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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI MANJUNATHA.G, HON’BLE
आदेश / O R D E R
PER MANJUNATHA.G, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-10, Chennai, dated 24.02.2020 and pertains to assessment year 2016-17.
At the outset, we find that there is a delay of 157 days in appeal filed by the assessee. During the course of hearing, when defect was brought to the notice of the learned AR present, he has submitted that delay in filing of appeal is mainly due to lockdown imposed by the Govt. on account of spread of Covid-19 infections and which needs to be excluded for computing limitation in view of judgment of the Hon’ble Supreme Court in Miscellaneous Petition No.21 of 2022 in Suo Motu Writ Petition (C) No.3 of 2020, if the period of delay is covered within the period specified in the order of the Apex Court, then same needs to be condoned in view of specific problem faced by the public on account of Covid-19 pandemic.
2.1 The learned DR, on the other hand, fairly agreed that delay may be condoned in the interest of justice.
2.2 Having heard both sides and considered reasons given by the learned AR, we find that the Hon’ble Supreme Court in Miscellaneous Petition No.21 of 2022 in Suo Motu Writ Petition (C) No.3 of 2020, has extended limitation applicable to all proceedings in respect of Courts and Tribunals across the country on account of spread of Covid-19 infections w.e.f. 15.03.2020, till further orders and said general exemption has been extended from time to time. We further noted that delay noticed by the Registry pertains to the period of general exemption provided by the Hon'ble Supreme Court extending limitation period applicable for all proceedings before Courts and Tribunals and thus, considering facts and circumstances of the case and also in the interest of natural justice, we condone delay in filing appeal filed by the assessee.
The assessee has raised the following grounds of appeal:
1.1 The CIT(A) erred in confirming the addition of Rs.7,41,23,0137- as unaccounted sales in a summary manner without proper appreciation of facts of the case.
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1.2 The CIT(A) ought to have noted that the Assessee had agreed to produce the vouchers, Bills, accounts including the omitted turnover upon which the entire addition was made.
1.3 The CIT(A) having taken note of the specific ground raised for the production of evidences under Rule 46A in respect of addition of unaccounted sales held that the request of the assessee cannot be entertained at this stage which is bad in law and is violative of the provisions of Income Tax Act.
1.4 The CIT(A) having himself noted that his powers are co-terminus with that of the AO, ought to have examined the additional evidences himself or called for a remand report from the Assessing Officer.
1.5 In any event, the CIT(A) ought to have taxed the proportionate profit element out of the sales that was omitted by the Assessee.
2.1 The CIT(A) erred in confirming the disallowance of Rs.3,52,5897- on account of freight charges.
2.2 The CIT(A) erred in not considering the details filed by the Assessee in a proper perspective.
2.3 The CIT(A) having noted that the Assessee had agreed to produce vouchers and bills as additional evidences upon which the entire addition was made, ought to have directed the AO to verify the same.
3.1 The CIT(A) erred in confirming the addition of Rs.6,94,636/- being excess claim of salary & wages.
3.2 The CIT(A) failed to consider the details filed by the Assessee in a proper perspective.
3.3 The CIT(A) having noted that the Assessee having volunteered to produce vouchers and supporting evidences in relation to this addition, ought to have directed the AO to verify the same.
The brief facts of the case are that the assessee is a partnership firm engaged in the business of export of sea foods such as fresh and live crabs chilled and frozen shrimps. The assessee had filed its return of income for the AY 2016-17 on 05.09.2017 admitting total income of Rs.NIL and claimed current loss of Rs.3,81,545/-. The case was selected for scrutiny and during the course of assessment proceedings, the AO noticed that there was a difference of Rs.7,41,23,013/- in export sales turnover admitted by the assessee in ITR filed for the relevant assessment year and as per the information available with the Department in ITS Export/Import Summary Data. The AO called upon the assessee to reconcile the difference in export turnover. Although, the assessee filed certain details, but could not reconcile difference in export turnover as per its books and turnover as per ITS data. Therefore, the AO has made addition of Rs.7,41,23,013/-. The AO had also called for details of various expenses debited into P & L A/c, but the assessee could not file any evidences and thus, the AO has disallowed a sum of Rs.17,02,225/- towards disallowance of expenses and added back to the total income.
Being aggrieved by the assessment order, the assessee preferred an appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee challenged additions made by the AO towards difference in export turnover along with revised financial statement for the relevant assessment year and explained that the turnover difference has been reconciled. The assessee had also agitated disallowance of expenses with certain evidences. The Ld.CIT(A) after considering relevant submissions of the assessee and also taken note of revised financial statement filed by the assessee opined that the revised financial statement submitted by the assessee are not audited and from said statement, it cannot be ascertained how difference in sales turnover has been reconciled. Therefore, rejected explanation furnished by the assessee and sustained addition made towards difference in export turnover amounting to Rs.7,41,23,013/-. In so far as disallowance of various expenses, the Ld.CIT(A) has allowed relief towards disallowance of Quality Certification Charges of Rs.3,60,000/- and also disallowance of Export Inspection Charges of Rs.2,95,000/-. Further, in respect of disallowance of freight charges amounting to Rs.3,52,589/- and disallowance of salary & wages of Rs.6,94,636/-, the Ld.CIT(A) has confirmed the additions made by the AO on the ground that the assessee could not file any evidences in support of expenses. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before us.
The Ld.AR for the assessee referring to certain additional evidences filed in the form of Paper Book, more particularly, sample shipping bills for export of Fish & Prawns for the FY 2016-17 and abstract of shipping bills of the assessee for both crabs and fish submitted that the difference in turnover has been reconciled with necessary evidences and also filed revised financial statement. The Ld.CIT(A) rejected revised financial statement simply for the reason that said revised financial statement is unaudited. Therefore, he submitted that one more opportunity of hearing may be given to the assessee to file necessary evidences and reconcile difference in turnover.
The Ld.DR, on the other hand, supporting the order of the Ld.CIT(A), submitted that the assessee could not explain difference in export turnover with necessary evidences either before the AO or before the Ld.CIT(A).
Further, even before the Tribunal, the assessee could not file any evidences ‘as to how’ difference in export turnover has been reconciled except submitting certain sample shipping bills for exporting fish & prawns.
Therefore, he submitted that there is no reason to set aside the issue to the file of the AO.
We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The facts with regard to the impugned dispute are that there is a difference in export turnover reported in the ITR filed for the AY 2016-17 when compared to export turnover as per ITS data available with the AO. It is also an admitted fact that the assessee could not reconcile said difference with necessary evidences. Even before the Ld.CIT(A), the assessee could not file any evidences and reconciliation to explain difference in export turnover except filing revised unaudited financial statement. Therefore, the Ld.CIT(A) rejected arguments of the assessee and revised financial statement. Now, the Ld.Counsel for the assessee submitted sample shipping bills for export of fish and prawns, which is available in Page Nos.304-353 of Paper Book filed by the assessee. The assessee had also filed abstract of shipping bills for both crabs and fish which is available in Page Nos.293-303 of Paper Book filed by the assessee. The assessee claims that one more opportunity of hearing may be given to file necessary evidences and reconcile the difference. We find that except filing sample shipping bills and abstract of shipping bills, the assessee could not reconcile and explain the difference in turnover even before us. However, fact remains that he is able to file certain sample shipping bills and claimed that if one more opportunity of hearing is given, he will be able to explain difference in turnover.
Therefore, considering the fact that the assessee has filed certain additional evidences, we set aside the issue to the file of the Ld.CIT(A) for fresh consideration in light of certain additional evidences filed by the assessee.
Thus, we set aside the order of the Ld.CIT(A) on this issue and restore the issue back to the file of the Ld.CIT(A) and direct the Ld.CIT(A) to re- examine the claim of the assessee and decide the issue in accordance with law. The Ld.CIT(A) may also take necessary report from the AO, if required, on additional evidences filed by the assessee to decide the issue.
In so far as disallowance of certain expenses like freight charges and salary & wages, since we had restored the substantial issue of difference in reconciliation of export turnover, these two issues are also set aside to the file of the Ld.CIT(A) with a direction to re-examine the claim of the assessee in light of evidences that can be filed during the course of appellate proceedings.
In the result, appeal filed by the assessee is allowed for statistical purposes.