C.JEBAMANI,CHENNAI vs. ITO, NON CORP WARD 11(4), CHENNAI

आदेश / O R D E R

PER G. MANJUNATHA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is directed against the order of the

Principal Commissioner of Income Tax, Chennai-8, dated 27.03.2021,

passed u/s.263 of Income Tax Act, 1961, and relevant to assessment year

2015-16.

which, necessary petition for condonation of delay explaining the reasons

for the delay, has been filed. The learned counsel submitted that assessee

could not file appeal within the time allowed under the Act, therefore, delay

may be condoned. Having heard both sides and considered the petition filed

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by the assessee for condonation of delay, we are of the considered view

that reasons given by assessee for not filing the appeal within the time

allowed under the Act, comes under reasonable cause as provided under

the Act, for condonation of delay and hence, delay in filing of above appeal

is condoned and appeal filed by the assessee is admitted for adjudication.

business of import and sale of used printing and paper cutting machines

filed his return of income for the AY 2015-16 on 23.03.2017 admitting total

income of Rs.10,87,720/-. The case has been selected for scrutiny and the

assessment has been completed u/s.143(3) of the Act, on 14.11.2017 and

accepted returned income. The case has been subsequently taken up for

revision proceedings by the PCIT on the ground that assessment order

passed by the AO is erroneous in so far as it is prejudicial to the interest of

the Revenue. The PCIT, in the show cause notice observed that as per

Export Import data from CBEC, the invoice value of purchases was shown

at Rs.65,32,481/-, whereas, as per the details furnished by the assessee

vide letter dated 04.10.2017 before the AO, the import value of purchases

were shown at Rs.38,11,869/-, and thus, difference of Rs.27,20,522/-

should be brought to tax. Therefore, called upon the assessee to explain,

as to why, the assessment order passed by the AO should not be set aside

in terms of provisions of Sec.263 of the Act. In response, the assessee has

filed detailed Written Submissions on the issue vide letter dated 17.03.2021

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and the same has been reproduced on pages 2-3 of the PCIT’s order. The

sum and substance of the arguments of the assessee before the PCIT are

that although, the CBEC has determined higher value of import of used

machineries for the purpose of customs duty, but the assessee has paid

actual amount, for which, supporting evidences like bills issued by the

suppliers, bill of entry and other relevant documents have been furnished.

The AO after considering relevant facts has rightly accepted the purchase

value declared by the assessee. Therefore, the question of invoking

provisions of Sec.263 of the Act, on the very same issue does not arise.

also taken note of certain judicial precedents opined that the AO has failed

to consider relevant materials to bring to tax, the difference in value of

import made by the assessee for the relevant assessment years which

rendered the assessment order passed by the AO is erroneous in so far as

prejudicial to the interest of the Revenue. Therefore, set aside the

assessment order passed by the AO u/s.143(3) of the Act dated 14.11.2017

and direct the AO to re-do the assessment and examine the aspect

discussed in the body of the order. The relevant findings of the PCIT are

as under:

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respect of the issues raised in show cause notice, which is clear from the discussion made in' para 2 & 4 of the order. He has passed the order in undue haste without calling for the required details and without applying mind to relevant material. The Assessing Officer' has passed the order without conducting necessary investigation which he was prima-facie required to do making the order an erroneous assessment warranting revision u/s 263. Reference in this regard may be made to the decision of Hon'ble (TAT (SB), Chennai, in the case of Rajalakshmi Mills Ltd Vs ITO 313 ITR(AT) 182, wherein it was held that Commissioner of Income tax can regard order as erroneous on the ground that Assessing Officer should have made further enquiries before accepting statement made by assessee in his return. Passing an order without applying mind to relevant facts would certainly be an erroneous assessment requiring exercise of Jurisdiction u/s.263; This view is supported by the decision of Hon'ble Guhati High Court in CIT Vs Jawahar Bhattacharjee 341 ITR 434 (Gau((FB). In 41 ITR 286 (Ker), it was held that when AO passed a cryptic order which does not contain details and claims were accepted without enquiry, the assessment order was erroneous and order u/s 263 was justified. In case of Supercloth, 99 ITD 300 (Chn), it was held that lack of enquiry by AO was sufficient to invoke revisionary jurisdiction u/s 263. In case of Rampyari Devi 67 ITR 84 (SC), it was held that accepting the issue without conduction enquiry is valid ground for invoking proceedings u/s 263. In case of the assessee, the Assessing Officer has neither applied his mind nor made any enquiry or called for all required details to come to a proper conclusion. In fact, the explanations given by the assessee during the present proceedings were never put forth during the assessment proceedings. But the Assessing Officer accepted completed the assessment without applying mind to the relevant facts and without causing necessary enquiry. Since twin conditions of the order being erroneous and also being prejudicial to the interests of revenue are satisfied, revisionary proceedings u/s 263 of the Act have been rightly initiated.

assessee submitted that during the course of assessment proceedings, the

AO has issued a specific notice on the issue of value of imports and exports

shown in the return of income, for which, the assessee has filed a detailed

reply dated 27.09.2017 and explained the difference between purchases

shown in the books of accounts and purchases value at determined by the

CBEC. Further, the assessee had also explained the reasons for mismatch

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in import of purchases with necessary evidences. The AO after considering

relevant facts has rightly accepted the purchases declared by the assessee

and thus, it cannot be said that the assessment order passed by the AO is

erroneous in so far as it is prejudicial to the interest of the Revenue.

submitted that the PCIT has brought out clear facts to the effect that the

assessment order passed by the AO is erroneous in so far as it is prejudicial

to the interest of the Revenue and their orders should be upheld.

record and gone through orders of the authorities below. The sole basis for

the PCIT to invoke provisions of Sec.263 of the Act, is difference between

value of imports shown by the assessee in the books of accounts and value

determined by the CBEC for the purpose of payment of customs duty.

According to the PCIT, said difference constitutes unexplained income of

the assessee, which needs to be taxed. It was the explanation of the

assessee that the aspect of import purchases has been examined by the

AO, where the assessee has explained the reasons for difference in

purchases. According to the assessee, he had purchased used machinery

from abroad, for which, necessary invoices and other related documents

have been produced. However, CBEC has not accepted the invoice value

and determined separate value for the purpose of customs duty. Therefore,

merely for the reason that the CBEC does not accept the value declared by

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the assessee, it does not mean that the assessee has understated the

imports and difference between actual price paid for imports and value

determined by the CBEC is undisclosed income of the assessee. The AO

after considering relevant facts has rightly concluded that there is no reason

to make addition towards difference in value of imports. Since, the AO has

already considered the issue and has taken a view, in our considered

opinion, the PCIT cannot substitute his view and held that assessment order

passed by the AO is erroneous in so far as prejudicial to the interest of the

Revenue. Therefore, we quashed the order passed by the PCIT u/s.263 of

the Act.

Order pronounced on the 21st day of September, 2022, in Chennai.

Sd/- Sd/- (महावीर िसंह) (जी. मंजूनाथा) (G. MANJUNATHA) (MAHAVIR SINGH) उपा�� /VICE PRESIDENT लेखा सद�य/ACCOUNTANT MEMBER

चे�ई/Chennai, �दनांक/Dated: 21st September, 2022. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�/CIT 2. ��यथ�/Respondent 5. िवभागीय �ितिनिध/DR 3. आयकर आयु� (अपील)/CIT(A) 6. गाड� फाईल/GF