STANDARD ELECTRICAL PRODUCTS,MUMBAI vs. ITO WARD 31(3)(4)., MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘SMC‘ BENCH MUMBAI BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER & SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER (Assessment Year :2015-16) M/s. Standard Electrical Vs. ITO Ward 31(3)(4), Mumbai Products C-13, Bandra Kurla 1 Sadhana Indl. Estate Complex Oshiwara Bridge Pratyakshakar Bhavan S.V.Road, Jogeshwari (W) Bandra East Mumbai- 400 102 Mumbai-400 051 PAN/GIR No.AAGFS8946R (Appellant) .. (Respondent) Assessee by Shri Kirit Sanghvi Revenue by Shri Rajeev Kumar Singh Date of Hearing 21/02/2023 Date of Pronouncement 24/02/2023 आदेश / O R D E R PER M. BALAGANESH (A.M):

This appeal in A.Y.2015-16 arises out of the order by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) in appeal No.CIT(A)-42, Mumbai/10274/2017-18 dated 25/08/2022 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 20/12/2017 by the ld. Income Tax Officer, Wd-31(3)(4), Mumbai (hereinafter referred to as ld. AO).

 Tax invoices in respect of export sales along with documents submitted to the custom department.  Documents of claim of Duty Drawback made before the Custom Department and payment received in your bank account.  Copy of bank account showing receipt from export.  Nature of business in respect of export.  As per ITS, you have made export to the tune of Rs.1,90,55,155/-(invoice value) whereas FOB value is Rs.1,87,14,618/ Please explain the difference  As per ITS, Total export is Rs.190,55,155 however as per profit and loss account you have shown at Rs 141,73,722 50 Please explain the same with supporting documents  Please reconcile duty drawback received as reported in ITS 3.1. Since no details were filed by the assessee on the scheduled date on 21/09/2017, the ld. AO issued a show-cause notice to the assessee as to why the difference in export turnover amounting to Rs.48,81,453/- M/s. Standard Electrical Products (Rs.1,90,55,155 – 1,41,73,722) be not brought to tax as income of the assessee. The assessee filed its reply through e-mail on 29/09/2013 furnishing the following documents:- a) Details of exports done during the year specifying the amount in foreign currency and in Indian rupees, invoice value and FOB value of exports, export documents, purchase orders, shipping bills, import export code & IED customer department copy, bill and clearing, bank realization certificate copy and exchange control copy. The assessee categorically stated before the ld. AO that it had made only four exports during the year totaling to Rs.1,41,73,722/- for which the entire documents as stated supra were furnished before the ld. AO. The assessee also submitted vide further letter dated 15/11/2017 that the following shipping bills which were carried out fraudulently using the name of the assessee together with its PAN and import export code as appearing in the customs department records had not been carried out by the assessee:- Sr. No. Shipping Bill No. Date 1 8426829 17/03/2015 2 7910498 19/02/2015 3 7892136 18/02/2015 4 7698494 09/02/2015 5 7273515 17/01/2015 6 8727936 31/03/2015 3.2. Assessee had not done any exports in respect of these shipping bills. Accordingly, assessee explained that there was no need for it to account the alleged export sales made thereof in its books of accounts. The assessee categorically submitted that one Ganesh Forwarders Pvt. Ltd.

M/s. Standard Electrical Products (clearing and handling agent) name is also mentioned in the shipping bill stating that he had handled the aforesaid disputed exports for and on behalf of the assessee. The assessee also placed on record the order No.233/2015-16 passed by the Additional Commissioner of Customs (NS- II) dated 30/12/2015 wherein pursuant to the enquiry conducted by the Customs department on the two containers carrying Red sanders, it came to the knowledge of the customs department that assessee’s name had been used for export of some shipment by some unauthorized people. In response thereto, the assessee before the customs department categorically stated that it is no way connected with clearing and handling agent Ganesh Forwarders Pvt. Ltd. and no way involved with the containers containing Red sanders. Even M/s. Ganesh Forwarders Pvt. Ltd. categorically denied having any relationship with the assessee right from their inception. Obviously any exports that had been allegedly made would have to be either manufactured or purchased by the assessee and thereafter, the requisite quantity of goods could have gone out of India. The assessee had produced the entire audited books of accounts with all the supporting details and tax audit report before the ld. AO. It is not the case of the Revenue that the assessee had bought certain goods out of books and had exported the same out of India which has also been kept out of books. This is evident from the fact that the ld. AO had only resorted to add the gross profit of 11.69% on the alleged export sales. The gross profit rate of 11.69% is nothing but the gross profit disclosed by the assessee on the four exports carried out by it and disclosed by it in the profit and loss account. When the assessee had categorically denied having made the aforesaid six disputed exports and also the fact that its name had been fraudulently utilized in the aforesaid shipping bills, the ld. AO should have made verification from the bankers as to whether any export proceeds were received in the assessee’s account which has been kept outside the books of accounts of the assessee firm. The ld. AR on his M/s. Standard Electrical Products part placed certificate from Abhudaya Co-operative Bank Ltd. dated 20/02/2023 before us for the first time which reads as under:-

3.3. Before us, the ld. AR submitted that the assessee would be willing to provide the quantitative details which would prove categorically that the aforesaid six alleged exports were never made by the assessee as it was neither manufactured / purchased nor bought from the grey market by the assessee. In other words, without M/s. Standard Electrical Products the goods coming into existence in the assessee’s kitty, the same could not be exported by the assessee. Hence, he prayed for setting aside of this issue to the file of the ld.AO to prove the bonafides of the assessee in this regard. Accordingly, we deem it fit to restore this issue to the file of the ld. AO for denovo adjudication qua the issue in dispute before us, in accordance with law. The assessee is at liberty to furnish additional evidences, if any, in support of its contentions including the quantitative details. The ld. AO also is hereby directed to make necessary enquiries / verification from third parties including outside regulatory agencies such as customs department to understand the outcome of the enquiries conducted by the customs department on the assessee, on Ganesh Forwarders Pvt. Ltd. in connection with the seizure of two containers containing Red sanders. Needless to mention that assessee be given reasonable opportunity of being heard. The assessee also should provide necessary evidences to the ld. AO pertaining to the outcome of enquiries carried out by the customs department as stated supra. Accordingly, the ground raised by the assessee is allowed for statistical purposes.

Order pronounced on 24/02/2023 by way of proper mentioning in the notice board.