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TMI Blog2010 (12) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Officer. II. The Income Tax Officer and the Commissioner of Income Tax Officer (Appeals) further erred is not accepting the submission that even if it is presumed for the sake of argument that the payment of custom duty is made by the appellant the same being expenditure ought to have been an allowed as deduction under section 69C of the Income Tax Act 1961.' 2. The facts which revealed from the record are as under. The assessee filed the return of income for the A.Y. 1986-87 declaring the total income at Rs. 132,7S0/-. The said return-was initially processed u/s. 143(1) of the Act Subsequently, proceedings u/s. 147 was initiated by issuing the notice u/s 148 of the Act. The assessment of the assessee was completed u/s. 143(3) r.w.s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the duty of the assessee to prove the genuineness of high seas sale as also to satisfactorily explain the nature and source of customs duty paid." 3. As per the directions of the Tribunal, the A.O. issued notices to the assessee. The assessee filed the copies of the letters received from (1) M/s. Shaveta Industries & (ii) ABC Metal Industries, (iii) Printice Metal Industries, (iv) Delhi Metal Company, (v) Rajendra Metal Industries, (vi) Bawa Metal and Mohan Metal Company. The A.O. has noted that all those letters were bearing dates of September 1990 i.e. prior to the date of the original order passed u/s. 143(3) r.w.s. 147. The A.O. expressed his reservation about the genuineness of the said letters as he noted that it those letters were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the directions of ITAT, it was the duty of the assessee to prove the genuineness of the high seas sales as also to satisfactorily explain the nature and source of customs duty paid.' Now, the assessee in appeal before us. 4. We have heard the rival submissions of the parties and also perused the records. The assessee has filed the paper book in which the order of the Ld. CIT (A) for the A.Y. 1987-88 dated 16.1.1996 is filed. From the perusal of the said order it is seen that the identical controversy was there in the subsequent year i.e. regarding the alleged payment of the custom duty. The Ld. CIT (A) and the A.O. daleted the addition made by the A.O. in respect of the 'high seas sale' made to M/s. Printic Metal Industries. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of 'high seas sales' was paid by the buyers. Presuming that the assessee could not prove the payment of the custom duty but as rightly argued by the Ld. Counsel,proviso to section 69C is inserts w.e.f. the A.y. 1999-2000 and as per the said proviso if any addition is Made on account to unexplained expenditure then same is treated as deemed income of the assessee and no deduction is allowable under any head of the income. Prior to 1.4.1999, as per the settled law, when the expenditure is not unlawful or illegal the same was allowable. We, therefore, accept the alternate plea of the assessee that custom duty being a statutory duty payable by the assessee and it is a business expenditure to the extent of the addition, the same is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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