DCIT, New Delhi v. M/s. Chandabh Impex Pvt. Ltd., New Delhi

ITA 773/DEL/2013 | 2009-2010
Pronouncement Date: 18-10-2013 | Result: Dismissed

Appeal Details

RSA Number 77320114 RSA 2013
Assessee PAN AADCC3503G
Bench Delhi
Appeal Number ITA 773/DEL/2013
Duration Of Justice 8 month(s) 11 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Chandabh Impex Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 18-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 18-10-2013
Date Of Final Hearing 08-08-2013
Next Hearing Date 08-08-2013
Assessment Year 2009-2010
Appeal Filed On 06-02-2013
Judgment Text
THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SMT. DIVA SINGH JUDICIAL MEMBER AND SHRI T.S.KAPOOR ACCOUNTANT MEMBER I.T.A .NO.-773/DEL/2013 (ASSESSMENT YEAR-2009-10) DCIT VS CHANDABH IMPEX PVT. LTD. CIRCLE-3(1) A-64B SECOND FLOOR NEW DELHI. NIZAMUDDIN EAST NEW DELHI. PAN-AADCC3503G (APPELLANT) (RESPONDENT) I.T.A .NO.-230/DEL/2013 (ASSESSMENT YEAR-2009-10) CHANDABH IMPEX PVT. LTD. VS DCIT C/O-M/S RRA TAX INDIA CIRCLE-3(1) D-28 SOUTH EXTENSION NEW DELHI. PART-I NEW DELHI-110049. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ASHWANI TANEJA ADV & SH. SOMIL AGARWAL CA RESPONDENT BY: SH. VIVEK KUMAR SR. DR ORDER PER DIVA SINGH JM THESE ARE TWO CROSS-APPEALS FILED BY THE ASSESSEE A ND THE REVENUE AGAINST THE ORDER DATED 05.11.2012 OF CIT(A)-VI NEW DELHI PERTAINING TO 2009-10 ASSESSMENT YEARS. BOTH THESE APPEALS ARE BEING DEC IDED BY A COMMON ORDER AS ISSUES RAISED THEREIN ARE INTERLINKED. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER :- 01. WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.11 120 775/- (TYPOGRAPHICAL ERROR T HE AMOUNT SHOULD READ RS.11 12 775/-) MADE ON ACCOUNT OF DISALLOWANCE OF COMMISSION EXPENSES IGNORING THE FACTS:- (A) THE ASSESSEE COMPANY IS CLAIMING EXPENSES MERELY ON THE BASIS OF AMOUNT DELETED IN BANK ACCOUNT BUT THERE IS NOTHING ON RECORD TO PROVE SERVICES RENDERED EXPENSES ARE GENUINE FOR TH E BUSINESS PURPOSES. I.T.A .NO.-773 & 230/DEL/2013 2 (B) THE ASSESSEE COMPANY FAILED TO PROVIDE THE DOCUMENT ARY EVIDENCES DURING THE ASSESSMENT PROCEEDINGS. 02. WHETHER THE LD. CIT(A) HAS ERRED ON FACTS AND IN LA W IN DELETING THE ADDITION MADE U/S 40(A)(IA) AMOUNTING TO RS.50 95 0 12/- IGNORING THE FACTS THAT ASSESSEE COMPANY HAS NOT DEDUCTED TDS ON MAKIN G THE PAYMENT OF FREIGHT & CARTAGE. 03. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND MODIFY ALTER ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME B EFORE OR DURING THE HEARING OF THIS APPEAL. 1.1. THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING THE D ISALLOWANCE OF RS.1 04 86 640/- MADE BY LD. AO ON ACCOUNT OF COMMI SSION EXPENSES PAID BY THE ASSESSEE AND HAS ERRED IN SUSTAINING THE DIS ALLOWANCE BEING COMMISSION PAID TO SH. RAKESH TALWAR AND M/S R.T. A SSOCIATES AND HAS FURTHER ERRED IN NOT CONSIDERING AND APPRECIATING T HE EVIDENCE PLACED ON RECORD BY THE ASSESSEE. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER ACT ION OF LD. CIT(A) IN NOT DELETING THE DISALLOWANCE FULLY AS MADE BY LD. AO O N ACCOUNT OF COMMISSION EXPENSES PAID BY THE ASSESSEE IS CONTRAR Y TO LAW AND FACTS VOID AB INITIO AND WITHOUT GIVING ADEQUATE OPPORTU NITY OF HEARING BY RECORDING INCORRECT FACTS AND FINDINGS AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234B OF THE INCOME TAX ACT 1 961. 4. THAT THE APPELLANT CRAVES THE LEAVE TO ADD MODIFY AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND AL L THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE IN THE YEAR UNDER CONSIDERATION WHO WAS ENGAGED IN THE BUSINESS OF E XPORT SALE OF CHEMICALS PARTICULARLY FOR MINING AND QUARRY INDUSTRY DECLARE D AN INCOME OF RS.4 77 95 762/- BY WAY OF FILING A RETURN. THE RETURN WAS PROCESSE D U/S 143(1) AND SUBSEQUENTLY BY ISSUANCE OF NOTICE U/S 143(2) AND 142(1) ACCOMPA NIED BY QUESTIONNAIRE ETC. IT WAS SELECTED FOR SCRUTINY ASSESSMENT. THE AO IN TH E COURSE OF THE ASSESSMENT PROCEEDINGS CONSIDERING THE FACT THAT THE ASSESSEE HAD CLAIMED COMMISSION EXPENSES AMOUNTING TO RS.1 15 99 415/- REQUIRED THE ASSESSEE TO PROVIDE THE NECESSARY DETAILS. I.T.A .NO.-773 & 230/DEL/2013 3 2.1. IN RESPONSE THERETO THE ASSESSEE AS PER THE AS SESSMENT ORDER CLAIMED COMMISSION EXPENSES IN THE NAME OF THE FOLLOWING PA RTIES:- 1. M/S R.T. ASSOCIATES DUBAI RS.3904560/- 2. SHRI RAKESH TALWAR DUBAI RS.3631968/- 3. M/S R.T. ASSOCIATES DUBAI RS.2950112/- 4. M/S ALEM DASTA & CO. RS.1076285/- 5. SHRI ZHOU CHUNYU RS.136490/- RS.11599415/- 2.2. THE AO REQUIRED THE ASSESSEE TO JUSTIFY ITS CL AIM BY PROVIDING THE FOLLOWING DETAILS IN ORDER TO ESTABLISH THE GENUINENESS OF TH E EXPENSES CLAIMED:- - PROOF OF SERVICES RENDERED BY THE PARTY CONCERNED - CONFIRMATION OF THE CONCERNED PARTIES - COPIES OF COMMUNICATION E-MAINS ADVISORY ETC. BET WEEN THE ASSESSEE AND PERSON TO WHOM COMMISSION HAS BEEN PAID. 2.3. IN RESPONSE THERETO THE ASSESSEE FILED WRITTEN SUBMISSIONS DATED 15.11.20111 THE SAME ARE EXTRACTED IN THE ASSESSME NT ORDER AND REPRODUCED HEREUNDER FOR READY-REFERENCE:- THE ASSESSEE HAS TRIED TO CONTACT THEM OVER PHONE AND VIA E-MAIL TO WITH REMINDER SENT TO RT ASSOCIATES/RAKESH TALWAR UAE AS ALSO MR. ZHOU OF CHUNYU CONSULTANTS CHINA BUT UNFORTUNATELY THERE IS NO RE SPONSE FROM ANY OF THEM TILL DATE. AS REGARDS ALEM DESTA & CO. ETHIPIA THERE IS NO E-MAIN CONTACT ADDRESS BUT THE OWNER MR. ALEM DESTA WAS CONTACTED OVER PHONE ONCE AND REQUESTED TO PROVIDE THE REQUIRED INFORMATION FOR T HE TAX PURPOSE. HE HAS NEITHER SENT ANY INFORMATION NOR IS RESPONDING TO O UT TELEPHONE CALLS. 2.4. CONSIDERING THE SUBMISSIONS ADVANCED THE AO WA S OF THE VIEW THAT THE ASSESSEE DOES NOT HAVING ANY DOCUMENTARY EVIDENCE T O PROVE SERVICES RENDERED BY THE CONCERNED PARTIES AND TAKING INTO CONSIDERATION THE FACT THAT NO COMMUNICATION IS AVAILABLE FROM THE PARTIES AND EVEN CONFIRMATION OF THE RECIPIENT IS NOT FILED AND THE ONLY PLEA TAKEN IS THAT THE AMOUNT IS PAID THRO UGH BANKING CHANNEL HELD THE EXPLANATION AS NOT ACCEPTABLE. HE WAS OF THE VIEW THAT THE GENUINENESS OF THE EXPENSES FOR BUSINESS CANNOT BE ACCEPTED MERELY ON THE BASIS OF THE FACT THAT THE AMOUNT WAS CREDITED THROUGH BANKING CHANNELS. 2.5. RELIANCE WAS PLACED UPON DIZA HOLDINGS (P) LTD . 255 ITR 573 (KER.) FOR THE PROPOSITION THAT THE BURDEN WAS ON THE ASSESSEE TO OFFER A SATISFACTORY EXPLANATION ABOUT THE NATURE AND SOURCE OF THE AMOUNT FOUND CRE DITED IN THE BOOKS OF THE I.T.A .NO.-773 & 230/DEL/2013 4 ASSESSEE. MERE FURNISHING OF PARTICULARS WAS NOT E NOUGH AND THE MERE FACT THAT THE PAYMENT WAS BY WAY OF ACCOUNT PAYEE CHEQUE WAS ALSO NOT CONCLUSIVE. RELIANCE WAS ALSO PLACED ON THE FOLLOWING JUDGEMENTS:- (I) SASSOON J. DAVID & CO. (P) LTD. VS CIT [1979] 118 ITR 261(SC); (II) L.H.SUGAR FACTORY & OIL MILLS (P.) LTD. VS CIT [198 0] 125 ITR 293 (SC); (III) CIT VS IMPERIAL CHEMICAL INDUSTRIES (INDIA) (P) LTD . [1969] 74 ITR 17(SC); (IV) JASWANT TRADING CO. VS CIT [1995] 212 ITR 24; (V) ANNAMMA ALEXANDER VS CIT [1989] 176 ITR 229. 2.6. ACCORDINGLY THE CLAIM OF THE ASSESSEE WAS DISA LLOWED WITH THE FOLLOWING OBSERVATIONS :- IN VIEW OF THE ABOVE NOTED FACTS IT IS PROVED THAT THE ASSESSEE COMPANY IS CLAIMING EXPENSES MERELY ON THE BASIS OF AMOUNT DEB ITED IN BANK ACCOUNT BUT THERE IS NOTHING ON RECORD TO PROVE SERVICES RENDER ED & EXPENSES ARE GENUINE FOR BUSINESS PURPOSES. THE ASSESSEE COMPANY FAILED TO PROVIDE THE DOCUMENTARY EVIDENCES AS CALLED FOR BY THE AO DURING THE ASSESS MENT PROCEEDINGS. THEREBY ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM OF EXPENS ES BY NOT SUBMITTING DOCUMENTARY EVIDENCE. HENCE AMOUNT OF RS.11599415/ - IS HEREBY DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE COMPAN Y. 3. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY T HE ASSESSEE MOVED A PETITION UNDER RULE 46A OF THE ITAT RULES 1962 REQUESTING FO R ADMISSION OF ADDITIONAL DOCUMENTS/EVIDENCES. THE CIT(A) FORWARDED THE SAME TO THE AO SEEKING A REPORT ON THE ADDITIONAL EVIDENCE. AS PER PARA 3 OF THE I MPUGNED ORDER THE AO SUBMITTED HIS REPORT DATED 09.07.2012 AND THE ASSESSEE IN RE SPONSE THERETO FILED ITS REJOINDER THERETO (THE COPY OF THE REMAND REPORT WAS PROVIDED BY THE ASSESSEE IN THE COURSE OF THE HEARING). 3.1. CONSIDERING THE ARGUMENTS OF THE ASSESSEE THE FRESH EVIDENCES WERE ADMITTED BY THE CIT(A) ON THE FOLLOWING REASONING :- 5.3. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE BY THE LD. AR AND HAVE GONE THROUGH THE ASSESSMENT ORDER. I HAVE ALS O CONSIDERED THE REMAND REPORT SUBMITTED BY THE AO WRITTEN SUBMISSIONS OF THE APPELLANT COMPANY AND THE REJOINDER ON THE ABOVE GROUND. 5.3.1. AS REGARDS TO ADMISSIONS OF ADDITIONAL EVIDE NCES ARE CONCERNED I FIND THAT ASSESSMENT ORDER IN THE PRESENT CASE WAS PASSE D BY THE AO ON 16.12.2011 AND THE APPELLANT SUBMITTED A LETTER DATED 15.12.20 11 WITH WHICH COPIES OF THE RELEVANT AGREEMENTS TOWARDS PAYMENT OF COMMISSION W ERE FILED BEFORE THE OA WHICH WERE NOT CONSIDERED BY THE AO WHILE PASSING T HE IMPUGNED ORDER. SIMILARLY COPIES OF EMAIL MESSAGE FROM MR. ZHOU OF CHUNYU CONSULTANTS I.T.A .NO.-773 & 230/DEL/2013 5 CONFIRMING THE COMMISSION PAID TO THEM BY THE ASSES SEE AND FURTHER CONFIRMING THAT THEY HAD SEEN THE MAIL OF THE APPELLANT LATE COULD NOT BE FILED BY THE APPELLANT DUE TO GENUINE REASONS EXPLAINED AND THE REFORE IN THE INTEREST OF JUSTICE WHEN SUCH EVIDENCES PROVE THE GENUINENESS OF THE TRANSACTIONS AND GO TO THE ROOT OF THE MATTER CANNOT BE IGNORED JUST B ECAUSE FOR THE REASONS EXPLAINED BY THE APPELLANT COULD NOT BE FILED DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. ALL THESE EVIDENCES WERE FORWARDED TO THE AO FOR EXAMINATION BUT NO COMMENTS ARE GIVEN BY THE AO ON ANY OF THESE EVIDENCES. AS A FIND THAT THESE EVIDENCES FILED ARE NECESSARY TO ADJUDICATE T HE GROUNDS OF THE APPEAL THE ADDITIONAL EVIDENCES FILED BY THE APPELLANT COMPANY ARE ADMITTED. 3.2. THE CIT(A) FURTHER TOOK INTO CONSIDERATION THE ARGUMENTS THAT THE ASSESSEE HAD NO CONTROL OVER THE COMMISSION AGENTS FOR ENSUR ING TIMELY REPLY AND THE COMMISSIONS/FACILITATION FEES ARE ESSENTIAL FOR FRU CTIFICATION OF THE TRADING BUSINESS AND THAT THE AGENTS WERE NECESSARY AS THE ASSESSEE DOES NOT HAVE ANY PERMANENT/EXCLUSIVE AGENTS. THE ASSESSEE HAD CANVAS SED THAT IN THE YEAR UNDER CONSIDERATION ON ACCOUNT OF THE BAN OF EXPORTS OF A MMONIUM NITRATE BY CHINA DUE TO BEIJING OLYMPICS AN ACUTE SHORTAGE AND STEEP RIS E IN PRICES IN THE INTERNATIONAL MARKET RESULTED AND THE WINDOW OF OPPORTUNITY SO C REATED WAS UTILIZED BY THE ASSESSEE WHICH HAD RESULTED IN HUGE MARGINS WHICH C OULD BE EARNED ONLY WITH THE HELP OF THESE FOREIGN AGENTS/PARTIES WHO SOURCED TH E MATERIAL ACCORDING TO THE REQUIREMENTS OF THE ASSESSEE. THE PROFIT HAS RESUL TED IT WAS ARGUED ONLY WITH THE HELP OF THESE FOREIGN PARTIES/AGENTS. IT WAS STATE D THE ASSESSEE FACED DIFFICULTY IN PROVIDING THE REQUIRED INFORMATION TO THE AO AS THE SE PARTIES WERE BASED OVERSEAS AND THE ASSESSEE HAD NO CONTROL OVER THEM SO AS TO FORCE THROUGH PHONE ETC. TO CONFIRM THE TRANSACTIONS TO THE SATISFACTION OF THE AO AS HAVING NO CONTROL OVER THE PARTIES THE ASSESSEE WAS NOT IN A POSITION TO INSIS T FOR THEIR CO-OPERATION AS SUCH COULD INITIALLY ONLY RELY ON THE FACT THAT THE PAYM ENTS HAVE BEEN MADE THROUGH THE BANKING CHANNELS. 3.3. IT WAS SUBMITTED THAT THESE PARTIES NAMELY R.T . ASSOCIATES AND RAKESH TALWAR UAE WHO FACILITATED IN MAKING AVAILABLE MOS T OF THE COMPANYS REQUIREMENTS OF AMMONIUM NITRATE BY SOURCING FROM E GYPT IRAN AND EUROPE WHEREAS ALEM DESTA CO. AND ZHOU CHUNYU CONSULTANTS FACILITATED SALES WITH I.T.A .NO.-773 & 230/DEL/2013 6 CHINESE COMPANY ENGAGED IN QUARRY OPERATIONS IN ETH IOPIA WAS IN ITSELF ADEQUATE EVIDENCE FOR HAVING RENDERED THE REQUISITES SERVICE FOR WHICH COMMISSION WAS PAID. IT WAS ALSO SUBMITTED THAT THE COMMISSIONS H AD BEEN REMITTED ONLY WHEN THE COMPANY REALIZED FULL PAYMENTS FROM ITS OVERSEAS CL IENTS/BUYERS. IN SUPPORT OF THE CLAIM IT WAS STATED THAT BEFORE THE AO CONFIRMATION OF THE SWIFT ADVICE FROM THE ICICI BANK WERE AVAILABLE FOR R.T. ASSOCIATES; WHER EAS FOR ALEM DESTA & CO. AND ZHOU CHUNYU CONSULTANTS THEY WERE NOT READILY AVAI LABLE BECAUSE THESE WERE RELATING TO OLD RECORDS. HOWEVER IT WAS ARGUED THE BANK HAD SEPARATELY CONFIRMED THE PAYMENTS MADE AND THE CONFIRMATIONS WERE FILED BEFORE THE AO. IT WAS FURTHER SUBMITTED THAT IT WAS SPECIFICALLY BROUGHT TO THE NOTICE OF THE AO THAT PAYMENT TO RAKESH TALWAR TOWARDS COMMISSION FOR PRODUCT SOURCI NG FROM IRAN WAS MADE THROUGH SBI SOUTH EXTENSION BRANCH NEW DELHI AS NO OTHER BANK WAS WILLING TO TRANSACT BUSINESS WITH IRAN AT THAT POINT OF TIME D UE TO UNCERTAINTY IN THE GEOGRAPHICAL LOCATION ETC. IN THESE CIRCUMSTANCES THE INSISTENCE OF THE AO TO PROVIDE COPY OF PAN CARD I.D. PROOF INDIAN ADDRES S OF THESE PARTIES AND THEIR OTHER BUSINESS CONNECTIONS IN INDIA WAS ASSAILED AS THESE DOCUMENTS COULD NOT BE PROVIDED AS NONE OF THE PARTIES RESIDED IN INDIA. IT WAS ALSO ARGUED THAT THE AO WAS INFORMED THAT THE ASSESSEE HAS HAD NO DEALINGS WITH THESE PARTIES IN ANY SUBSEQUENT YEAR. IT WAS ALSO SUBMITTED THAT THE AO WAS ALSO INFORMED THAT MR. TALWAR WAS SETTLED IN DUBAI FOR OVER 30 YEARS AND H AD NO INTEREST IN INDIA. 3.4. THE RECORD SHOWS THAT ON BEHALF OF THE ASSESSE E IT WAS ALSO ARGUED THAT THE AO WAS INFORMED THAT THE ASSESSEE HAD NO PERMANENT/ EXCLUSIVE AGENT OUTSIDE INDIA AND IN ORDER TO OBTAIN THE FACILITIES AND IN THE I NTERESTS OF THE BUSINESS THE ASSESSEE HAD TO OBTAIN THE SERVICES OF THESE PARTIES FOR FAC ILITATING IN PROCURING THE MATERIAL TO SHIP THE SAME TO THE RESPECTIVE DESTINATIONS WHE RE THE SALES ARE MADE. IT WAS STATED THAT IN ORDER TO ENSURE THE TIMELY PAYMENT F ROM THE PARTIES AND RELATED ACTIVITIES AND FOR SATISFACTORILY COMPLETION OF THE BUSINESS TRANSACTION THE PARTIES HAD PROVIDED SERVICES TO THE ASSESSEE AND FOR THE R ENDERING OF THESE SERVICES THE COMMISSION HAD BEEN PAID. IT WAS EMPHASIZED THAT I T HAD BEEN BROUGHT TO THE I.T.A .NO.-773 & 230/DEL/2013 7 NOTICE OF THE AO THAT AT THE RELEVANT POINT OF TIME THERE WAS AN ACUTE SHORTAGE OF AMMONIUM NITRATE DUE TO RESTRICTIONS IMPOSED ON EX PORTS OF AMMONIUM NITRATE BY CHINA DUE TO BEIJING OLYMPICS AND THE ASSESSEE M ADE EFFORTS TO EXPLOIT THIS OPPORTUNITY BY ENGAGING R.T. ASSOCIATES/ RAKESH TAL WAR WHO COULD FACILITATE IN THE PROCUREMENT AND SHIPMENT OF AMMONIUM NITRATE AS THE ASSESSEE ON ITS OWN WAS NOT ABLE TO SECURE THE REQUIRED QUANTITY IN THE PREVAILING SCARCITY OF THE PRODUCT FROM ITS REGULAR SOURCE NAMELY DEEPAK FERTI LIZERS & PETROCHEMICAL CORPORATION LTD PUNE WHO WAS ABLE TO PROVIDE ONLY LIMITED QUANTITIES AND SINCE IT HAD RECEIVED A MUCH LARGER ORDER FROM ITS CLIENT IN INDONESIA IT WAS IMPERATIVE TO SOURCE QUALITY AMMONIUM NITRATE FROM OVERSEAS SUPPL IERS SO AS TO SUPPLEMENT THE ORDERED QUANTITY TO THE EXTENT POSSIBLE. IT WAS SU BMITTED THAT ONLY ON ACCOUNT OF THE EFFORTS OF AND SERVICES PROVIDED BY R.T. ASSOCI ATES/RAKESH TALWAR THAT THE ASSESSEE COMPANY EARNED A FIVE FOLD PROFIT AS COMP ARED TO WHAT IS GENERALLY MADE ON THIS PRODUCT DURING THIS PERIOD OF SCARCITY OF AMMONIUM NITRATE. IT WAS SUBMITTED THAT SUBSTANTIAL PROFITS WERE GENERATED F OR SALE OF PRODUCT TO ETHIOPIA THROUGH ALEM DESTA CO./CHUNYA CONSULTANTS. THE TOT AL COMMISSION PAID TO THESE PARTIES IT WAS SUBMITTED WORKS OUT TO ABOUT 5.5% OF THE TOTAL TURN OVER OF THE ASSESSEE COMPANY AND THE ASSESSEE GENERATED A PROFI T OF 25% (RS.4 79 02 567/-) AS REFLECTED IN THE P&L A/C OF THE ASSESSEE COMPANY. IT WAS EMPHASIZED THAT IT HAD BEEN EXPLAINED TO THE AO THAT IN THE LAST 2 YEARS T HE ASSESSEE HAD NO DEALINGS WITH ANY OF THESE PARTIES AND AS SUCH IT IS DIFFICULT TO PREVAIL UPON THEM TO PROVIDE THE REQUIRED INFORMATION. IT WAS SUBMITTED THAT THE AS SESSEE HAD TRIED TO CONTACT THE PARTIES OVER PHONE AND E-MAIL AND ALSO SENT REMINDE R TO R.T. ASSOCIATES AND RAKESH TALWAR UAE AND ALSO MR.ZHOU OF CHUNYU CONSU LTANT CHINA BUT UNFORTUNATELY THERE WAS NO RESPONSE OF ANY OF THEM. AS REGARDS ALEM DESTA & CO. ETHIOPIA IT WAS STATED THERE WAS NO E-MAIL C ONTACT ADDRESS BUT THE OWNER MR. ALEM DESTA WAS CONTACTED OVER PHONE AND REQUESTED T O PROVIDE INFORMATION FOR TAX PURPOSES. I.T.A .NO.-773 & 230/DEL/2013 8 3.5. IT WAS REITERATED THAT THE COMMISSIONS WERE PA ID IN PURSUANCE TO SERVICES RENDERED NOT ONLY FOR PROCURING THE MATERIAL BUT AL SO TO SEND THE SAME TO THE DESTINATION I.E CUSTOMERS OF THE ASSESSEE REQUIRING THE MAKING OF ARRANGEMENT FOR TRANSPORTATION OF THE SAME AND ENSURING THE PAYMENT S FROM CUSTOMERS AND ENSURING PAYMENTS TO THE ASSESSEE. APART FROM THESE BARE AN D SIMPLE ACTIVITIES THE PARTIES PERFORMED VARIOUS ACTIVITIES OUTSIDE INDIA AS GOOD S WERE SOURCED FROM OUTSIDE INDIA AND SOLD AND DELIVERED OUTSIDE INDIA WHICH WA S POSSIBLE FOR THESE PARTIES ONLY AS THE ASSESSEE COULD NOT HANDLE THESE FROM I NDIA AND HAD IT ATTEMPTED TO DO SO ITSELF THE SHEER COST AND LACK OF LOCAL AWARENES S WOULD HAVE BEEN AN OBSTACLE. 3.6. THE ACTION OF THE AO WAS ALSO ASSAILED ON THE GROUND THAT THE AO HAS IGNORED THE GROUND REALITIES WHICH PREVAIL IN A BUS INESS SCENARIO WHERE SERVICES ARE PROCURED FROM OUTSIDE AGENTS THE FILLING OF AGREEME NTS INVOICES COPIES OF SWIFT ADVICES ISSUED BY THE BANK CONFIRMATIONS THAT THE P AYMENTS WERE REMITTED FROM THE BANK CANNOT BE IGNORED MERELY BECAUSE THE ASSESSEE WHO IS NOT IN CONTACT WITH THESE PARTIES AS IT HAS NO BUSINESS DEALINGS AS SUC H IS UNABLE TO GIVE CONFIRMATIONS. IT WAS ARGUED THAT THE AO HAS IGNORED THAT THE ASSE SSEE HAS TRIED TO CONTACT THEM ON PHONE AND E-MAIL AND HAS NO CONTROL OVER THEM. IT WAS SUBMITTED THAT IT IS NOT THE CASE OF THE AO THAT THE PARTIES TO WHOM COMMISSION HAS BEEN PAID ARE KNOWN TO THE ASSESSEE OR ARE RELATIVES OR FAMILY MEMBER OR ARE RELATED TO THE DIRECTOR EITHER IN THE COMPANY OR SISTER CONCERNS IF ANY. THE COMM ISSION PAID IT WAS SUBMITTED IS NOT VERY HIGH WHEN COMPARED TO THE PROFITS EARNED T HE COMMISSION IT WAS ARGUED HAS NOT EVEN BEEN HELD TO BE BOGUS OR GENUINE BY TH E AO. 3.7. THE RELIANCE PLACED BY THE AO ON SASSOON J.DAV ID & CO.(P) LTD. VS CIT[1979] 118 ITR 261(SC) WAS WRONGLY APPLIED AS TH AT WAS A CASE WHERE DISALLOWANCE OF THE COMMISSION WAS THE NATURE OF TH E SALARY AND THE FACTS ARE ENTIRELY DISTINGUISHABLE. SIMILARLY RELIANCE ON L. H.SUGAR FACTORY & OIL MILLS (P) LTD. VS CIT [1980] 125 ITR 293(SC) AND CIT VS IMPER IAL CHEMICAL INDUSTRIES (INDIA) (P.) LTD. [1969] 74 ITR 17 (SC) ALSO IT WAS STATED DID NOT APPLIED AS THE ASSESSEE HAS SUBMITTED VOLUMINOUS EVIDENCES TO JUST IFY THE EXPENDITURE INCURRED ON I.T.A .NO.-773 & 230/DEL/2013 9 COMMISSION PAID. IT WAS SUBMITTED THAT IT IS NOT E VEN THE CASE OF THE AO THAT THE COMMISSION WAS NOT REMITTED BY THESE PARTIES HE HA S ONLY DISALLOWED THE SAME AS THE ASSESSEE COULD NOT SUBMIT THE CONFIRMATIONS OF THE PARTIES. HAD THE PARTIES BEEN SITUATED IN INDIA IT WAS STATED THE ASSESSEE COULD HAVE PRODUCED THEM BUT SINCE THEY ARE SITUATED OUTSIDE INDIA IT WAS NOT PO SSIBLE TO PRODUCE THEM. REFERENCE WAS MADE TO THE VARIOUS DOCUMENTS IN THE PAPER BOOK FILED NAMELY COPIES OF E- MAIL REMINDERS COPIES OF E-MAIL RECEIVED FROM MR. ZHOU OF CHUNYU CONFIRMING THE PAYMENT CERTIFICATE FROM THE ICICI BANK TELEPH ONE NO. AND E-MAIL OF RAKESH TALWAR ALEM DESTA. IT WAS SUBMITTED THAT THESE A RE SUBSTANTIAL EVIDENCES TO PROVE THAT THE COMMISSION WAS PAID. NOTHING CONTRA RY TO THE SAID FACT IT WAS ARGUED HAS BEEN BROUGHT ON RECORD BY THE AO. IT WAS REITERATED THAT IT WAS A LEGITIMATE BUSINESS EXPENDITURE OF THE ASSESSEE WH ICH HAS NOT BEEN DOUBTED AND IT HAS RESULTED IN HIGH PROFIT BECAUSE OF THE SERVICES RENDERED BY THESE PERSONS WHICH PROFIT THE ASSESSEE COULD NOT HAVE EARNED WITHOUT T HE HELP OF THESE PERSONS AS ALL THE ACTIVITIES PERFORMED BY THEM IN THE ABSENCE OF THE PARTIES ABROAD COULD NOT HAVE BEEN POSSIBLY PERFORMED BY THE ASSESSEE. IT W AS ARGUED THAT HAD THE ASSESSEE NOT TAKEN THE SERVICES OF THESE PERSONS THAN THE AS SESSEE WOULD HAVE HAD TO OPEN SOME OFFICE/OFFICES IN THOSE COUNTRIES AND EMPLOY P ERSONS TO LOOK AFTER ITS BUSINESS AFFAIRS WHO WOULD THEN SEEK SERVICES FROM THE LOCA L PERSONS AND AS SUCH IT WAS A PRUDENT BUSINESS DECISION TO PAY COMMISSION WHICH WAS A CHEAPER COURSE OF ACTION BY WAY OF WHICH THE ASSESSEE HAS MAXIMIZED I TS PROFIT BY EXPLOITING THE SCARCITY OF THE AMMONIUM NITRATE AT THE RELEVANT PO INT OF TIME INSTEAD OF ESTABLISHING A BUSINESS OFFICE ABROAD. ADDRESSING THE ADDITIONAL EVIDENCES FILED IT WAS STATED THAT THE AO HAS NOT COMMENTED NEGATIVELY THEREON WHICH LEADS TO THE CONCLUSION THAT THE AO HAS NOTHING BEFORE IT TO DIS REGARD THE SAME. RELIANCE WAS PLACED UPON FOLLOWING JUDGEMENTS:- (I) INCOME TAX OFFICER VS SHYAM SUNDER JAJODIA [20 08] 26 SOT 541; (II) CIT VS KONKAN MARINE AGENCIES 313 ITR 308; (III) ACIT VS SHREE SAJJAN MILLS LTD. 302 ITR (INDORE) [2 008] 115 TTJ 145; I.T.A .NO.-773 & 230/DEL/2013 10 (IV) COMMISSIONER OF INCOME TAX VS PRINTERS HOUSE (P) LT D. [2010] 188 TAXMAN 70 (DELHI). 3.8.. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT TH E FRESH EVIDENCES WHICH THE ASSESSEE COULD OBTAIN BY THE TIME OF THE APPELLATE PROCEEDINGS WERE ADMITTED BY THE CIT(A) ACCEPTING THE REASONING THAT THE EVIDENC ES FILED ON 16.12.2011 BEFORE THE AO COULD NOT BE CONSIDERED AS THE ASSESSMENT OR DER WAS PASSED ON THE SAID DATE ITSELF. THE RELEVANT AGREEMENT IN SUPPORT OF THE COMMISSION PAID ALONGWITH COPY OF E-MAIL MESSAGE FROM M/S ZHOU CHUNYU CONSUL TANTS ETC. SINCE WENT TO THE ROOT OF THE MATTER THE CIT(A) WAS HELD COULD NOT BE IGNORED AS SUCH THEY WERE TAKEN INTO CONSIDERATION AND SINCE THESE EVIDENCES WERE NOT CONSIDERED BY THE AO THE SAME WERE CONFRONTED TO HIM. THE CIT(A) IT IS SEEN TAKING NOTE OF THE FACT THAT THESE WERE NOT CONTROVERTED BY THE AO AS HE OFFERED NO COMMENTS DESPITE OPPORTUNITY ACCEPTED THE SAME. 3.9. ADDRESSING THE EVIDENCE FILED IN SUPPORT OF TH E COMMISSION PAID TO MR. ALEM DESTA IT IS SEEN THAT THE CIT(A) TOOK INTO CO NSIDERATION THE FACT THAT THE ASSESSEE SUBMITTED A COPY OF THE AGREEMENT WITH TH E SAID PARTY FOR SOLICITING BUSINESS PARTICULARLY FROM CHINESE COMPANY WORKING IN ETHIOPIA FOR BITUMEN AND EXPLOSIVES/ACCESSORIES SOURCED FROM VARIOUS COUNTRI ES INCLUDING INDIA ALONGWITH COPY OF INVOICES FOR COMMISSION PAYABLE; CONFIRMATI ON FROM ICICI BANK DATED 08.02.2012 CONFIRMING THE PAYMENT REMITTED TO THE BANK OF M/S ALEM DESTA & CO. ETHIOPIA. THESE EVIDENCES WERE CONSIDERED TO BE SUFFICIENT TO PROVE THAT COMMISSION WAS PAID BY THE ASSESSEE TO M/S ALEM DES TA COMPANY OF ETHIOPIA. 3.10. CONSIDERING THE EVIDENCE FOR CHUNYU CONSULTAN TS THE CIT(A) TOOK NOTE OF THE FACT THAT CONFIRMATIONS RECEIVED THROUGH E-MAIL DATED 25.02.2012 FROM M/S MR. ZHOU OF CHUNYU CONSULTANTS CONFIRMING COMMISSION PA ID SUBSTANTIALLY PROVED THAT THE EXPENSES INCURRED BY THE ASSESSEE FOR COMMISSIO N WAS PAID TO THE SAID PARTY WHEREIN THE SAID PARTY CONFIRMED THE RECEIPT OF US D 3150 IN 2008 FROM THE ASSESSEE COMPANY TOWARDS COMMISSION FOR FACILITATIN G SALE OF EXPLOSIVES IN ETHIOPIA. I.T.A .NO.-773 & 230/DEL/2013 11 3.11. HOWEVER CONSIDERING THE CLAIM OF COMMISSION P AID TO M/S R.T. ASSOCIATES WHEREIN THE ASSESSEE DID NOT PROVIDE DOCUMENTARY EV IDENCE AND MERELY STATED THAT THE ASSESSEE WAS UNABLE TO CONTACT THE SAID PARTY THE CIT(A) WAS OF THE VIEW THAT IN THE PRESENT DAY AND TIMES WHERE THERE ARE SO MAN Y MEANS OF COMMUNICATION AVAILABLE NAMELY E-MAIL TELEPHONE NO ETC AND CONFI RMATIONS FROM ALEM DESTA ETHIOPIA AND MR. ZHOU CHUNYU OF CHINA COULD BE FIL ED DESPITE THAT THE ASSESSEE HAS NOT BEEN ABLE TO EVEN CONTACT SH.RAKESH TALWAR WAS CONSIDERED TO BE NOT CREDIBLE. IN THIS BACKGROUND THE MERE FACT OF PAYM ENT OF COMMISSION THROUGH BANKING CHANNELS WAS CONSIDERED TO BE NOT SUFFICIEN T EVIDENCE OF RENDERING THE SERVICES. ADDRESSING THE EVIDENCES FILED THE CIT( A) NOTICED THAT THE PASSPORTS OF MR. RAKESH TALWAR FIRST PASSPORT WAS ISSUED ON 21 .03.2007 AND WAS VALID UPTO 20.03.2017 AND DESPITE THAT COPY OF ANOTHER PASSPOR T ISSUED ON 11.01.2011 WAS AVAILABLE WHICH WAS VALID UPTO 10.01.2021. BOTH TH E PASSPORTS SHOWED THAT THE SAID PERSON WAS AN INDIAN NATIONAL AND THE PASSPORT S WERE ISSUED BY CONSULATE GENERAL OF INDIA DUBAI UAE. ACCORDING TO THE CI T(A) THERE WAS A DOUBT ON THE IDENTITY OF SH. RAKESH TALWAR ITSELF. ACCORDINGLY R ENDERING OF SERVICES BY M/S. R.T. ASSOCIATES WAS NOT ACCEPTED BY THE CIT(A). 4. 3.1. 3.12. THE RELIANCE PLACED UPON ITO VS SHYAM SUNDER JAJODIA [2008] 26 SOT 541 BY THE ASSESSEE WAS CONSIDERED TO BE NOT RELEVANT A S IN THE FACTS OF THAT CASE THE COMMISSION AGENTS HAD RESPONDED TO THE QUERY OF TH E AO AND SOME OF THEM HAD EVEN SUPPLIED INFORMATION REGARDING RENDERING OF S ERVICES. APART FROM THAT FACT THE COMMISSION PAYMENT WAS ALLOWED TO THESE AGENTS IN THE EARLIER YEARS AND IN SUBSEQUENT YEARS ON SIMILAR LINES. THUS THE FACTS WERE CONSIDERED TO BE DISTINGUISHABLE. 3.13. SIMILARLY IN ACIT VS SH. SAJAN MILLS LTD THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAD FULLY DISCHARGED THE BURDEN PLACED UPON IT TO PROVE THE PAYMENT OF COMMISSION AS SIMILAR COMMISSION WAS PAID TO THE ASSESSEE IN EARLIER YEARS. IN THE FACTS OF PRESENT CASE HE WAS OF THE VIEW THAT T HERE IS NO REGULAR DEALING WITH M/S R.T. ASSOCIATES EITHER IN THE PAST OR IN SUBSEQ UENT YEARS ACCORDINGLY THE CLAIM I.T.A .NO.-773 & 230/DEL/2013 12 QUA THE SAID PARTY WAS HELD TO BE DISALLOWED. CONS EQUENTLY ONLY THE PAYMENT OF COMMISSION MADE TO ALEM DESTA AND M/S ZHOU OF CHUNY U CONSULTANTS WERE ALLOWED AND THE PAYMENT OF COMMISSION TO M/S RAKESH TALWAR WAS HELD TO BE NOT GENUINE AND DISALLOWED. 4. AGGRIEVED BY THIS BOTH THE ASSESSEE AND THE DEPA RTMENT IS IN APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS MOVED GROUND NO-1 & 2 AND THE DEPARTMENTAL GROUND QUA THE RELIEF GRANTED BY THE CIT(A) HAS AGI TATED GROUND NO-1 WHICH HAVE BEEN REPRODUCED IN THE EARLIER PART OF THIS ORDER. 4.1. THE LD. SR. DR ADDRESSING THE DEPARTMENTAL GRO UND INVITED ATTENTION TO THE ASSESSMENT ORDER SO AS TO CONTEND THAT THE SAID ORD ER WAS PASSED ON 16.12.2011 AS SUCH THE ASSESSEE HAS FILED THE EVIDENCE SOUGHT BY THE AO ONLY ON 15.12.2011 AND WHY THE SAME EVIDENCE COULD NOT BE FILED IN THE COU RSE OF THE ASSESSEE PROCEEDINGS WAS QUESTIONED. THE EVIDENCES IT WAS ARGUED WERE F ILED ONLY AT THE FAG END OF THE ASSESSMENT PROCEEDINGS WHICH LEAD TO THE NEED FOR F ILING PETITION FOR ADMISSION OF FRESH EVIDENCE BEFORE THE CIT(A). THE SAID FACT I T WAS REQUESTED NEEDS TO BE ADDRESSED BY THE ASSESSEE. IT WAS HIS STAND THAT M ERELY STATING THAT THE COMMISSION HAS BEEN PAID THROUGH THE BANKING CHANNELS CANNOT B E SAID TO DISCHARGING THE ONUS PLACED TO PROVE THAT SERVICES HAVE BEEN RENDERED BY THE COMMISSION AGENT. THE SAID ONUS IT WAS SUBMITTED WAS UPON THE ASSESSEE WH ICH SHOULD HAVE BEEN DISCHARGED BY THE ASSESSEE DURING THE ASSESSMENT PR OCEEDINGS. AS SUCH RELYING UPON THE DEPARTMENTAL GROUND IT WAS HIS SUBMISSION THAT THE ASSESSEE HAS FAILED TO PROVIDE DOCUMENTARY EVIDENCE IN THE COURSE OF THE A SSESSMENT PROCEEDINGS. ACCORDINGLY IT WAS HIS SUBMISSION THAT THE ASSESSME NT ORDER BE UPHELD AND THE IMPUGNED ORDER BE SET ASIDE. 4.2. LD. AR ADDRESSING THE DEPARTMENTAL GROUNDS SUB MITTED THAT THE CIT(A) HAS ARRIVED AT A FINDING THAT SUFFICIENT OPPORTUNITY WA S NOT GIVEN BY THE AO IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AS SUCH THE EV IDENCE COULD BE FILED AT THE FAG END OF THE ASSESSMENT PROCEEDINGS. IT WAS ALSO HIS SUBMISSION THAT THE AO HAS FAILED TO APPRECIATE THE FACT THAT THE TRANSACTION TOOK PLACE IN 2008 AND THE ASSESSEE I.T.A .NO.-773 & 230/DEL/2013 13 HAD NEITHER ANY PRIOR DEALING WITH THESE PARTIES AN D NOR SUBSEQUENT DEALING WITH THESE PARTIES. IT WAS HIS SUBMISSION THAT THERE IS NOT EVEN A WHISPER OF SUSPICION CAST BY THE REVENUE ON THE FACT THAT THESE WERE REL ATED PARTIES OR ASSOCIATED CONCERN OR SISTER CONCERNS ETC. IT WAS STATED THAT PARTIES WERE CONTACTED WHEN DUE TO THE PREVALENCE OF PECULIAR SHORTAGE OCCURRING DU E TO THE RESTRICTION IMPOSED BY CHINA BEFORE THE BEIJING OLYMPICS FOR ACQUIRING THE SPECIFIC PRODUCT AS A RESULT OF WHICH THE ASSESSEE EXPLOITED THE SITUATION FOR COM MERCIAL CONSIDERATIONS AND MADE ATTEMPTS IN THE INTERNATIONAL MARKET TO SOURCE AND PROVIDE THE CHEMICALS BY UTILIZING THE SERVICES OF THESE DIFFERENT PARTIES W HO NOT ONLY MADE THE SPECIFIC CHEMICALS AVAILABLE TO THE ASSESSEE BUT ALSO ENSURE D TRANSPORTATION OF THE SAME FROM THE SOURCING COUNTRIES TO THE CUSTOMERS AND EN SURE THE PAYMENT FROM THE CUSTOMERS TO THE ASSESSEE AND ONLY AFTER THESE SERV ICES WERE PERFORMED COMMISSIONS WERE PAID. IT WAS SUBMITTED THAT BEFOR E THE CIT(A) IT HAD BEEN ARGUED THAT HAD THE ASSESSEE NOT UTILIZED THE SERVI CES OF THESE PARTIES THEN THE ASSESSEE WOULD HAVE HAD TO OPEN AN OFFICE IN THESE COUNTRIES ENGAGE MANPOWER TO FURTHER ENGAGE THE LOCAL PARTIES TO ENSURE TRANS PORTATION DELIVERY AND PAYMENT FROM THE PARTIES AND SINCE THE ASSESSEE DOES NOT H AVE ANY DEALING WITH THESE PARTIES THE OCCASION TO CONTROL AND ENSURE CO-OPER ATION TO GIVE CONFIRMATIONS IN SUPPORT OF THE TRANSACTION CANNOT BE HELD AGAINST T HE ASSESSEE AS IT HAD NO CONTROL OVER THE PARTIES. IT WAS HIS SUBMISSION THAT THE R ECORD WOULD SHOW THAT THE ASSESSEE IN-COMPLIANCE WITH THE REQUIREMENTS OF THE AO TRIED HIS LEVEL BEST TO CONTACT THESE THREE PARTIES AND FROM TWO OF THE PAR TIES THE ASSESSEE COULD GET CONFIRMATIONS/AGREEMENT ETC AND THE SAID EVIDENCE C OULD BE MADE AVAILABLE AT THE FAG END OF THE ASSESSMENT PROCEEDINGS DESPITE THE B EST EFFORTS OF THE ASSESSEE. THE SAID EVIDENCES IT WAS SUBMITTED HAS BEEN RIGHTLY CO NSIDERED BY THE CIT(A) TO BE CRUCIAL AND RELEVANT EVIDENCE AND THE RECORD WOULD SHOW WAS MADE AVAILABLE TO THE AO WHO HAS NOT LED ANY EVIDENCE TO DISCREDIT THE SA ME. ADDRESSING THE ARGUMENTS MOVED ON BEHALF OF THE REVENUE IT WAS HIS SUBMISSIO N THAT THE LD. SR. DR HAS ALSO NOT DISCREDITED THE EVIDENCE AND HAS MERELY ARGUED THAT WHY THE SAME COULD NOT BE I.T.A .NO.-773 & 230/DEL/2013 14 MADE AVAILABLE IN THE ASSESSMENT PROCEEDINGS. IT W AS ARGUED THAT THE ASSESSEE HAS LED SUFFICIENT ARGUMENTS ADDRESSING THIS ASPECT AND AS SOON AS THE EVIDENCES WERE AVAILABLE THE ASSESSEE PLACED THEM ON RECORD AND IF THE AO COULD NOT GO THROUGH THE SAME ON ACCOUNT OF PAUCITY OF TIME THE EVIDENC ES HAVE BEEN ADMITTED BY THE CIT(A) AND CONFRONTED TO THE AO. THE ARGUMENTS THA T THE ASSESSEE NEITHER HAD ANY CONTROL OVER THE SAID PARTIES AND NOR HAD ANY PRIO R OR SUBSEQUENT DEALINGS IS A MATTER OF RECORD AS SUCH THE MERE ARGUMENTS THAT WH Y IT COULD NOT BE MADE AVAILABLE DURING THE ASSESSMENT PROCEEDINGS DOES NO T DETRACT FROM THAT FACT THAT NOTHING ADVERSE TO THE EVIDENCES HAS BEEN ARGUED AS SUCH IT WAS HIS SUBMISSION THAT THE DEPARTMENTAL APPEAL DESERVES TO BE DISMISS ED. 4.3. ADDRESSING THE GROUND RAISED BY THE ASSESSEE I T WAS HIS SUBMISSION THAT THE ASSESSEE HAS FILED PETITION FOR ADMISSION OF ADDITI ONAL EVIDENCES BEFORE THE ITAT. REFERRING TO THE SAME IT WAS SUBMITTED THE PETITION WAS FILED FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF THE I.T. RULES ON 08.08.2013 AND THE APPEAL WAS ADJOURNED TO 14.08.2013 IN ORDER TO AFFORD DEPA RTMENT TO GO THROUGH THE SAME. ADDRESSING THE SAID PETITION WHICH IS IN CONTINUATI ON OF THE PAPER BOOK FILED ON 01.07.2013 RUNNING INTO 195 PAGES IT WAS STATED TH AT THE ADDITIONAL EVIDENCE SOUGHT TO BE ADMITTED ARE PLACED IN A SEPARATE PAPE R BOOK ON ADDITIONAL EVIDENCE RUNNING FROM 196 TO 246 OF THE PAPER BOOK. THE LD. AR SUBMITTED THAT PAGE 139 TO PAGE 164 OF THE ORIGINAL PAPER BOOK CONTAINS THE WRITTEN SUBMISSIONS FILED DATED 12.03.2012. SPECIFIC ATTENTION WAS INVITED TO PAGE 144 OF THE SAME IN SUPPORT OF THE ARGUMENTS THAT THE BANK CONFIRMATIONS CONFIRMIN G THE FACT THAT THE PAYMENTS HAVE BEEN REMITTED TO THE SPECIFIC PERSONS WERE AVA ILABLE ON RECORD OF THE AO AND THE ASSESSEE HAD EXPLAINED THAT FOR THE LAST FEW YE ARS THERE HAS BEEN NO OCCASION TO STAY IN CONTACT WITH THE SAID PERSONS AND THE EFFOR TS MADE OVER PHONE AND E-MAIL AND REMINDERS HAVE NOT RESULTED IN ANY CONFIRMATION S AND COPIES OF E-MAIL REMINDERS AS PER PAGE 145 OF THE PAPER BOOK WERE FI LED BEFORE THE CIT(A) AND COPIES OF DETAILS OF INVOICES AND PURCHASES FOR PAY MENT OF COMMISSION PAID TO M/S R.T. ASSOCIATES ALONGWITH INVOICES OF M/S R.T. ASSO CIATES DUBAI WERE ALSO FILED I.T.A .NO.-773 & 230/DEL/2013 15 BEFORE THE CIT(A). COPY OF THE INVOICE DATED 18.03 .2009 OF R.T. ASSOCIATES DUBAI UAE WAS ALSO FILED SHOWING CHARGING OF THE C OMMISSION OF USD 57800 TOWARDS SALE OF AMMONIUM NITRATE FROM EGYPT FRANCE SWEDEN TO INDONESIA BEFORE THE CIT(A). SIMILARLY COPY OF INVOICE DATED 09.03.2009 OF M/S R.T. ASSOCIATES DUBAI TO THE ASSESSEE COMPANY FOR CHARG ING OF COMMISSION OF USD 76500 TOWARDS SALE OF AMMONIUM NITRATE EGYPT TO IN DONESIA HAS BEEN FILED BEFORE THE CIT(A). COPY OF AGREEMENT DATED 20.05.2 005 MADE BETWEEN THE ASSESSEE COMPANY AND R.T. ASSOCIATES FOR PAYMENT OF COMMISSION FOR FACILITATING SUPPLY OF POROUS PRILLED AMMONIUM NITRATE AS PER AG REED SPECIFICATIONS FROM EGYPT/EUROPE/SOUTH AFRICA FOR A MINIMUM QUANTITY OF 3000 M.T. OF AMMONIUM NITRATE TO BE SHIPPED LATEST BY 31.03.2009 WHEREIN THE COMMISSION PAYABLE AGREED @ USD 55/MT UPON FULL REALIZATION OF THE PAYMENT FR OM THE ASSESSEE OVERSEAS CUSTOMERS HAD ALSO BEEN FILED BEFORE THE CIT(A) AS WOULD BE EVIDENT FROM PAGE 146 OF THE PAPER BOOK. COPY OF THE SWIFT ADVISE OF THE ICICI BANK OF THE SPECIFIC AMOUNT WERE ALSO FILED. SIMILARLY COPY OF THE AGRE EMENT DATED 20.05.2008 BETWEEN ASSESSEE AND RAKESH TALWAR OF UAE AND VALID ITY OF AGREEMENT UPTO 31.03.2009 FOR SHIPMENT OF 1000 MT OF AMMONIUM NITR ATE WITH COMMISSION PAYABLE @ USD 70/MT PAYABLE UPON FULL REALIZATION O F THE PAYMENT FROM THE ASSESSEES OVERSEAS CUSTOMERS WAS ALSO FILED BEFORE THE CIT(A). COPY OF THE BANK STATEMENT OF THE ASSESSEE COMPANY FROM STATE BANK OF INDIA SHOWING THAT PAYMENT OF USD 69200 TO MR. RAKESH TALWAR ALONG WITH COPY O F RELEVANT BILLS ON WHICH COMMISSION HAS BEEN PAID WERE FILED BY THE CIT(A) A S WOULD BE EVIDENT FROM PAGE 147. AS SUCH IT WAS HIS ARGUMENT THAT ALL THESE EV IDENCES WERE SIMILAR TO THE EVIDENCES FILED BEFORE THE CIT(A) FOR THE OTHER TWO PARTIES WHICH THE CIT(A) ACCEPTED AS SUFFICIENT EVIDENCE FOR RENDERING SERVI CES. THE ONLY REASON FOR DISCARDING THESE RELEVANT AND SIMILAR EVIDENCES IN THE CASE OF M/S R.T. ASSOCIATES WAS THAT UNLIKE THE OTHER TWO PARTIES HEREIN THE AS SESSEE COULD NOT FILE A CONFIRMATION IN RESPONSE TO ITS E-MAILS OR TELEPHON ES ETC. AND THE CIT(A) FOR THE SAID SPECIFIC REASON HAS REJECTED THE COGENT EVIDEN CE AS IN INSUFFICIENT EVIDENCE. IN I.T.A .NO.-773 & 230/DEL/2013 16 THESE CIRCUMSTANCES IT WAS HIS SUBMISSIONS THAT TH E ASSESSEE NEEDS TO FILE ADDITIONAL EVIDENCE WHICH HAS NOW COME IN POSSESSIO N OF THE ASSESSEE. THE FACT THAT IT GOES TO THE ROOT OF THE MATTER CANNOT BE DI SPUTED. THE SAID EVIDENCE IT WAS SUBMITTED IS THE COPY OF THE DEATH CERTIFICATE OF M R. RAKESH TALWAR WHICH SHOWS HIS PERMANENT ADDRESS AS A1/302 DIERA DUBAI (COPY PLACED ON PAGE 196 OF THE PAPER BOOK). ADDRESSING PAGE 196A OF PAPER BOOK IT WAS SUBMITTED THAT THE SAID DEATH CERTIFICATE HAS BEEN ATTESTED BY THE EMBASSY OF UAE. IT WAS HIS SUBMISSION THAT COPIES OF THE OLD PASSPORT AND NEW PASSPORT OF ERSTWHILE OF RAKESH TALWAR ARE PLACED AT PAGE 197-224 WHICH ON ACCOUNT OF THE FRE QUENT TRAVEL OF THE SAID PERSON HAD TO BE ISSUED AGAIN AS PER THE REQUIREMENTS OF T HE PASSPORT OFFICE. ADDRESSING THE FACT AS TO WHY SH. RAKESH TALWAR DID NOT RESPON D TO THE E-MAIL AND THE TELEPHONES IT WAS HIS SUBMISSION THAT SH. RAKESH T ALWAR EXPIRED ON 24.12.2012 AFTER A PROLONGED ILLNESS WHICH REQUIRED HIS DIAGNO SIS HOSPITALIZATION AND INVESTIGATION AND ON ACCOUNT OF BEING PRE-OCCUPIED WITH HIS MEDICAL CONDITION THE SAID PERSON DID NOT RESPOND TO THE E-MAILS AND TELE PHONES OF THE ASSESSEE FOR REASONS WHICH CAN NOW BE UNDERSTOOD WITH HINDSIGHT. THE MEDICAL PAPERS SHOWING CONTINUOUS ILL HEALTH OF THE SH. RAKESH TALWAR IT WAS SUBMITTED ARE PLACED AT PAGES 225-245 OF THE PAPER BOOK. ADDRESSING IN THI S BACKGROUND THE EVIDENCE SOUGHT TO BE FILED ATTENTION WAS INVITED TO PAGE 5 2 OF THE PAPER BOOK WHICH WOULD SHOW THAT ALL NECESSARY EVIDENCE WAS AVAILABLE BEFO RE THE CIT(A) I.E THE AGREEMENT FOR SOURCING AMMONIUM NITRATE DATED 20.05 .2008 BETWEEN THE ASSESSEE AND MR. RAKESH TALWAR SIGNED BY THE ERSTWH ILE SH. RAKESH TALWAR ON BEHALF OF R.T. ASSOCIATES DUBAI UAE. THE SAME IS REPRODUCED FOR READY- REFERENCE :- AGREEMENT FOR SOURCING OF AMMONIUM NITRATE IN BETW EEN CHANDABH IMPEX PVT LTD. INDIA AND R.T.ASSOCIATES DUBAI UAE THIS AGREEMENT MADE AS 20 TH DAY OF MAY 2008 BETWEEN CHANDABH IMPEX PVT. LTD PO BOX-3202 NEW DELHI-110013 INDIA (HER EINAFTER REFERRED TO AS CHANDABH) AND RT ASSOCIATES PO BOX -2394 DUBAI UAE (HEREINAFTER REFERRED TO AS RTA) 1. CHANDABH AND RTA AGREE TO WORK TOGETHER FOR FACILIT ATING SUPPLY OF POROUS PRILLED AMMONIUM NITRATE AS PER AGREED SPECI FICATIONS FROM I.T.A .NO.-773 & 230/DEL/2013 17 EGYPT/EUROPE/SOUTH AFRICA FOR A MINIMUM QUANTITY OF 3000 MT TO BE SHIPPED LATEST BY 31 ST MARCH 2009. 2. COMMISSION BY CHANDABH TO RTA WILL BE RESTRICTED TO SOURCING OF AMMONIUM NITRATE BY RTA @ USD 55/MT WITH SHIPMENTS OF REASONABLE SIZE 10 CONTAINERS PER SHIPMENT PARTICULARLY FOR IN DONESIA TO MINIMIZE ON CLEARING/FORWARDING CHARGES AT JAKARTA (TANJUNG PRI OK PORT). 3. SUCH COMPENSATION WILL BE MADE TO RTA BY CHANDABH O NLY AFTER THE GOODS ARE ACCEPTED BY THE CLIENT AND ALL THE SALE P ROCEEDS ARE REALIZED. THE AGREED COMPENSATION WILL REMITTED VIA WIRE TRANSFER IN US$ THROUGH OUR BANKERS VIZ ICICI BANK CONNAUGHT PLACE NEW DELHI WITHIN 15 DAYS OF SUBMISSION OF INVOICE BY RTA. 4. THIS AGREEMENT IS ON A NON-EXCLUSIVE BASIS AND CHAN DABH RESERVES THE RIGHT TO WORK WITH ANY OTHER PARTY AS LONG AS T HERE IS NO CLASH OF INTEREST BETWEEN RTA AND THAT PARTY. 5. THE ABOVE AGREEMENT WILL BE IN FORCE TILL 31 ST MARCH 2009 AND IS SUBJECT TO RENEWAL THEREAFTER WITH MUTUAL CONSENT. FOR CHANDABH IMPEX PVT LTD. FOR RT AS SOCIATES SD/- SD/- (ANIL KHANNA) (RAKESH TALWAR) DATED :-20 TH MAY 2008. 4.4. ATTENTION WAS ALSO INVITED TO PAGE 49 WHICH WA S ALSO AVAILABLE BEFORE THE CIT(A) AND DULY CONFRONTED TO THE AO IT WAS STATED IS A SUMMARY OF DETAILS OF INVOICES/PURCHASES WITH GROSS MARGIN FOR PAYMENT OF COMMISSION TO R.T. ASSOCIATES WHEREIN INVOICE REFERENCE IS GIVEN ALONG WITH DATE AND QUANTITY AND SALES PER UNIT PRICES PURCHASE UNIT PRICE UNIT GR OSS MARGIN AND TOTAL GROSS MARGIN. ATTENTION WAS ALSO INVITED TO PAGE 179 OF THE PAPE R BOOK WHICH SHOWS THAT THE ASSESSEE BEFORE CIT(A) HAD MADE AN ATTEMPT TO SEARC H OUT THE MAIL RECORDS OF SENT AND RECEIVED MAILS AND CERTAIN E-MAILS RECEIVED FRO M SH. RAKESH TALWAR COULD BE LOCATED WHICH WERE FILED ALONGWITH COPY OF THE BANK STATEMENT OF SH. RAKESH TALWAR AND PASSPORT OF SH. RAKESH TALWAR ISSUED FRO M UAE TO SHOW THAT SH. RAKESH TALWAR DID NOT RESIDE IN THE COUNTRY THE SA ID IS PLACED AT PAGE 179 OF THE PAPER BOOK. ADDRESSING PAGE 186 OF THE PAPER BOOK COPY OF THE BANK STATEMENT OF SH. RAKESH TALWAR CONFIRMING THAT COMMISSION HAD BE EN CREDITED TO HIS ACCOUNT STATEMENT WAS FILED BEFORE THE CIT(A). THE COPY OF THE SAID BANK STATEMENT OF SH. RAKESH TALWAR IT WAS STATED IS PLACED AT PAGE 190 O F THE PAPER BOOK. ADDRESSING THE BACKGROUND IT WAS SUBMITTED THAT THE AO HAD STA RTED HIS INQUIRY FROM I.T.A .NO.-773 & 230/DEL/2013 18 DECEMBER 2011 AND SH. RAKESH TALWAR HAS BEEN ILL FR OM JANUARY 2011 AS SUCH THERE WAS SUFFICIENT AND CREDIBLE EVIDENCE TO SHOW WHY SH. RAKESH TALWAR COULD NOT AND DID NOT RESPOND BUT THE EVIDENCE ON RECORD SHOW THAT SERVICES HAVE BEEN RENDERED BY THE SH. RAKESH TALWAR ON ACCOUNT OF WHI CH SUBSTANTIAL PROFITS HAVE BEEN EARNED AND PAYMENTS HAVE BEEN MADE TO SH. RAKE SH TALWAR AND THERE IS NO SHRED OF EVIDENCE OR DOUBT FOR THAT MATTER THAT THE PAYMENT HAS COME BACK TO THE ASSESSEE. ACCORDINGLY IN THESE CIRCUMSTANCES IT WA S HIS SUBMISSION THAT THE FRESH EVIDENCE DESERVES TO BE ACCEPTED AND CONSIDERING TH E SAME THE ADDITION SUSTAINED DESERVES TO BE DELETED. 4.5. THE LD. SR. DR QUA THE ASSESSEES APPEAL OPPOS ED THE ADMISSION OF ADDITIONAL EVIDENCE IT WAS HIS SUBMISSION THAT THE RECORD SHOWS THAT THE CONCERNED PERSONS TRAVELED A LOT AS WOULD BE EVIDENT FROM THE STAMPING FROM PAGE 217 AND PAGE 221 OF THE PAPER BOOK WHICH IS THE FRESH EVIDE NCE SOUGHT TO BE ADMITTED. REFERRING TO THE SAME IT WAS POINTED OUT THAT SH. R AKESH TALWAR WAS GRANTED A VISA AND HE TRAVELED TO USA IN DECEMBER 2011. SIMILARLY PAGE 223 OF THE PAPER BOOK IT WAS SUBMITTED WOULD SHOW THAT ON 10.06.2012 SH. RAKESH TALWAR TRAVELED TO DELHI. ACCORDINGLY IT WAS HIS SUBMISSION THAT WHEN THE SAID PERSON WAS FIT TO TRAVEL TO DIFFERENT COUNTRIES HE MOST DEFINITELY C OULD HAVE RESPONDED TO THE E-MAILS AND TELEPHONES OF THE ASSESSEE AS SUCH THE FRESH EV IDENCE SOUGHT TO BE ADMITTED ITSELF DOES NOT SUPPORT THE CASE OF THE ASSESSEE. 4.6. LD. AR ADDRESSING THE OBJECTIONS OF THE SR. DR INVITED ATTENTION TO PAGE 196 OF THE PAPER BOOK SO AS TO EMPHASIZE THAT IT WOULD SHOW THAT SH. RAKESH TALWAR WHO TRAVELED TO INDIA ON 10.06.2012 PASSED AWAY IN INDIA ON 28.06.2012 AT MAX DEVKI HEART & VA AT 2 PRESS ENCLAVE ROAD SAKET NE W DELHI. INVITING ATTENTION TO PAGE 242 OF THE PAPER BOOK IT WAS HIS SUBMISSION THAT THE TRAVEL TO THE US WAS UNDERTAKEN ON ACCOUNT OF GETTING MEDICAL HELP/INVES TIGATION IN ORDER TO DIAGNOSE THE MEDICAL CONDITION AND THE REPORT OF THE DEPARTM ENT OF NEUROLOGICAL SURGERY SURGERY DIRECTORS OF CALIFORNIA CENTER FOR SOME RAR E MEDICAL CONDITION AVAILABLE ON RECORD AT PAGE 242 WOULD SHOW THAT ASSOCIATE PRO FESSOR SANDEEP KUNWAR MD I.T.A .NO.-773 & 230/DEL/2013 19 EXAMINED HIM AND HIS REPORT IS ON RECORD. AS SUCH IT WAS HIS SUBMISSION THAT THE SUSPICION OF THE DEPARTMENT THAT THE TRAVEL WAS VAC ATION/TRAVEL IS MISPLACED AS THE SAME WERE FRANTIC EFFORTS MADE TO DIAGNOSE THE MEDI CAL CONDITION AND ULTIMATELY SH. RAKESH TALWAR SUCCUMBED TO THE DISEASE AS SUCH IT WAS SUBMITTED THAT THE REASONS FOR NON-REPLY OF SH. RAKESH TALWAR THE ONLY REASON WHICH PREVAILED UPON THE CIT(A) TO DISCARD THE COGENT EVIDENCES WHICH WE RE SIMILAR TO THE OTHER TWO PARTIES IS CRUCIAL AND GOES TO THE ROOT OF THE MATT ER AND DESERVES TO BE ADMITTED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION OF THE SAME WE ARE OF THE VIEW THAT THE ADDITIONAL EVIDENCE SOUGHT TO BE ADMITTED BY THE LD. AR ON BEH ALF OF THE ASSESSEE DESERVES TO BE ADMITTED AS THE REASONING TAKEN BY THE CIT(A) FO R NOT ACCEPTING THE ASSESSEES CLAIM NAMELY THE FACT THAT SH. RAKESH TALWAR OF R. T. ASSOCIATES HAS NOT RESPONDED TO THE E-MAILS/TELEPHONES OF THE ASSESSEE CONFIRMIN G THE RENDERING OF SERVICES CAN BE ADDRESSED BY THESE EVIDENCES. THE SUSPICION SO ADDRESSED FOR DISCARDING THE EVIDENCES RELIED UPON CAN BE ADDRESSED ONLY BY THES E EVIDENCES AS SUCH THEY GO TO THE ROOT OF THE MATTER AND DESERVES TO BE ADMITTED. THESE EVIDENCES DIRECTLY THROW LIGHT ON THE SUSPICION OF THE DEPARTMENT AS THEY AD DRESS WHY SH. RAKESH TALWAR DID NOT RESPOND TO THE TELEPHONE AND E-MAILS THE F RESH EVIDENCE SOUGHT TO BE ADMITTED TOWARDS THIS FACT AS SUCH ARE RELEVANT AND COGENT MATERIAL AS THE TRANSACTION HAS BEEN HELD TO BE NOT GENUINE SOLELY ON ACCOUNT OF THE FACT THAT THE SAID PARTY DID NOT RESPOND. IT IS SEEN THAT THE EV IDENCE AND MATERIAL AVAILABLE ON RECORD BEFORE THE CIT(A) WHICH IS CONFRONTED TO TH E AO HAS NOT BEEN DISCREDITED BY THE AO FOR ALL THE THREE PARTIES AND WHEREAS FO R THE TWO PARTIES THE CIT(A) HAS FOUND THE EVIDENCE SUFFICIENT AND COGENT NAMELY FOR CHUNYU AND ALEM DESTA AND FOR RAKESH TALWAR OF R.T. ASSOCIATES HE HAS DECIDE D THE ISSUE AGAINST THE ASSESSEE AS THE CONCERNED PARTY DID NOT CONFIRM THE RENDERIN G OF SERVICES. ADDRESSING THE DEPARTMENTAL GROUND AS DISCUSSED IN THE EARLIER PAR T OF THIS ORDER WHERE THE DETAILED ARGUMENTS BEFORE THE CIT (A) HAVE BEEN DISCUSSED IN DETAIL AS FOUND ADVANCED BEFORE THE CIT (A) WHICH WAS REITERATED BEFORE WE F IND NO GOOD REASON TO INTERFERE I.T.A .NO.-773 & 230/DEL/2013 20 WITH THE FINDING OF THE CIT (A) QUA CHUNYU CONSULTA NTS AND M/S ALEM DESTA AS THE EVIDENCE RELIED UPON HAS NOT BEEN ASSAILED BY T HE REVENUE NOR ANY ARGUMENT HAS BEEN ADVANCED ON MERIT AS TO WHY THE RELIEF GRA NTED SHOULD BE WITHDRAWN APART FROM THE ARGUMENT THAT THE EVIDENCES OUGHT HAVE BEE N FILED IN THE ASSESSMENT PROCEEDINGS BEFORE THE AO WHICH HAS ALREADY BEEN AD DRESSED AS ON FACTS WE CONFIRM THE FINDING OF THE CIT(A) THAT THE ASSESSEE HAVING NO CONTROL OVER THE SAID PARTIES CANNOT BE HELD ACCOUNTABLE FOR THE DELAY IN BRINGING ON RECORD THE MATERIAL AT THE FAG END OF THE PROCEEDINGS WHICH HAD ARISEN DUE TO PAUCITY OF TIME DURING THE ASSESSMENT PROCEEDINGS. ON CONSIDERING THE ARG UMENTS ADVANCED BEFORE THE CIT(A) WHICH WERE REPEATED BEFORE US WE CONCUR WIT H THE FINDING OF THE CIT(A) THAT FOR REASON BEYOND THE CONTROL OF THE ASSESSEE THE EVIDENCES COULD NOT BE FILED IN THE COURSE OF THE ASSESSMENT PROCEEDINGS DUE TO PAUCITY OF TIME GRANTED BY THE AO SPECIALLY AS THE ASSESSEE HAD NO INTERACTION WIT H THE SAID PARTIES AND WAS NOT IN A POSITION TO CONTROL THE PARTIES TO DIRECT IMMEDIA TE COMPLIANCE BY CONFIRMING. ACCORDINGLY WE UPHOLD THE ACTION OF THE CIT(A) IN A CCEPTING THE ASSESSEES CLAIM QUA THE TWO PARTIES. AS SUCH THE DEPARTMENTAL GROUN D IS DISMISSED. 5.1 ADDRESSING THE ASSESSEES GROUND WE HAVE ALREAD Y RECORDED A FINDING THAT THE EVIDENCES SOUGHT TO BE FILED ADDRESSING THE DEM ISE AFTER TRAVEL FOR OBTAINING MEDICAL OPINION DIAGNOSE THE MEDICAL CONDITION OF S H. RAKESH TALWAR ERSTWHILE RESIDENT OF DUBAI WHO ULTIMATELY PASSES AWAY ON 28. 06.2012 IN MAX HOSPITAL SAKET NEW DELHI WITHIN A MONTH OF HIS ARRIVAL IN INDIA AS SUCH THE ASSESSEE HAD ADEQUATELY LED SUFFICIENT AND COGENT EVIDENCE TO DE MONSTRATE THAT SH. RAKESH TALWAR DURING THE PERIOD THE ASSESSEE WAS ATTEMPTI NG TO GET A REPLY TO ITS E-MAILS / PHONES ETC. SH. RAKESH TALWAR WAS PRE-OCCUPIED WITH HIS MEDICAL TREATMENT DUE TO WHICH CONFIRMATION REPLY COULD NOT BE OBTAINED. THE VARIOUS PAGES IN THE PASSPORT REFERRED TO BY THE SR. DR SHOWED THAT HE TRAVELED T O USA INDIA ON SPECIFIC DATES AND EVIDENCES AT PAGES 225 TO 246 WHICH CONTAINS CO PIES OF MEDICAL PAPERS OF SH. RAKESH TALWAR FROM 19.01.2011 IN SHARJAH UAE DUBA I UAE INDIA CALIFORNIA USA ETC. AS SUCH QUA M/S R.T. ASSOCIATES SUPPORT TH E PLEA OF THE ASSESSEE I.T.A .NO.-773 & 230/DEL/2013 21 ACCORDINGLY WE SET ASIDE THE FINDING OF THE CIT(A) WHEREIN HE HAS NOT CARED TO ADDRESS THE EVIDENCES RELIED UPON QUA THE RENDERING OF SERVICES BY THE SAID PARTY AND RESTORE THE ISSUE BACK TO THE AO TO CONSIDER T HE EVIDENCE AND PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSES SEE A REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY ASSESSEES GROUND IS ALLO WED FOR STATISTICAL PURPOSES. 6. QUA THE SECOND ISSUE ADDRESSED BY THE DEPARTMENT THE FACTS AS PER THE ASSESSMENT ORDER ARE THAT THE AO HAS OBSERVED THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON THE FOLLOWING PAYMENTS:- FREIGHT & CARTAGE (CONTRACTUAL IN NATURE) 9.6.2008 AL ANSR CO. FOR COKE & CHEM RS.326721/- 7.7.2008 APM GLOBAL LOGISTICS EGYPT LIMITED RS.864 731/- 12.10.2008 APM GLOBAL LOGISTICS EGYPT LIMITED RS.9 09972/- 28.10.2008 APM GLOBAL LOGISTICS EGYPT LIMITED RS.5 92706/- 3.11.2008 APM GLOBAL LOGISTICS EGYPT LIMITED RS.10 88450/- 1.12.2008 APM GLOBAL LOGISTICS EGYPT LIMITED RS.46 1519/- 31.01.2009 APM GLOBAL LOGISTICS EGYPT LIMITED RS.5 75460/- RS.4819559/- INSPECTION CHARGES 4.11.2008 EGYPTIAN CHEMICAL INDUSTRIES RS.28500/- 10.2.2009 AL ANSR CO. FOR COKE & CHEM RS.246953/- RS.275453/- 6.1. ACCORDINGLY HE REQUIRED THE ASSESSEE TO EXPLA IN THE SAME BY WAY OF ISSUANCE OF SHOW CAUSE NOTICE. IN RESPONSE THERET O THE ASSESSEE PLEADED THAT THE SERVICES WERE RENDERED OUTSIDE INDIA AND ACCORDINGL Y NO TDS WAS REQUIRED TO BE DEDUCTED. SUPPORT WAS DERIVED FROM CIRCULAR NO.786 DATED 07.02.2000. HOWEVER THE AO WAS NOT CONVINCED WITH THE EXPLANATION OFFER ED AND HELD THAT THE ASSESSEE EXPORTED ABOUT 40% GOODS FROM INDIA & FREIGHT & CAR TAGE WAS PAID FOR THESE SERVICES AS SUCH SECTION 194C WAS ATTRACTED. HE WA S ALSO OF THE VIEW THAT TESTING CHARGES WERE ALSO PAID FOR THE TESTING OF GOODS SEN T FROM INDIA AND THE CIRCULAR RELIED UPON HAD BEEN WITHDRAWN AS SUCH HE HELD TDS SHOULD HAVE BEEN DEDUCTED FOR THE SAID PAYMENTS AS SUCH ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DO SO DISALLOWANCE U/S 40(A)(IA) OF THE INCOME TAX AC T 1961 AMOUNTING TO RS.50 95 012/- WAS MADE U/S 40(A)(IA) READ WITH SEC TION 100 OF THE INCOME TAX ACT. I.T.A .NO.-773 & 230/DEL/2013 22 7. IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY T HE FACTUAL FINDING ON THE LEGAL PRINCIPLES RELIED UPON BY THE AO WAS ASSAILED ON BE HALF OF THE ASSESSEE. THESE ARGUMENTS ARE FOUND RECORDED AT PARA 6.2 AT PAGES 1 7-20 OF THE IMPUGNED ORDER. A PERUSAL OF THE SAME SHOWS THAT ATTENTION WAS INVITE D TO THE FACT THAT THE DETAILS OF PAYMENTS OF FREIGHT AND CARTAGE CLAIMED IN THE P&L ACCOUNT WERE MADE TO APM GLOBAL LOGISTICS EGYPT AND M/S AL ANSR CO. SUPPORTE D BY COPIES OF INVOICES FILED BEFORE THE AO WERE RELIED UPON. THE INSPECTION CHA RGES IT WAS STATED WERE PAID TO M/S EGYPTIAN CHEMICAL INDUSTRIES AND THE COPIES OF INVOICES IN SUPPORT OF THE SAID CLAIM AVAILABLE BEFORE THE AO WERE RELIED UPON. IT WAS REITERATED THAT TDS WAS NOT REQUIRED TO BE DEDUCTED AS THE PAYMENT TOWARDS THE SAID EXPENSES WERE MADE TO NON-RESIDENT PARTIES FOR SERVICES RENDERED OUTSI DE INDIA WHICH WERE EXEMPT FROM TAX U/S 9 OF THE INCOME TAX ACT 1961 AS WELL AS UN DER THE RELEVANT DTAA WITH THE RESPECTIVE COUNTRIES. REGARDING FREIGHT AND CARTAG E ON PURCHASES IT WAS SUBMITTED THAT THE PURCHASE WAS GENERALLY MADE ON CFR BASIS W HICH INCLUDE COST AND TRANSPORTATION FREIGHT WHICH IS PAID DIRECTLY BY TH E SUPPLIER EXCEPT FROM SUPPLIER FROM EGYPT WHO ONLY SUPPLY ON FOB BASIS REQUIRING THE FREIGHT TO BE PAID BY THE BUYER. IT WAS SUBMITTED THAT THE PRICE WHICH THE A SSESSEE CHARGES FROM ITS CUSTOMERS INCLUDES FREIGHT (CFR BASIS) BUT THIS IS NOT SEPARATELY SHOWN IN THE BILLS RAISED FOR SALES MADE TO THE FOREIGN BUYERS. IT WA S ALSO SUBMITTED THAT ALL TRANSACTIONS UNDER REVIEW ARE BASED ON SHIPMENTS O N HIGH SEAS THAT IS FROM COUNTRY OF ORIGIN (NOT INDIA) TO THE OVERSEAS CUSTO MER. AS SUCH NO FREIGHT WAS PAID TO ANY SHIPPING AGENT IN INDIA. ACCORDINGLY SINCE THE ASSESSEE HAD PURCHASED GOODS OUTSIDE INDIA WHICH WERE SENT DIRECTLY WHICH TOO WERE OUTSIDE INDIA AS WOULD BE EVIDENT FROM THE SALE AND PURCHASE INVOICE S THE DETAILS OF WHICH WERE ALSO FILED BEFORE THE AO WHILE EXPLAINING THE COMMI SSION PAID TO THE FOREIGN PARTIES. THE RELIANCE PLACED UPON CIRCULAR NO-7 DA TED 22.10.2009 BY THE AO IT WAS SUBMITTED WAS NOT RELEVANT AS THE CIRCULAR NO-786 W AS RELIED UPON BY THE ASSESSEE. IT WAS ALSO SUBMITTED THAT THE PAYMENTS OF FREIGHT AND INSPECTION CHARGES HAD NOT BEEN DOUBTED BY THE AO AND EVEN CONSIDERING THE BOA RDS CIRCULATION NO-7 DATED I.T.A .NO.-773 & 230/DEL/2013 23 22.10.2009 WHICH CAME INTO FORCE FROM 22.10.2009 WA S NOT EVEN RELEVANT ON ACCOUNT OF THE SPECIFIC FACTS OF THE PRESENT CASE. RELIANCE WAS PLACED UPON THE FOLLOWING JUDGEMENTS :- (I) ACIT VS M/S P.P. OVERSEAS IN ITA NO.-733/MUM/2 010 DATED 18.02.2011; (II) CHANDRAKANT THACKAR VS. ASSTT. CIT 129 TTJ 1 (CTK) (UO); (III) R.R.CARYYING CORPORATION VS. ASSTT. CIT 30 DTR 569 (CTK); (IV) ITO VS FREIGHT SYSTEMS (INDIA) (P.) LTD 103 TTJ 103 (DEL F) (V) DCIT VS DIVIS LABORATORIES LTD.[2011] 12 TAXMANN.C OM 103 (HYD.). 8. CONSIDERING THESE SUBMISSIONS THE CIT(A) DELETED THE ADDITION MADE AS A RESULT OF A DISALLOWANCE HOLDING AS UNDER :- 6.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS M ADE BY THE LD. AR AND HAVE GONE THROUGH THE ASSESSMENT ORDER. I HAVE ALSO CONS IDERED THE REMAND REPORT SUBMITTED BY THE AO WRITTEN SUBMISSIONS OF THE APP ELLANT COMPANY AND THE REJOINDER ON THE ABOVE GROUND. NO COMMENTS ARE GIVE N BY THE AO IN THE REMAND REPORT ON THESE ISSUES. IT IS OBSERVED FROM THE ASS ESSMENT ORDER PASSED THAT THE EXPENSES INCURRED AND PAID ARE NOT DISPUTED BY THE AO. THE ONLY REASON TO MAKE DISALLOWANCE IS NON DEDUCTION OF TAX BY THE APPELLA NT COMPANY ON THESE PAYMENTS MADE AS ACCORDING TO THE AO IS THAT HE FOUND THAT T HE SERVICES IN THIS CASE WERE RENDERED IN INDIA AND THE ASSESSEE EXPORTED ABOUT 4 0% GOODS FROM INDIA & FREIGHT AND CARTAGE WAS PAID FOR THESE SERVICES. WH EREAS APPELLANT CLAIMS THAT NO GOODS WERE EXPORTED FROM INDIA AND NO FREIGHT OR I NSPECTION CHARGES WERE PAID FOR ANY SERVICES RENDERED IN INDIA BY THE ABOVE COM PANIES TO WHOM APPELLANT COMPANY HAS MADE THE PAYMENT. THUS THE ONLY ISSUE TO BE EXAMINED IS AS TO WHETHER ANY EXPENSE IS CLAIMED BY THE APPELLANT UND ER THE HEAD FREIGHT AND CARTAGE TO THESE PERSONS FOR THE SERVICES RENDERED IN INDIA OR THE SERVICES WERE RENDERED BY THESE COMPANIES OUTSIDE INDIA ON WHICH PROVISIONS OF SECTION 194C ARE NOT APPLICABLE. THE APPELLANT COMPANY HAS FURNISHED DETAILS OF FREI GHT CHARGES PAID TO M/S. APM GLOBAL LOGISTICS EGYPT LTD. AND M/S. AL N ASR CO. FOR COKE & CHEM. THE INSPECTION CHARGES AMOUNTING TO RS.28 500/- ARE PAID TO M/S. EGYPTIAN CHEMICAL INDUSTRIES. AS PER CIRCULAR NO. 786 DATED 7.2.2000 NO TAX WAS TO BE DEDUCTED WHERE THE NON-RESIDENT AGENT OPERATES OUTS IDE THE COUNTRY AND NO PART OF HIS INCOME ARISES IN INDIA. FURTHER SINCE THE P AYMENT IS USUALLY REMITTED DIRECTLY ABROAD IT CANNOT BE HELD TO HAVE BEEN RECE IVED BY OR ON BEHALF OF THE AGENT IN INDIA. SUCH PAYMENTS WERE THEREFORE HELD TO BE NOT TAXABLE IN INDIA. IN THE PRESENT APPEAL APPELLANT COMPANY HAS SUBMITTED COPIES OF ALL THE INVOICES OF THE FREIGHT PAID WHICH IS IN RESPECT OF OCEAN FREIG HT PAID TO M/S. APM GLOBAL LOGISTICS EGYPT LTD. FOR ALEXANDRIA TO JAKARTA AN D NONE OF THE PAYMENT IS MADE FOR ANY FREIGHT WHICH CAN BE SAID TO HAVE INCURRED FOR FREIGHT PAID IN INDIA. APPELLANT HAS ALSO PLACED ON RECORD THE EVIDENCES T HAT IT HAS WRONGLY DEBITED INSPECTION CHARGES BY FREIGHT AMOUNT. IN ANY CASE NEITHER THE FREIGHT NOR THE INSPECTION CHARGES ARE PAID BY THE APPELLANT COMPAN Y FOR ANY SERVICES RENDERED BY THESE COMPANY IN INDIA AND NOR THE PAYMENTS ARE MADE TO THESE PARTIES IN INDIA AND THEREFORE BY NO IMAGINATION EITHER THE PROVISIONS OF SECTION 194 C OR SECTION 195 ARE APPLICABLE ON ANY OF THESE PAYMENTS MADE TO THESE PARTIES BY THE I.T.A .NO.-773 & 230/DEL/2013 24 APPELLANT COMPANY. FURTHERMORE NEITHER THE AO HAS BROUGHT ON RECORD AS TO WHICH FREIGHT AMOUNT OR INSPECTION CHARGES WERE PAI D BY THE APPELLANT COMPANY TO ANY INDIAN PARTY WHICH IS SUBJECT TO DEDUCTION OF TAX U/S 40(A)(IA). IN VIEW OF THESE OBSERVATIONS THE ADDITION MADE ON THESE FIND INGS WHEN NO AMOUNT OF FREIGHT IS PAID IN INDIA THE ADD ITION MADE OF RS.50 95 012/- ON ACCOUNT OF FREIGHT AND INSPECTION CHARGES IS DEL ETED. 9. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL. THE LD. SR. DR PLACED RELIANCE UPON THE ASSESSMENT ORDER. HOWE VER THE FINDINGS ON FACTS WERE NOT ASSAILED BY LEADING ANY COGENT EVIDENCE NO R THE EVIDENCE TAKEN INTO CONSIDERATION BY THE CIT(A) AND THE JUDGEMENTS RELI ED UPON WERE ASSAILED. THE LD. AR ON THE OTHER HAND IN THE ABSENCE OF ANY SERI OUS ARGUMENTS ON BEHALF OF THE REVENUE PLACED RELIANCE UPON THE IMPUGNED ORDER HOW EVER IT WAS HIS SUBMISSION THAT IN CASE THE SR. DR WANTS TO SERIOUSLY CONTEST THE ISSUE THEN HE IS READY TO ARGUE AT LENGTH ADDRESSING THE EVIDENCE WHICH HAVE BEEN CONSIDERED AS ADMITTEDLY THE FACTS ARE UNDISPUTED THAT THE PURCHASE AND SALE DUE TO THE SERVICES OF THE SPECIFIC PARTIES WERE MADE AT HIGH SEAS AS SUCH NO AGENT IN INDIA WAS PAID CONSEQUENTLY FOR THE PAYMENTS MADE TO COMPANIES/PARTIES SITUATED IN DIFFERENT COUNTRIES HAVING NO PRESENCE IN INDIA THE OCCASION TO DEDUCT TDS DOES NOT ARISE. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS THE PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION OF THE FACTS AND CIRCUM STANCES AND POSITION OF LAW WHICH WE HAVE REFERRED TO AT LENGTH IN THE EARLIER PART OF THIS ORDER WE FIND NO INFIRMITY IN THE IMPUGNED ORDER. BEING SATISFIED W ITH THE REASONING AND FINDING ARRIVED AT THEREIN THE DEPARTMENTAL GROUND IS DISM ISSED. 11. IN THE RESULT THE APPEAL OF THE DEPARTMENT IS D ISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH OCTOBER OF 2013. SD/- SD/- (T.S.KAPOOR) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:18/10/2013 *AMIT KUMAR* I.T.A .NO.-773 & 230/DEL/2013 25 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI