN OUR OPINION, THE SCHEME OF ASSESSMENT PR OCEEDINGS SHOULD BE UNDERSTOOD IN THE FOLLOWING MANNER PURSUANT TO THE SEARCH CONDUCTED U /S 132 OF THE ACT :- A) NOTICE U/S 153A OF THE ACT WOULD BE ISSUED ON THE P ERSON ON WHOM THE WARRANT OF AUTHORIZATION U/S 132 OF THE ACT WAS ISSUED FOR THE SIX ASSESSMENT YEARS PRECEDING THE YEAR OF SEARCH AND ASSESSMENTS THEREON WOULD BE COMPLETED U /S 153A OF THE ACT FOR THOSE SIX ASSESSMENT YEARS. B) IN RESPECT OF THE YEAR OF SEARCH, NOTICE U/S 143(2) OF THE ACT WOULD BE ISSUED AND ASSESSMENT THEREON WOULD BE COMPLETED U/S 143(3) OF THE ACT. C) IN RESPECT OF CONCLUDED ASSESSMENTS PRIOR TO THE YE AR OF SEARCH, NO ADDITION COULD BE MADE IN THE RELEVANT ASSESSMENT YEAR UNLESS ANY INCRIMINATI NG MATERIAL IS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO THE RELEVANT ASSESSMENT YEAR . D) PURSUANT TO THE SEARCH U/S 132 OF THE ACT, THE PEND ING PROCEEDINGS WOULD GET ABATED. IN RESPECT OF ABATED ASSESSMENTS, THE TOTAL INCOME NE EDS TO BE DETERMINED AFRESH IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A AND OTHER PROVI SIONS OF THE ACT. 6.4.1. THE CONCLUDED ASSESSMENTS FOR THE PURPOSE O F SECTION 153A OF THE ACT SHALL BE - (I) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREADY COMPLETED U/S 143(1) AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HAS EXPIRE D OR; (II ) ASSESSMENT YEARS WHERE ASSESSMENTS ARE ALREAD Y COMPLETED U/S 143(3) OF THE ACT ; UNLESS THEY ARE REOPENED U/S 147 OF THE ACT FOR SOM E OTHER PURPOSE IN BOTH THE SCENARIOS STATED ABOVE. 6.4.2. THE SCHEME OF ASSESSMENT PROCEEDINGS CONTEMP LATED U/S 153A OF THE ACT ARE TOTALLY DIFFERENT AND DISTINCT FROM THE PROCEEDINGS CONTEMP LATED U/S 147 OF THE ACT AND THESE PROCEDURES OF ASSESSMENT OPERATE IN DIFFERENT FIELD S AND HAVE DIFFERENT PURPOSES TO BE FULFILLED ALTOGETHER. 6.4.3. THE EXPRESSION ASSESS OR REASSESS STATED I N SECTION 153A(1)(B) HAS TO BE UNDERSTOOD AS BELOW:- ASSESS MEANS ASSESSMENTS TO BE FRAMED IN RESPECT OF ABATED ASSESSMENT YEARS IRRESPECTIVE OF THE FACT WHETHER THERE ARE ANY INCRIMINATING MATERI ALS FOUND DURING THE COURSE OF SEARCH WITH RESPECT TO RELEVANT ASSESSMENT YEARS ; REASSESS MEANS ASSESSMENTS TO BE FRAMED IN RESPEC T OF CONCLUDED ASSESSMENT YEARS WHERE INCRIMINATING MATERIALS WERE FOUND DURING THE COURS E OF SEARCH IN RESPECT OF THE RELEVANT ASSESSMENT YEAR. 6 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 2.7. WE ALSO FIND THAT RECENTLY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS KABU L CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HELD AS UNDER:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT , READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN THE AFOREMENTIONED DE CISIONS, THE LEGAL POSITION THAT EMERGES IS AS UNDER: I) ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153A(1) WILL HAVE TO BE MANDATORILY ISSUED TO THE PERSON SEARCHED REQ UIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE SEARCH TAKES PLACE. II) ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. THE TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTED BY THE AOS AS A FRESH EXERCISE. III) THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEARCH TAKES PLACE. THE AO HAS THE POWER TO ASSESS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN S EPARATE ASSESSMENT ORDERS FOR EACH OF THE SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE ASSESS MENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE DISCLOSED AND THE UNDISCLOSED IN COME WOULD BE BROUGHT TO TAX'. IV) ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE OF THE SEARCH, OR OTHE R POST-SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE AO WHICH CAN BE RELATED TO THE E VIDENCE FOUND, IT DOES NOT MEAN THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT HAS TO BE MADE UNDER THIS S ECTION ONLY ON THE BASIS OF SEIZED MATERIAL.' V) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESSMENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DA TE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI) INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SECTION 153A MERGES INTO O NE. ONLY ONE ASSESSMENT SHALL BE MADE SEPARATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTHER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII) COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BASIS OF SOME INCRIMINATI NG MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED I NCOME OR PROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DI SCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL ASSESSMENT. 38. THE PRESENT APPEALS CONCERN AYS 2002-03, 2005-0 6 AND 2006-07 , ON THE DATE OF THE SEARCH THE SAID ASSESSMENTS ALREADY STOOD COMPLETED. SINCE NO INCR IMINATING MATERIAL WAS UNEARTHED DURING THE SEARCH, NO ADDITIONS COULD HAVE BEEN MADE TO THE INCOME ALREAD Y ASSESSED. 2.8. WE FIND THAT THE DECISION RELIED UPON BY THE L D DR IN THE CASE OF CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (DEL) DOES NOT IN ANY MANNER ADVANCE THE CASE OF THE REVENUE AS ADMITTEDLY THE HONBLE DELHI HIGH COURT IN PARA 24 OF ITS ORDER HAD HELD AS UNDER:- 24. WE ARE NOT CONCERNED WITH A CASE WHERE NO INCR IMINATING MATERIAL WAS FOUND DURING THE SEARCH CONDUCTED UNDER SECTION 132 OF TH E ACT. WE, THEREFORE, EXPRESS NO OPINION AS TO WHETHER SECTION 153A CAN BE INVOKED E VEN IN SUCH A SITUATION. THAT QUESTION IS THEREFORE LEFT OPEN. 7 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 2.9. WE FIND THAT THE DECISION OF HONBLE DELHI HIG H COURT IN THE CASE OF CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 (DEL) HAD DUL Y CONSIDERED THE DECISIONS OF CIT VS ANIL KUMAR BHATIA REPORTED IN (2013) 352 ITR 493 (D EL) ; CIT VS CHETAN DAS LACHMAN DAS REPORTED IN (2012) 211 TAXMAN 61 (DEL HC) ; MA DUGULA VENU VS DIT REPORTED IN (2013) 215 TAXMAN 298 (DEL HC) ; CANARA HOUSING DE VELOPMENT CO. VS DCIT REPORTED IN (2014) 49 TAXMANN.COM 98 (KAR HC) ; FILATEX INDIA LTD VS CIT REPORTED IN (2014) 229 TAXMAN 555 (DEL HC) ; JAI STEEL (INDIA) VS ACIT REP ORTED IN (2013) 219 TAXMAN 223 (DEL HC) ; CIT VS MURLI AGRO PRODUCTS LTD REPORTED IN (2 014) 49 TAXMANN.COM 172 (BOM HC) ; CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAVA S HEVA) LTD REPORTED IN (2015) 374 ITR 645 (BOM HC) AND ALL CARGO GLOBAL LOGISTICS LTD VS DCIT REPORTED IN (2012) 137 ITD 287 (MUM ITAT) (SB). HENCE IT COULD BE SAFEL Y CONCLUDED THAT THE DECISION OF HONBLE DELHI HC IN THE CASE OF KABUL CHAWLA SUPRA IS THE LATEST ONE ON THE IMPUGNED ISSUE WHICH HAD CONSIDERED THE DECISIONS THAT WERE QUOTED BY THE LD DR AND DISTINGUISHED THE SAME. 2.10. WE ALSO FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT RECENTLY IN THE C ASE OF PRINCIPAL CIT VS M/S SALASAR STOCK BROKING LTD IN G .A.NO. 1929 OF 2016 ITAT NO. 264 OF 2016 DATED 24.8.2016 HAD ENDORSED THE AFORESAID VIEW OF HONBLE DELHI H IGH COURT IN KABUL CHAWLAS CASE AND ALSO PLACED RELIANCE ON ITS OWN DECISION IN THE CASE OF CIT VS VEERPRABHU MARKETING LTD REPORTED IN (2016) 73 TAXM ANN.COM 149 (CAL HC). 2.11. WE FIND THAT THE PROVISIONS OF SECTION 132 OF THE ACT RELIED UPON BY THE LD DR WOULD BE RELEVANT ONLY FOR THE PURPOSE OF CONDUCTING THE SEARCH ACTION AND INITIATING PROCEEDINGS U/S 153A OF THE ACT. ONCE THE PROCEEDINGS U/S 153A OF THE ACT ARE INITIATED, WHICH ARE SPECIAL PROCEEDINGS, THE LEGISLATURE IN ITS WISDOM BIFURCATES DIFFERENTIAL TREATMENTS FOR ABATED ASSESSMENTS AND UNABATED ASSESSMENTS. AT TH E COST OF REPETITION, WE STATE THAT IN RESPECT OF ABATED ASSESSMENTS (I.E PENDING PROCEEDI NGS ON THE DATE OF SEARCH) , FRESH ASSESSMENTS ARE TO BE FRAMED BY THE LD AO U/S 153A OF THE ACT WHICH WOULD HAVE A BEARING ON THE DETERMINATION OF TOTAL INCOME BY CONSIDERING ALL THE ASPECTS, WHEREIN THE EXISTENCE OF INCRIMINATING MATERIALS DOES NOT HAVE ANY RELEVANCE . HOWEVER, IN RESPECT OF UNABATED ASSESSMENTS, THE LEGISLATURE HAD CONFERRED POWERS O N THE LD AO TO JUST FOLLOW THE 8 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 ASSESSMENTS ALREADY CONCLUDED UNLESS THERE IS AN IN CRIMINATING MATERIAL FOUND IN THE SEARCH TO DISTURB THE SAID CONCLUDED ASSESSMENT. IN OUR CONSIDERED OPINION, THIS WOULD BE THE CORRECT UNDERSTANDING OF THE PROVISIONS OF SECTION 153A OF THE ACT , AS OTHERWISE, THE NECESSITY OF BIFURCATION OF ABATED AND UNABATED ASS ESSMENTS IN SECTION 153A OF THE ACT WOULD BECOME REDUNDANT AND WOULD LOSE ITS RELEVANCE . HENCE THE ARGUMENTS ADVANCED BY THE LD DR IN THIS REGARD DESERVES TO BE DISMISSED. 2.11. IN VIEW OF THE AFORESAID FINDINGS AND RESPECT FULLY FOLLOWING THE JUDICIAL PRECEDENTS RELIED UPON HEREINABOVE, WE HOLD THAT THE VARIOUS D ISALLOWANCES MADE TOWARDS COMMISSION, PF/ESI AND FBT FOR THE ASST YEARS 2006-07 TO 2009-1 0 , WHICH WERE UNABATED / CONCLUDED ASSESSMENTS, ON THE DATE OF SEARCH, DESERVES TO BE UNDISTURBED IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARC H AND ACCORDINGLY DIRECTED TO BE DELETED. HENCE WE HOLD THAT THE LD AO OUGHT TO HAVE ONLY FOL LOWED THE OLD ASSESSED INCOME U/S 143(3) FOR THE AFORESAID ASST YEARS 2006-07 TO 2009 -10. SINCE THE ISSUES ARE ADDRESSED ON PRELIMINARY GROUND OF ABSENCE OF INCRIMINATING MATE RIALS, WE REFRAIN TO GIVE OUR FINDINGS ON THE MERITS OF THE DISALLOWANCES MADE TOWARDS COMMIS SION , PF/ESI AND FBT FOR ASST YEARS 2006-07 TO 2009-10. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD FOR THOSE ASST YEARS ARE ALLOWED. 3. THE NEXT ISSUE TO BE DECIDED IN THE APPEALS FOR THE ASST YEARS 2010-11 AND 2011-12 ARE AS TO WHETHER THE LD CITA IS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF COMMISSION PAID IN THE SUMS OF RS. 57,69,392/- AND RS. 3,47,000- RESPE CTIVELY MADE BY THE LD AO IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD A O OBSERVED THAT THE ASSESSEE COMPANY PAID COMMISSION TO THE FOLLOWING PARTIES FOR PROCURING S ALE ORDERS FOR THE PRODUCTS MANUFACTURED BY THE COMPANY:- ASST YEAR 2010-11 ASST YEAR 2011-12 STEEL CRACKERS PVT LTD 86,23,684 9 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 CREATORS CORPORATION 29,15,100 6,94,000 THE LD AO OBSERVED THE FOLLOWING IN HIS ORDER:- FROM THE BILLS RAISED BY THE COMMISSION AGENTS LI KE M/S MICKY METALS & M/S STEEL CRACKERS IT APPEARS THAT COMMISSION @ 3% ON SALES W AS CHARGED BY THEM AND IN CASE OF M/S CREATOR CORPORATION THE COMMISSION WAS CHARGED FOR POLICY DECISION RESULTING INTO SALES OF COMPANY'S PRODUCTS WHICH VARIED FROM RS.450/- TO RS .2,000/-ON SALE OF EACH PRODUCT. AS THE BULK OF THE PURCHASE OF COMPANY'S PRODUCT HAS BEEN THE INDIAN RAILWAYS WHICH IS A GOVERNMENT AGENCY THE COMMISSION PAID TO THESE BROK ERS APPEARS TO BE EXCESSIVE AS THE GOVERNMENT AGENCY CALLS FOR A TENDER AND A LOWEST B IDDER ARE GIVEN THE CONTRACT FOR EITHER WORKS CONTRACT OR SUPPLY OF GOODS OR MATERIALS AFTE R BEING ASSURED OF THE QUALITY OF GOODS IS AS PER SPECIFICATION. IN DOING SO THE COMMISSION CH ARGED APPEARS TO BE ON THE VERY HIGHER SIDE BECAUSE MAY BE FOR PREPARATION OF TENDERS, OFF ICIAL WORKS, ESTIMATE, MARKET SURVEY, FEASIBILITY REPORT AND TRAVELLING MAY COST SOME EXP ENSES BUT IT IS NOT LIKELY THAT IT SHOULD BE 3% OF THE GROSS SALES MADE OR PER SET OF SALES RS.4 50/- TO RS. 2,000/-. KEEPING IN VIEW THAT BY INFLATING EXPENSES THE ASSESSEE COMPANY MAY REDU CE ITS PROFIT AT LEAST TO SOME EXTENT. SO, IN ORDER TO RESTRICT THAT, 50% OF THE EXPENDITURE B OOKED ON ACCOUNT OF BROKERAGE AND COMMISSION PAID TO THESE PARTIES ON ESTIMATE BASIS IS BEING DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE IN THE RESPECTIVE ASSE SSMENT YEARS. ACCORDINGLY, THE LD AO DISALLOWED THE COMMISSION PA ID TO THE EXTENT OF 50% TO THE TUNE OF RS. 57,69,392/- AND RS. 3,47,000/- FOR THE ASST YEA RS 2010-11 AND 2011-12 RESPECTIVELY. 3.2. THE ASSESSEE PLEADED BEFORE THE LD CITA THAT THE COMMISSION WAS PAID TO PARTIES FOR RENDERING SERVICES IN THE MATTER OF PROCUREMENT OF RAILWAY CONTRACT AND THE SAME WERE MADE UNDER TERMS AND CONDITIONS AS PER WRITTEN AGREEMENT S WITH PARTIES. THE ASSESSEE ALSO SUBMITTED THE FOLLOWING DOCUMENTS IN SUPPORT OF ITS CLAIM :- (A) AGREEMENT COPY (B) LEDGER ACCOUNT (C ) TDS DETAILS ON COMMISSION PAYMENTS (D) COPY OF BILLS RAISED BY PARTIES (E) IT RETURN AND ACCOUNTS INCLUDING BALANCE SHEET OF RECIPIENT COMPANIES WHEREIN THE SAID COMMISSION INCOME HAS BEEN DULY OFFERED TO TAX BY T HEM. IT WAS ALSO SUBMITTED THAT THE AFORESAID DETAILS WE RE ALSO SUBMITTED BY THE ASSESSEE BEFORE THE LD AO WHO DID NOT MAKE ANY COMMENTS REGARDING T HE SAME. IT WAS ARGUED THAT THE ADDITION HAS BEEN MADE BY THE LD AO MERELY BASED ON GUESS WORK DEHORS THE MATERIALS ON RECORD. RELIANCE IN THIS REGARD WAS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN 10 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 THE CASE OF DHAKESHWARI COTTON MILLS LTD VS CIT REPORTED IN 26 ITR 775 (SC) WHEREIN IT WAS HELD THAT NO ADDITION CAN BE MADE WITHOUT MATER IAL AND ON MERE SUSPICION. 3.3. THE LD CITA OBSERVED THAT THE ASSESSEE WAS ASK ED TO SUBMIT THE EVIDENCES REGARDING THE SERVICES RENDERED BY THE PERSONS TO WHOM COMMIS SION WAS PAID. THE LD CITA TOOK COGNIZANCE OF THE AFORESAID DOCUMENTS FILED BY THE ASSESSEE BEFORE HIM. HE HOWEVER CONCLUDED THAT THE ASSESSEE DID NOT SUBMIT ANY EVID ENCE OF QUANTUM OF SERVICES RENDERED BY THE PERSONS AND ALSO FAILED TO ESTABLISH THAT THE Q UANTUM OF COMMISSION PAYMENT IS COMMENSURATE WITH THE SERVICES RENDERED BY THE PART IES. ACCORDINGLY, HE UPHELD THE DISALLOWANCES MADE BY THE LD AO. AGGRIEVED, THE ASS ESSEE IS IN APPEALS BEFORE US ON THE FOLLOWING GROUNDS:- AY 2010-11 1B) THAT WITHOUT PREJUDICE TO GROUND NO. 1(A) AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ACTION OF LD. CIT(A) TO CONFIRM DISALLOWA NCE OF COMMISSION OF RS.57,69,392/- IS ERRONEOUS, ARBITRARY AND BAD IN LAW EVEN ON MERITS. AY 2011-12 1B) THAT WITHOUT PREJUDICE TO GROUND NO. 1(A) AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ACTION OF LD. CIT(A) TO CONFIRM DISALLOWA NCE OF COMMISSION OF RS.3,47,000/- IS ERRONEOUS, ARBITRARY AND BAD IN LAW EVEN ON MERIT. 3.4. THE LD AR ARGUED THAT THE ENTIRE DETAILS OF CO MMISSION PAYMENTS TO PARTIES WERE FILED BEFORE THE LOWER AUTHORITIES. THE LD AO DID NOT DI SPUTE THE NATURE OF SERVICES RENDERED BY THOSE PARTIES TO THE ASSESSEE IN LIEU OF RECEIPT OF COMMISSION. INFACT THE LD AO HIMSELF HAD ELABORATED IN HIS ASSESSMENT ORDER THE VARIOUS ACTI VITIES TO BE CARRIED OUT BY THE RESPECTIVE PARTIES BUT SIMPLY STATED THAT THE COMMISSION PAYME NT SEEMS TO BE ON THE HIGHER SIDE. HE ARGUED THAT BOTH THE LD AO AND THE LD CITA FAILED T O BRING IN COMPARABLE CASES TO ESTABLISH THAT THE COMMISSION PAYMENTS MADE BY THE ASSESSEE I S ON THE HIGHER SIDE. THE ASSESSEE HAD DULY ESTABLISHED THAT THE COMMISSION PAYMENTS WERE MADE PURSUANT TO AGREEMENTS ENTERED INTO WITH PARTIES, TAX WAS DULY DEDUCTED AND REMITT ED ON THE COMMISSION PAYMENTS, INVOICES RAISED BY THOSE PARTIES ON THE ASSESSEE IN THAT REG ARD WERE FILED AND THOSE PARTIES HAD ALSO DULY OFFERED THE COMMISSION INCOME IN THEIR RESPECT IVE RETURNS, PROOF FOR WHICH WAS ALSO FILED BEFORE THE AUTHORITIES. HENCE HE ARGUED THAT THE ASSESSEE HAD DULY ESTABLISHED ITS ONUS IN FULL IN SUPPORT OF THE CLAIM OF EXPENDITURE. H E FURTHER ARGUED THAT THE ASSESSEE HAS BEEN 11 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 PAYING THE COMMISSION TO THE PARTIES ON A REGULAR B ASIS AND THIS HAS BEEN THE REGULAR PRACTICE OF THE ASSESSEE . 3.5. IN RESPONSE TO THIS, THE LD DR ARGUED THAT THE RE IS NO NEED TO BRING THE COMPARABLE CASES IN THE INSTANT CASE AS IT HAD BEEN FOUND DURING THE SEARCH THAT THE ASSESSEE HAD BEEN ENGAGED IN THE PRACTICE OF INFLATING EXPENDITURE. MOREOVER THE ASSESSEE HAD NOT PROVED WITH EVIDENCES TO JUSTIFY THE QUANTUM OF COMMISSION PAYM ENTS MADE BY IT AND HENCE THE LD AO HAD REASONABLY GRANTED DEDUCTION TO THE EXTENT OF 5 0% OF THE CLAIM MADE BY THE ASSESSEE WHICH DOES NOT REQUIRE ANY INTERFERENCE. 3.6. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE LD AO HAD DISALLOWED THE COMMISSION PAYMENT AT 50% OF THE CLAIM MADE BY THE ASSESSEE ON THE GROUND THAT THE SAME IS ON THE HIGHER SIDE. WE FIND THAT THE ASSESSEE H AD DULY FURNISHED THE EVIDENCES IN SUPPORT OF THE CLAIM OF COMMISSION PAYMENTS , NATURE OF SER VICES RENDERED BY THOSE PARTIES BY WAY OF FILING THE AGREEMENTS ENTERED INTO BY THE ASSESS EE WITH THEM, COMPLIANCE TO TDS PROVISIONS MADE BY THE ASSESSEE ON THE COMMISSION P AYMENTS AND ASSESSEE HAD ALSO FURNISHED THE INCOME TAX RETURNS TOGETHER WITH THE BALANCE SHEETS AND PROFIT AND LOSS ACCOUNT OF THOSE PARTIES WHEREIN THE COMMISSION INCOME HAD BEEN DULY OFFERED TO TAX BY THE RESPECTIVE PARTIES. WE FIND THAT THE ASSESSEE HAD DISCHARGED ITS COMPLETE ONUS TO ESTABLISH THE GENUINENESS OF THE CLAIM OF COMMISSION PAYMENTS . WE ARE NOT IN AGREEMENT WITH THE ARGUMENT OF THE LD DR THAT NO COMPARABLE CASES NEED TO BE BROUGHT ON RECORD BY THE LD AO IN THE INSTANT CASE, FOR WHICH PURPOSE , HE PLACED RELIANCE ON THE OBSERVATION OF THE LD AO THAT THE ASSESSEE GROUP WAS INVOLVED IN INFLATION O F EXPENDITURE IN ORDER TO REDUCE THE TAXABLE PROFITS AS FOUND IN THE COURSE OF SEARCH. INFACT THE LD AO IN ORDER TO MAKE THIS OBSERVATION HAD PLACED RELIANCE ON THE OBSERVATION MADE BY THE INVESTIGATION WING IN THEIR APPRAISAL REPORT. BUT WE FIND THAT THE SAME LD AO HAD NOT MADE ANY OTHER DISALLOWANCE OF EXPENDITURE ON THE GROUND OF INFLATION OF EXPENDITU RE AND MORE SO, THERE IS NO IOTA OF EVIDENCE BROUGHT ON RECORD TO PROVE THAT THE ASSESS EE HAD INDEED INVOLVED IN INFLATION OF EXPENDITURE TO REDUCE THE TAXABLE PROFITS AND IT ON LY REMAINED AS A WILD ALLEGATION. HENCE IN THESE FACTS AND CIRCUMSTANCES, WE HAVE NO OTHER OPT ION BUT TO DISMISS THE ARGUMENTS OF THE LD DR ADVANCED IN THAT REGARD. IF THAT BE SO, THER E IS ABSOLUTELY NO BASIS FOR THE LD AO TO ALLOW 50% OF THE CLAIM OF THE ASSESSEE. WE FIND TH AT THE LD AO HIMSELF IN HIS ORDER HAD 12 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 MENTIONED THE VARIOUS ACTIVITIES TO BE CARRIED OUT BY THE PARTIES JUSTIFYING THE PAYMENT OF COMMISSION. IT IS NOT IN DISPUTE THAT THE COMMISS ION @ 3% IS PAID TO M/S STEEL CRACKERS PVT LTD ON SALES MADE THROUGH THEM AND IN RESPECT O F CREATORS CORPORATION , COMMISSION WAS PAID FOR POLICY DECISION RESULTING INTO SALES OF COMPANYS PRODUCTS WHICH VARIED FROM RS 450 TO RS 2000 ON SALE OF EACH PRODUCT. ALL THES E FACTS ARE BROUGHT OUT CLEARLY IN THE ASSESSMENT ORDER ITSELF. WE FIND THAT IN ADDITION TO THE ABOVE, THE ASSESSEE HAD ALSO PROVIDED THE AGREEMENT COPY , LEDGER ACCOUNT , TDS DETAILS ON COMMISSION PAYMENTS , COPY OF BILLS RAISED BY PARTIES AND IT RETURN AND ACCOUNTS INCLUDING BALANCE SHEET OF RECIPIENT COMPANIES WHEREIN THE SAID COMMISSION INC OME HAS BEEN DULY OFFERED TO TAX BY THEM. ALL THESE EVIDENCES CLEARLY PROVE BEYOND DOU BT THE CLAIM OF EXPENDITURE ON ACCOUNT OF COMMISSION. WE FIND THAT THE DISALLOWANCE HAS BEEN MADE MERELY BASED ON WILD ALLEGATION AND ON SURMISE AND CONJECTURE. IN THIS REGARD, THE SUPPORT DRAWN BY THE LD AR BY PLACING RELIANCE ON THE DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF DHAKESHWARI COTTON MILLS LTD VS CIT REPORTED IN 26 ITR 775 (SC) IS WELL FOUNDED. HENCE IN THE FACTS AND CIRCUMSTANCES, WE HOLD THAT THERE IS ABSOLUTELY NO MATERIAL BROUGHT ON RECORD TO DISALLOW 50% OF THE CLAIM MADE BY THE ASSESSEE AND ACCORDING LY THE ENTIRE DISALLOWANCE MADE ON THIS ACCOUNT DESERVES TO BE DELETED. ACCORDINGLY, THE GR OUND NO. 1(B) RAISED FOR ASST YEARS 2010-11 AND 2011-12 ARE ALLOWED. 4. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA IS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE ON ACCOUNT OF EMPLO YEES CONTRIBUTION TO PF / ESI IN THE SUM OF RS. 23,846/- FOR ASST YEAR 2011-12 IN THE FA CTS AND CIRCUMSTANCES OF THE CASE. 4.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD A O OBSERVED THAT AS PER CLAUSE 16(B) OF TAX AUDIT REPORT , THERE WAS A DELAYED DEPOSIT OF RS. 3 ,871/- TOWARDS EMPLOYEES CONTRIBUTION TO PF AND RS. 19,975/- ON ESI. SINCE THE SAME WAS NOT REMITTED TO THE PF/ESI AUTHORITIES WITHIN THE DUE DATE PRESCRIBED UNDER THE RESPECTIVE ACTS, THE LD AO DISALLOWED THE SAME IN ACCORDANCE WITH SECTION 36(1)(VA) OF THE ACT, WHICH WAS ALSO UPHELD BY THE LD CITA . AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON T HE FOLLOWING GROUND:- 2. (A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN CONFIRMING ADDITION IN RESPECT OF EM PLOYEE'S CONTRIBUTION TO PF/ESI OF RS. 23,846/- U/S 36(1)VA) READ WITH SECTION 2(24)(X) OF INCOME TAX ACT, 1961 WITHOUT PROPER APPRECIATION OF THE RATIO OF DECISION OF ITAT, SPEC IAL BENCH, MUMBAI IN ALL CARGO GLOBAL 13 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 LOGISTICS LTD. - VS - DCIT (ITA NO. 5018 TO 5022 & 5059/M/2010) AND BY MISREADING THE FACTS OF THE PRESENT CASE. (B) THAT WITHOUT PREJUDICE TO GROUND NO.2(A) AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ACTION OF LD. CIT(A) TO CONFIRM THE ADDIT ION U/S 36(1)(VA) READ WITH SECTION 2(24)(X) IS ERRONEOUS, ARBITRARY AND BAD IN LAW EVEN ON MERI T. 4.2. THE LD AR ARGUED THAT THE PF / ESI WAS REMITTE D BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AND HENCE PLACED RELIANCE ON THE DECISION OF THIS TRIBUNAL IN THE CASE OF VIJAY SHREE CEMENT WHEREIN IT WAS HELD THAT IF THE PAYMEN TS WERE MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME, EVEN THE EMPLOYEES CON TRIBUTION WOULD BE ALLOWED AS A DEDUCTION. HOWEVER, HE FAIRLY AGREED THAT THE SAME MAY BE DIRECTED TO BE VERIFIED BY THE LD AO AND PRAYED FOR SET ASIDE OF THIS TO THE FILE OF THE LD AO FOR VERIFICATION OF THE DATES WHICH WAS ALSO ACCEPTED BY THE LD DR. 4.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE FOLLOWING DECISIONS : - AKZO NOBEL INDIA LTD VS CIT IN ITA NO. 110 OF 2011 DATED 14.6.2016 (CAL HC) CIT VS VIJAY SHREE LIMITED IN ITA NO. 245 OF 2011 D ATED 6.9.2011 (CAL HC) CIT VS P.M.ELECTRONICS LTD REPORTED IN (2008) 220 C TR 635 (DEL) CIT VS SABARI ENTERPRISES REPORTED IN (2008) 298 IT R 141 (KAR) CIT VS ALOM EXTRUSIONS LTD REPORTED IN (2009) 319 I TR 306 (SC) CIT VS NEXUS COMPUTER P LTD REPORTED IN (2008) 219 CTR 54 (MAD) CIT VS VINAY CEMENT LTD REPORTED IN (2007) 213 CTR 268 (SC) CIT VS AIMIL LTD REPORTED IN 2010-TIOL-125-HC-DEL-I T CIT VS DHARMENDRA SHARMA REPORTED IN 297 ITR 320 (D EL) HOWEVER, IT NEEDS TO BE VERIFIED WHETHER THE EMPLOY EES CONTRIBUTION TO PF / ESI HAVE BEEN REMITTED BEFORE THE DUE DATE OF FILING THE RETURN O F INCOME BY THE ASSESSEE. HENCE WE DEEM IT FIT AND APPROPRIATE TO SET ASIDE THIS ISSUE TO T HE FILE OF THE LD AO TO VERIFY THE SAID DATES AND IF THE SAME ARE REMITTED BEFORE THE DUE DATE OF FILING RETURN OF INCOME, DEDUCTION IS TO BE GRANTED TO THE ASSESSEE. ACCORDINGLY, THE GROUND NO. 2(A) AND (B) RAISED BY THE ASSESSEE FOR ASST YEAR 2011-12 ARE ALLOWED FOR STATISTICAL P URPOSES. 5. THE LAST ISSUE TO BE DECIDED IN THESE APPEALS IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF BONUS, LEAVE SALARY U /S 43B OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THE ASST YEARS 2010-1 1 AND 2011-12. 14 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 5.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD A O OBSERVED FROM THE TAX AUDIT REPORT THAT THE BONUS PAYABLE OF RS. 5,22,670/- FOR THE ASST YEAR 2 010-11 AND BONUS, LEAVE SALARY & LEAVE WAGES PAYABLE OF RS. 12,79,715/- WERE NOT PAID BY T HE ASSESSEE AND ACCORDINGLY THE DISALLOWANCE U/S 43B OF THE ACT WAS WARRANTED. TH IS ACTION OF THE LD AO WAS UPHELD BY THE LD CITA. AGGRIEVED , THE ASSESSEE IS IN APPEAL S BEFORE US ON THE FOLLOWING GROUNDS:- AY 2010-11 2. (A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN CONFIRMING DISALLOWANCE OF BONUS OF RS. 5,22,670/- U/S 43B OF INCOME TAX ACT, 1961 WITHOUT PROPER APPRECIATION OF THE RATIO OF DE CISION OF ITAT, SPECIAL BENCH, MUMBAI IN ALL CARGO GLOBAL LOGISTICS LTD. - VS - DCIT. (B) THAT WITHOUT PREJUDICE TO GROUND NO. 2(A) AND O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ACTION OF LD. CIT(A) TO CONFIRM DISALLOWA NCE U / S 43B OF INCOME TAX ACT, 1961 IS ERRONEOUS, ARBITRARY AND BAD EVEN ON MERIT. AY 2011-12 3. (A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, LD. CIT(A) IS WRONG AND UNJUSTIFIED IN CONFIRMING DISALLOWANCE OF BONUS, LE AVE SALARY ETC OF RS. 12,79,715/- U/S 43B OF INCOME TAX ACT, 1961 WITHOUT PROPER APPRECIATION OF THE RATIO OF DECISION OF ITAT, SPECIAL BENCH, MUMBAI IN ALL CARGO GLOBAL LOGISTICS LTD. - VS - DCIT. (B) THAT WITHOUT PREJUDICE TO GROUND NO. 3(A) AND O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ACTION OF LD. CIT(A) TO CONFIRM DISALLOWA NCE U / S 43B OF INCOME TAX ACT, 1961 IS ERRONEOUS, ARBITRARY AND BAD EVEN ON MERIT. 5.2. THE LD AR ARGUED THAT AT THE TIME OF SIGNING O F THE TAX AUDIT REPORT, THE BONUS AND LEAVE SALARY WERE NOT PAID AND ACCORDINGLY THE TAX AUDITO R HAD REPORTED THAT THE SAME WERE NOT PAID BY THE ASSESSEE. BUT THE SAME WERE PAID BY AS SESSEE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME WHICH MAY KINDLY BE DIRECTED TO BE VERIFIED BY THE LD AO AND ACCORDINGLY DECIDE THE ISSUE. THE LD DR FAIRLY AGREED FOR THIS VERIFICATION BY THE LD AO. 5.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THE MATTER REQUIRES TO BE VERIFIED BY THE LD AO WITH REGARD TO THE ACTUAL DATE OF REMITTA NCE OF THE AFORESAID EXPENDITURE WHICH WOULD HAVE A BEARING ON THE ALLOWABILITY OF THE EXP ENDITURE IN TERMS OF SECTION 43B OF THE ACT. WE DIRECT THE LD AO TO VERIFY THE SAME AND DE CIDE THE ISSUE IN ACCORDANCE WITH LAW. ACCORDINGLY, THESE GROUNDS ARE ALLOWED FOR STATISTI CAL PURPOSES. 6. THE GROUND NO. 3 FOR ASST YEAR 2010-11 AND GROUN D NO. 4 FOR ASST YEAR 2011-12 ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICA TION. 15 IT(SS)A NO. 08 TO 13/KOL/2015 RAHEE TRACK TECHNOLOGIES PVT. LTD., AY 2006-07 TO 2 011-12 7. TO SUM UP, ASSESSEE APPEALS FOR ASST YEARS 2006-07 TO 2009-10 ARE ALLOWED ASSESSEE APPEALS FOR ASST YEAR 2010-11 AND ASST YEA R 2011-12 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 07.10.2016 SD/- SD/- (S.S. VISWANETHRA RAVI) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 7 TH OCTOBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT RAHEE TRACK TECHNOLOGIES PVT. LTD.N.H. 6, P.O. ARGORI, VILL JANGALPUR, HOWRAH-711302 2 RESPONDENT DCIT, CC-XXI, KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .