IN THE HIGH COURT OF DELHI AT NEW DELHI 
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  08.04.2011 
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 Present:        Dr. Rakesh Gupta, Ms. Ashwani Taneja and Ms. Rani Kiyala, 
 Advocates for the appellant. 
 Ms. Suruchi Aggarwal and Ms. Bhawana Bara, Advocates for the respondent. 
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 + ITA No. 647/2011 
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 1.       The appellant, herein, is a proprietor of M/s Pawan Jain and Sons and 
 is engaged in the business of manufacture of stainless steel utensils and 
 trading and export of stainless steel utensils, rice and other items. 
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 2.       This case pertains to the assessment year 2006-07, for which year, the 
 appellant has filed return of income declaring total income of `99,00,454/-. 
 The Assessing Officer in assessment proceedings noticed that the assessee had 
 paid commission of `31,25,312/- to one M/s Laxcon Steels (P) Ltd., purportedly, 
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 in consideration for the said company standing guarantee for purchases from 
 certain firms/companies. 
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 3.       The Assessing Officer was of the view that this transaction was not 
 genuine and, therefore, it had allowed the aforesaid commission and shown the 
 income at `1,30,25,766/-. The assessee preferred an appeal there against before 
 the CIT(A) who also confirmed the findings of the Assessing Officer. 
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 4.       Decision remains the same even at the level of ITAT which has dismissed 
 the appeal of the assessee.  From the orders passed by the three authorities 
 below, we find that they have examined the transaction in question, and keeping 
 in view various consideration, they come to the conclusion that no services were 
 referred by the said Company for which it was paid the commission by the 
 assessee.  Another factor which has also weighed with the authorities is that 
 there was no necessity to pay such a commission to the said party for standing 
 guarantee when the party owned him more than 
 `1.4 crores in loan. 
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 5.       These findings of facts are on the basis of proper appreciation of the 
 material on record and, therefore, in normal course there is no reason to 
 interfere with the same, that too in this appeal preferred under Section 260 A 
 of the Income Tax Act which is acceptable only on substantial question of law. 
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 6.       However, Dr. Gupta, learned counsel appearing for the assessee has 
 brought to our notice one significant fact, which according to him, is not taken 
 note by the authorities below. 
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 7.       He points out that M/s Laxcon Steels (P) Ltd., to whom commission was 
 paid, had filed Income Tax Return for the assessment year 2006-07 declaring 
 income of `1,48,50,705/- and had paid tax thereupon.   This indicates the 
 aforesaid commission paid by the assessee to the aforesaid company.  On this 
 basis, it is argued that it was not the intention of the assessee to divert the 
 income or to evade taxes.  It is also argued that the Revenue has not suffered 
 any loss, inasmuch as, the taxes are paid by M/s Laxcon Steels (P) Ltd which 
 received the aforesaid commission.  It is also stated by learned counsel for the 
 appellant that the acknowledgement of Income Tax Return in the case of M/s 
 Laxcon Steels (P) Ltd. was filed before the Assessing Officer and the same is a 
 part of record book and is glossed over by the authorities below. 
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 8.       Since this is vital information and has not been considered by the 
 authorities below, we restore the case back to the Assessing Officer for a 
 limited purpose, namely, to find out as to whether the aforesaid information is 
 on record, as claimed by the appellant and if it is found on record what would 
 be the effect thereof. 
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 9.       The present appeal is disposed of in the aforesaid terms. 
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 A.K. SIKRI, J. 
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 M.L. MEHTA, J. 
 APRIL 08, 2011 
 AK 
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