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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGH, HON’BLE & SHRI G. MANJUNATHA, HON’BLE
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.
We find that appeal filed by assessee is barred by limitation, for 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 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.
The brief facts of the case are that the assessee is engaged in the 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 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.
The PCIT after considering relevant submissions of the assessee and 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:
I have carefully considered the facts of the case and the submissions made by the assessee. The above facts were/not examined by the Assessing officer during the course of assessment proceedings. There is nothing on record to show that the Assessing Officer indeed applied his mind and came to a-judicious conclusion in 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.
Thus, the conditions for invoking revisional jurisdiction u/s 263 of the Act are satisfied and I hold that the Assessment Order dated 14.11.2017 passed u/s 143(3) of the Act for the A.Y.2015-16 is to be subjected to revision u/s 263. Hence, the Assessment Order is hereby set aside with a direction to examine the aspect discussed in the body of the order (supra) and pass the fresh Assessment Order within the stipulated time after providing sufficient opportunities to the assessee. The assessee has full liberty to present any material which was not submitted earlier before the Assessing Officer at the time of assessment proceedings.
5. The Ld.Counsel for the assessee referring to Paper Book filed by the 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 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.
6. The Ld.DR, on the other hand, supporting the order of the PCIT, 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.
We have heard both the parties, perused the materials available on 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 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.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on the 21st day of September, 2022, in Chennai.