JUDGMENT This appeal under section 260A of Income-tax Act, 1961, is from order dated September 18, 2003, passed by learned Income-tax Appellate Tribunal "A" Bench, Kolkata, in I. T. A. No. 1475 (Kol)/2001 for assessment year 1994-95 on following questions: "(i) Whether burden to prove that any expenditure in respect of which payment is made to person referred to in section 40A(2)(b) is excessive or unreasonable within meaning of section 40A(2A) is on Assessing Officer can and Tribunal was justified in law in casting burden upon appellant to show that conversion charge paid by it was equal to market rate or was not excessive or unreasonable? (ii) Whether initial explanation offered by assessee assuming that burden lay on assessee amounts to discharge of burden and shifting of onus on Assessing Officer and in facts and circumstances of case could Assessing Officer disagree with offer without adequate materials to deny explanation and alternatively could onus shift on assessee and would assessee be entitled to opportunity to explain point of disagreement noted by Assessing Officer? (iii) Whether Tribunal was justified in law in disallowing Rs. 766.76 per metric tonne in respect of pig from and C. I. scrap out of 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 appellant, submits that order passed by Tribunal is perverse as there is no basis for accepting conversion charges at Rs. 2000 per metric tonne. Prayer is made to remand matter before Assessing Officer for fresh assessment. Mr. Dudhuria, learned advocate appearing for Revenue, submits that in view of letter dated November 21, 1998, issued by Marcandy Prasad Radha Krishna Prasad P. Ltd., sister concern of appellant, justifying imposition of higher rate for conversion charges and as entire issue has been dealt with by Tribunal specifically, order under challenge is just and proper. We find that Assessing Officer, while disallowing claim of appellant, had found as under: "On scrutiny it reveals that assessee paid conversion charges to M/s. Marcandi Prasad Radha Prasad, 65, G. T. Road, Howrah. assessee-firm paid conversion charges to abovementioned party during financial year 1992-93 corresponding to assessment year 1993-94 at Rs. 1,749.04 per metric tonne but during financial year 1993-94 relevant to assessment year 1994-95 assessee paid conversion charges to same party at Rs. 2,766.76 per metric tonne. On query, 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 production has been made by outsider to fulfil contract in time high rate of conversion charge was paid'. Considering relationship between assessee-firm and concerned party (Marcandi Pd. Radha Pd. (P.) Ltd.) with whom assessee holding 37,200 shares, it is more or less established that so far as expenditure or conversion charge is concerned, assessee firm had made undue favour to said party by allowing conversion charge at exorbitantly high rate as compared to earlier year. After admitting 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 above observation, conversion charges (Rs. 2,766.76 - 2000) = Rs. 766.76 per metric tonne is disallowed under section 40A(2) of Income-tax Act as excessive and unreasonable. Hence, Rs. (1033.652 x 766.76) = Rs. 7,92,563 is disallowed." Being aggrieved, appellant preferred appeal before Commissioner of Income-tax (Appeals) who had allowed appeal by holding as under: "I have considered facts of case as well as submission made by learned authorised representative of appellant. Since all payments were made by account payee cheques and Income-tax Officer could not found any defect in respect of payment made to Marcandy Prasad Radhakrishna Prasad Pvt. Ltd. and also failed to cite any comparable case of any other party in same line of business disallowance amounting to Rs. 7,92,563 out of conversion charges appears to be based on suspicion and surmise and not on any documentary evidence. As such entire amount of disallowance is deleted." Aggrieved by said order, Revenue preferred appeal before Tribunal. Tribunal, while allowing appeal, inter alia, held as under: "It has not been disputed by assessee that assessee has substantial interest in M/s. Mercandy Pd. Radha Pd. P. Ltd. wherein they held 37,200 shares case of assessee rates only on ground that during year under consideration there were conversions of railway sleeper scrap in addition to pig iron and C. I. scrap though in earlier year there was conversion of pig iron and C. I. scrap only and that melting loss of railway sleeper scrap is more than other cases we have carefully perused statement of total quantity got converted by assessee through M/s. Marcandy Pd. Radha Pd. P. Ltd. during year under consideration as well as in immediate preceding assessment year. We find that during year under consideration, assessee got converted pig iron and C. I. scrap to extent of 476.417 metric tonnes and 49.260 metric tonnes, respectively. assessee has not given any explanation as to why conversion charges in respect of pig iron and C. I. scrap has been made at rate of 2766.76 per metric tonne as compared to 1749.04 metric tonnes, paid in last year there is no reason to pay higher rate of conversion charges in respect of pig iron and C. I. scrap. assessee's case is only that quality of railway sleeper scrap is generally of rough and of rejected sleeper and having of good amount of dust and rust resulting in melting loss at higher percentage than pig iron and C. I. scrap. Therefore, paying higher rate of conversion charges in respect of railway sleeper scrap can be well understood but we fail to understand reason for making higher rate of conversion charges in respect of pig iron and C. I. scrap. assessee has also not furnished any information or evidence to show that even rate of Rs. 2,766.76 per metric tonne on account of conversion of pig iron and C. I. scrap is equal to market rate assessee has nowhere pleaded that I. scrap is equal to market rate assessee has nowhere pleaded that rate of Rs. 2,766.76 paid for conversion of pig iron and C. I. scrap is reasonable and not excessive having regard to legitimate need of business and market value of matter we are, therefore, of considered view that rate of Rs. 2,766.76 paid by assessee to M/s. Marcandy Pd. Radha Pd. P. Ltd. on account of conversion charges of pig iron and C. I. scrap is excessive and unreasonable and is liable to be disallowed to extent of its being so excessive or unreasonable. rate of conversion adopted by Assessing Officer at Rs. 2,000 per metric tonne for year under consideration is found reasonable and proper inasmuch as assessee has not disputed as such this rate adopted by Assessing Officer. We, therefore, direct to allow deduction of conversion charges for pig iron and C. I. scrap at Rs. 2,000 per metric tonne and to allow conversion charges in respect of railway sleeper scrap at Rs. 2,766.76 per metric tonne as claimed by assessee. Assessing Officer shall modify assessment order accordingly." We find that though Mr. Mukherjee submits that no opportunity was granted to appellant, however, Assessing Officer had specifically noted that rate of conversion adopted by Assessing Officer was not disputed by assessee. It is also evident from letter dated November 21, 1998, that sister concern had explained for charging rate of conversion charges at Rs. 2,766.76 for accounting year 1993-94. As Tribunal had dealt with facts specifically, and as entire issue relates to fact, we are of view order under challenge calls for no interference. Hence, appeal is dismissed. Urgent certified copy of this order be supplied to parties, if applied for, upon compliance of all requisite formalities. *** Prakash Engineering Works v. Commissioner of Income-tax