- (1.) This appeal under section 260A of the Income-tax Act, 1961, is from an order dated September 18, 2003, passed by the learned Income-tax Appellate Tribunal "A" Bench, Kolkata, in I.T.A. No. 1475 (Kol)/2001 for the assessment year 1994-95 on the following questions: "(i) Whether the burden to prove that any expenditure in respect of which payment is made to a person referred to in section 40A(2)(b) is excessive or unreasonable within the meaning of section 40A(2A) is on the Assessing Officer can and the Tribunal was justified in law in casting the burden upon the appellant to show that the conversion charge paid by it was equal to the market rate or was not excessive or unreasonable? (ii) Whether the initial explanation offered by the assessee assuming that the burden lay on the assessee amounts to discharge of the burden and shifting of the onus on the Assessing Officer and in the facts and circumstances of the case could the Assessing Officer disagree with the offer without adequate materials to deny the explanation and alternatively could the onus shift on the assessee and would the assessee be entitled to an opportunity to explain the point of disagreement noted by the Assessing Officer? (iii) Whether the Tribunal was justified in law in disallowing Rs. 766.76 per metric tonne in respect of pig from and C.I. scrap out of the conversion charge of Rs. 2,766.76 per metric tonne under section 40A(2) as excessive and unreasonable and its purported findings in that behalf are arbitrary, unreasonable and perverse?" Mr. Mukherjee, learned advocate appearing for the appellant, submits that the order passed by the Tribunal is perverse as there is no basis for accepting the conversion charges at Rs. 2000 per metric tonne. Prayer is made to remand the matter before the Assessing Officer for fresh assessment.
(2.) Mr. Dudhuria, learned advocate appearing for the Revenue, submits that in view of the letter dated November 21, 1998, issued by Marcandy Prasad Radha Krishna Prasad P. Ltd., the sister concern of the appellant, justifying the imposition of higher rate for conversion charges and as the entire issue has been dealt with by the Tribunal specifically, the order under challenge is just and proper.
(3.) We find that the Assessing Officer, while disallowing the claim of the appellant, had found as under: "On scrutiny it reveals that the assessee paid conversion charges to M/s. Marcandi Prasad Radha Prasad, 65, G.T. Road, Howrah. The assessee-firm paid conversion charges to the abovementioned party during the financial year 1992-93 corresponding to the assessment year 1993-94 at Rs. 1,749.04 per metric tonne but during the financial year 1993-94 relevant to the assessment year 1994-95 the assessee paid conversion charges to the same party at Rs. 2,766.76 per metric tonne. On a query, the assessee-firm submitted explanation, vide letter dated February 27, 1997, submitted before me on February 28, 1997, that 'the assessee has not occupied any factory and all the production has been made by the outsider to fulfill the contract in time high rate of conversion charge was paid'. Considering the relationship between the assessee-firm and the concerned party (Marcandi Pd. Radha Pd. (P.) Ltd.) with whom the assessee holding 37,200 shares, it is more or less established that so far as expenditure or conversion charge is concerned, the assessee firm had made undue favour to said party by allowing conversion charge at exorbitantly high rate as compared to earlier year. After admitting the fact that there may be some increase in conversion charge in relevant year, I think Rs. 2,000 per metric tonne should be optimum rate. In view of the above observation, the conversion charges (Rs. 2,766.76 - 2000) = Rs. 766.76 per metric tonne is disallowed under section 40A(2) of the Income-tax Act as excessive and unreasonable. Hence, Rs. (1033.652 x 766.76) = Rs. 7,92,563 is disallowed.";