SRI MAHARAJA REFINERIES,ERODE vs. ACIT, CIRCLE-1, ERODE
आयकर अपीलीय अिधकरण, सी’ ायपीठ, चेई
IN THE INCOME TAX APPELLATE TRIBUNAL , ‘C’ BENCH, CHENNAI
ी मनु कुमार िगर ,ाियक सद एवं ी अिमताभ शु"ा, लेखा सद य के सम
BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER
AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER
आयकरअपीलसं./I.T.A.Nos.1955 & 1956/Chny/2024
(िनधारणवष / Assessment Years: 2013-14 & 2014-15)
Sri Maharaja Refineries,
# 128, Bhavani Road,
Erode-638 004. Vs
The Assistant Commissioner of Income-tax,
Circle-1,
Erode.
PAN : AAFFS-8491-N
(अपीलाथ/Appellant)
(यथ/Respondent)
अपीलाथकओरसे/ Appellant by :
Mr. S.Sridhar, Advocate (Erode)
यथकओरसे/Respondent by :
Mr. R.Clement Ramesh Kumar,
CIT &
Ms.Anitha, Addl.CIT
सुनवाईकतारीख/Date of hearing
:
19.02.2025
घोषणाकतारीख /Date of Pronouncement
:
07.05.2025
आदेश
आदेश
आदेश
आदेश / O R D E R
PER MANU KUMAR GIRI, JM:
The captioned appeals filed by the assessee are directed against separate orders of the Ld. Commissioner of Income Tax
(Appeals)(NFAC), Delhi [CIT(A)] both dated 07.06.2024 for Assessment Years 2013-14 & 2014-15. Since the facts and issues are common in these appeals, they are heard together and disposed off by this common order.
ITA No.1955/Chny/2024 : (A.Y. 2013-14):
2. For the AY 2013-14, the assessee has raised following grounds of appeal:
1.The order passed by the CIT (A) is bad and erroneous under law.
2.Without prejudice, the CIT (A) has erred in passing the impugned order, without considering the submissions made by the Appellant.
3. Without prejudice, the CIT (A) erred in not considering that the order u/s 143(3) r.w.s. 254, being passed by ACIT, Circle 1, Erode and not by the Faceless Assessment Unit, is violative of the provisions of Sections
144B and 151A, and as such, is null and void.
4. Without prejudice, the CIT (A) grossly erred in upholding the Assessment Order passed by the Assessing Officer, when it is passed beyond the time limit mentioned in Section 153(5), more particularly when its Second Proviso does not apply to the present case.
5. Without prejudice, the CIT (A) erred in not considering the violation of principles of natural justice, as the Assessing Officer did not provide a copy of the alleged Report of the Department of Economic Affairs under the Ministry of Finance, which was the sole basis for framing the impugned assessment.
6. Without prejudice, the CIT (A) erred in being indifferent towards the fact that the Assessing Officer did not establish or substantiate his opinion as to how and why the Report of the Department of Economic Affairs under the Ministry of Finance is relevant and justified.
7. Without prejudice, the disallowance under Section 40A(2)(b) is totally unwarranted, given that the prices of Palm Oil adopted by the Appellant are well in tandem with the then prevailing Fair Market Value as per the Annual Report published by the Ministry of Consumer Affairs, Food &
Public Distribution.
8. Without prejudice, the CIT(A) erred in upholding an erroneous order of the Assessing Officer by not following the mandate of the juri ictional
Madras High Court with regard to forming an honest opinion based on well-founded reasons, supported by tangible material before him to invoke
Section 40A(2), without considering the scope and effect of Section 40A(2)(a).
The assessee has raised similar grounds of appeal for AY 2014-15 in ITA No.1956/Chny/2024. Hence, our findings in AY 2013- 14 in ITA No.1955/Chny/2024 will apply mutatis mutandis to AY 2014-15 in ITA No.1956/Chny/2024 also. 4. Brief facts are as under: Briefly stating the facts of the case are that the assessee is a firm, derives income from Imports & Exports of palm oil. The assessee filed its return of income on 28.09.2013 for AY.2013-14 declaring total loss of Rs.1,00,08,610/-. The case was selected for 'complete scrutiny' for the reasons to verify 'Low Net Profit or Loss shown from Large gross Receipts, Large amount of sundry creditors and Large other expenses claimed in P & L account. Therefore, notice u/s 143(2) of the I.T. Act, 1961 was issued by the AO on 02.09.2014. purchases/sales from/to the various parties. As the assessee had entered into transactions with the Associated Enterprises (domestic), a reference was made on 30.09.2015 to the Transfer Pricing Officer for determining the Arm's Length Price. The TPO (Deputy Commissioner of Income-tax, TPO-2(1), Chennai) has passed order u/s 92(A)(3) of the Income-tax Act, 1961 suggesting downward adjustment of Rs.6,73,54,391/- on account of purchases from Associated Enterprises. Sufficient opportunity was given to the assessee for filing the submissions and documentary evidences. The assessee filed reply on 21.12.2016 in support of its claim. After examination of the submissions, the assessments u/s. 143(3) r.w.s 144C(13) of the IT Act was passed on 26.09.2017 by making addition to the extent of Rs.7,51,83,428/-. Further, the assessee has filed appeal before the Dispute Resolution Panel". The Dispute Panel has passed the order u/s 144(5) of the IT Act on 11.09.2017, Resolution Panel has rejecting the appeals Aggrieved by this order the assessee preferred further appeal before the Hon'ble ITAT D' Bench, Chennai. The Hon'ble ITAT has passed the order on 15.02.2023 restoring back to the file of the AO for examination of allowability of the expenditure in accordance with the provisions of sec.40A(2)(b) of the Act, since these transactions would not fall under section 92BA(i) and reference to TPO is not valid. 5. The co-ordinate Bench of Tribunal in assessee’s cases vide order dated 15.02.2023 in ITA No. 2608/Chny/2017 and IT(TP)A No.21/Chny/2018 for AYs AY 2013-14 and 2014-15 respectively has passed the following order as under: “It has thus been held by Hon’ble Court that the reference made to Ld. TPO in respect of specified domestic transactions as mentioned in clause (i) of Sec. 92BA would be invalid since the provisions were omitted since inception. At the same time, Hon’ble Court confirmed the action of Tribunal in restoring the matter back to the file of Ld. AO to examine the claim of expenditure in accordance with the provisions of Sec. 40A(2)(b) of the Act. Similar is the decision of Mumbai Tribunal in Mahindra Two Wheelers Ltd. vs. DCIT (ITA No.519/Mum/2018 dated 28.04.2022). No contrary decision is on record. Therefore, respectfully following the same and taking the same view, we would hold that reference to Ld. TPO was not valid and the consequential TP adjustments so made by Ld. AO could not be sustained in the eyes of law. At the same time, respectfully following the cited decisions, the matter stand restored back to the file of Ld. AO for examination of allowability of the expenditure in accordance with the provisions of Sec.40A(2) of the Act since these transactions would fall under those provisions. We order so.”
In a set aside proceedings, the assesse has raised the following legal issue: "Your attention is invited to Section 153(5) of the IT Act and as per which the time limit to pass an order had already expired, If the first proviso to Section 153(5) is resorted to by the Revenue, then conditions contemplated therein have to be strictly followed and certified copies of the conditions contemplated therein have to be supplied for effective rebuttal, if required. Assuming the conditions contemplated in the first proviso to Section 153(5) have been mel, even then, the time limit to pass order has already expired/ The above two submissions that time to complete the assessment had already passed have been made since, as per the communication dated 04/10/2023 by the