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TMI Blog2012 (11) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Ld. CIT(A) be set aside and that of the A.O. be restored. 3. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off." 3. In assessee's appeal, following grounds of appeal have been raised: "1.That the Id CIT(A) has not considered the correct facts of the case and disallowance of interest @ 13.50% on account of business advances should be deleted. 2. That there is no direct nexus of the business advances and disallowance of interest, hence the disallowance of interest should be deleted. 3. The CIT(A) has restricted the disallowance of interest @ 13.50% p.a instead of 21% p.a. hence the disallowance be deleted. 4. That CIT(A) has not considered the issue of notice u/s 142(1) & 143(2) in the appeal order, hence the proceedings of the A.O should be quashed on disallowance. 5. That the appellant craves for permission to add, amend or alter any ground of appeal at the time of hearing." 4. In ground No.1, the revenue contended that CIT(A) erred in law and facts in deleting addition of Rs.5,97,861/- made by the Assessing Officer on account of disallowance of job work expenses ignoring the fact that the liability to pay has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 5,7,861/- shows that it intend to make payment against the liability but the payment was stopped due to quality problem which emerged. Even though the liability may be disputed, it is an existing liability based on actual work done by the supplier. Under these circumstances, in my opinion, there is no scope for disallowing the part payment only because there is a dispute about the quality of the work. If any remission against the liability received by the assessee, the same would be required to be offered for tax under the provisions of section 40A(1) of the Act. The addition of Rs.5,97,861/- is, therefore, deleted. Ground No. 8 of appeal is allowed." 7. A bare perusal of the findings of the CIT(A) reveals that there is existence of liability, which is quantified and not in the nature of contingent liability. The mere dispute as to the quality of the job work would not render the liability as nonexistent. Therefore, the findings of the AO are legally not tenable. In view of this, findings of the ld. CIT(A) are upheld and ground of appeal of the revenue is dismissed. 8. Ground Nos. 2 & 3 are general in nature and need no separate adjudication. 9. In the result, appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credit balances. This fact had not been refuted by the AO. The assessee further contended with reference to copy of account of M/s Girnar Fibres Ltd. in its books of account, that it continued to avail such credit facility of substantial amount, during the financial year 1999-2000, 2000-01 and 2001-02 (part of the year). Therefore, appellant's content ion that security deposit resulted in benefit to itself, also appears to be borne out of the fact on record, at least in a financial year, after when the interest-free loans were given. The substantial finding of the CIT(A) in the matter, are incorporated in para 6.6 and the same is reproduced hereunder: "6.6 However, it is seen that from the financial year 2001-02 onwards the purchases as well as outstanding balances from Girnar Fibers Ltd reduced considerably and though the assessee had interest free loan outstanding against M/s Girnar Fibers Ltd, it did not adjust the purchases against the security deposits. No reason for no adjusting the purchases against the outstanding has been submitted by the appellant. The appellant's contention is that a suit has been filed for recovery of the amount from M/s Girnar Fibers Ltd. This suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bres Ltd. @ of 13.5%. Ground No. 5 of appeal memo and ground Nos. 1 and,.2 of additional grounds of appeal vide letter dated 1-0-8-2007 are, thus, partly allowed." 13. We have carefully perused the rival submissions, facts of the case and the findings of the AO as well as that of the CIT(A) and found that the appellate order, passed by the CIT(A), is well reasoned and detailed one, therefore, we do not find any infirmity therein and, hence, the same are upheld. However, to meet the ends of justice, the rate of interest is required to be reduced to 10%. Consequently, first three grounds of appeal of the assessee are partly allowed. 14. In Ground No.4 the assessee contended that CIT(A) has not considered the issue of notice u/s 142(1) & 143(2) in the appeal order, hence the proceedings of the A.O should be quashed on disallowance. The detailed findings of the CIT(A), on the issue raised by the assessee in Ground No.4, after appreciation of the submissions, have been recorded in para 6 of the appellate order, passed by him. The CIT(A), has admitted the additional grounds, being legal in nature. The issue related to the denial of natural just ice and limitation, in respect of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order has been served on 1-1-2007, it had been passed before that date i.e. on or before 31-12-2006. Perusal of the assessment record shows that there is signature of some person on the copy of the notice of demand and on the penalty notice dated 1-1-2007, apparently in receipt of these documents. There is a report of a notice server dated 30-12-2006 informing that he had gone to serve the documents on 30-12-2006 to the assessee but the owner was out that day and that some employee had put a date of service of 1-1-2007. He, therefore, had informed the office clerk about the same and the order was dispatched through Speed Post on the same date. The acknowledgement of the postal deptt for sending the documents by speed post to the assessee on 30-12-2006 at 8.33 PM is pasted on the reverse of first page of assessment order. The notice of demand, the penalty notice and the assessment order are all dated 18-12-2006. The AO in his report in respect of filing of appeal has also reported that notice of demand and the assessment order were dispatched on 30- 12-2006 by speed post. I think that there is sufficient evidence on record to show that the assessment order was signed on 18-12-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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