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Facts
The assessee, Knauf India Pvt. Ltd., engaged in manufacturing and trading of building materials, appealed against final assessment orders for AY 2017-18 and 2018-19. The disputes primarily concerned transfer pricing adjustments where the TPO rejected the assessee's Resale Price Method (RPM) and adopted Transactional Net Margin Method (TNMM), certain disallowances of expenses under Section 37, and an addition under Section 69C related to a difference in custom duty. The assessee contended that RPM was the appropriate method for its trading segment and sought working capital adjustments.
Held
The Tribunal remitted the transfer pricing issue back to the AO/TPO to re-determine the Arm's Length Price (ALP) based on the Resale Price Method (RPM), directing the assessee to provide audited segmental reports and a FAR profile. The disallowance under Section 37 for expenses was remitted to the AO for verification of additional evidence. The addition under Section 69C for custom duty difference was also remitted to the AO for reconciliation after collecting complete import data from the assessee.
Key Issues
The key legal issues included the selection of the Most Appropriate Method (MAM) for transfer pricing (Resale Price Method vs. Transactional Net Margin Method), validity of working capital adjustment, genuineness of expenses disallowed under Section 37 of the Act, and the correctness of an addition under Section 69C related to custom duty differences.
Sections Cited
144, 144C(13), 144C(8), 10C, 10CA, 92C(3), 92C, 10B(2), 92D, 10D, 37, 69C, 115JB, 143(2), 142(1), 10B(1)(c), 234B, 234C, 270A, 271AAC
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Income Tax Appellate Tribunal, DELHI BENCH ‘H’: NEW DELHI
Before: SHRI S.RIFAUR RAHMAN & SHRI VIMAL KUMAR
Order : 21.03.2025 O R D E R PER S.RIFAUR RAHMAN, AM : 1. These appeals are filed by the assessee against the final assessment order dated 30.06.2022 passed u/s 144 r.w.s.144C (13) of the Income Tax Act, 1961 (hereinafter called ‘the Act’) subsequent to the directions of the Ld. Dispute Resolution Panel (DRP)/TPO for Assessment Years 2017-18 & 2018-19.
& 2061/DEL/2022 2. Since the issues are common and the appeals are connected, therefore, the same are heard together and being disposed off by this common order. First we take up for AY 2017-18 as the lead case and the has taken the following grounds of appeal in Assessment Year 2017-18 :-
1. On the facts and in the circumstances of the case and in law, the Hon'ble Dispute Resolution Panel ('DRP'), the Learned Transfer Pricing Officer ('Ld. TPO') and the Ld. AO (hereinafter collectively to be referred as 'Revenue') has erred in making an adjustment of INR 145,266,260 to the total income of the Appellant for the relevant A Y, as against the returned income of Nil filed by the Appellant.
2. On the facts and in the circumstances of the case and in law, the Hon'ble DRP has grossly erred in not undertaking independent verification of the objections along with supporting documentation, submissions and additional evidence application filed by the Appellant, and by not issuing speaking directions, and rather restoring certain transfer pricing and corporate tax matters to the Ld. TPO and Ld. AO for consideration and thereafter passing a speaking order, which is in gross violation of section I 44C(8) of the Act and thus, the final assessment order passed for the relevant A Y is bad in law. Transfer Pricing Grounds: A. Erroneous adjustment of INR 73,389,756 relating to transfer pricing with respect to international transaction pertaining to Purchase of Finished Goods
3. On the facts and in the circumstances of the case and in law, the Revenue has erred in disregarding the provisions of Rule 10C read with Rule 10CA of the Income Tax Rules, 1962 ('the Rules') by rejecting Gross Profit margin (Gross profit/operating income) selected by the Appellant as the profit level indicator ('PLI') and substituting the same with Net Profit margin (net profit/operating income) analysis.
4. On the facts and in the circumstances of the case and in law, the Revenue while selecting Net Profit margin as the PLI, erred in disregarding the fact that the Appellant operates as a routine distributor and sells products imported from its associated enterprise ('AE') without any significant value addition, thereby making application of gross profit margin most appropriate PLI.
5. On the facts and in the circumstances of the case and in law, the Revenue has erred in disregarding the fact that 'Resale Price Method' can be selected as the most appropriate method in the instant case.
6. On the facts and in the circumstances of the case and in law, the Revenue has erred in disregarding the fact that the RPM with Gross profit margin as the PLI was accepted by the Ld. TPO in all preceding assessment years and the facts and circumstances, including Functions, Assets and Risk ('FAR') analysis of the Appellant, are identical in the assessment year under consideration and the preceding assessment years, thereby disregarding the rule of consistency as enunciated in various judicial pronouncements.
7. On the facts and in the circumstances of the case and in law, the Revenue has erred in rejecting the economic analysis carried out by the Appellant in the Transfer Pricing ('TP') documentation, modifying the same with his own analysis and in doing so: 7.1. erred in not appreciating that none of the conditions set out in section 92C(3) of the Act are satisfied in the present case. 7.2. contravened section 92C of the Act read with Rule IOB(2) of the Rules, by rejecting/ excluding the comparable companies selected by the Appellant in the economic analysis undertaken in the TP documentation which was prepared and maintained in compliance with section 92D of the Act read with Rule 10D of the Rules. Corporate Tax Grounds: B. Incorrect disallowance of [N R 4,141,229 under section 37 of the Act & 2061/DEL/2022 8. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in making an incorrect disallowance of INR 4,141,229 under section 37 of the Act for the relevant A Y by questioning the genuineness of certain expenses and its nexus to the Appellant's business without giving due opportunity to the Appellant for explaining the relevant facts prior to the passing of final assessment order. C. Incorrect addition of [NR 8,497,174 made under section 69C of the Act 9. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in making an incorrect addition of INR 8,497,174 on account of difference between custom duty actually paid by the Appellant amounting to INR 162,434,730 during the relevant A Y and custom duty alleged to be paid by the Ld. AO amounting to INR 170,931,094 based on CBEC Export Import data available with the department, ignoring the documents furnished by the Appellant on record and unwarrantedly seeking explanation/ reconciliation for above difference in custom duty paid without providing the CBEC Export Import data to the Appellant. D. Arbitrary addition of INR 59,238,100 in the computation of income and taxes 10. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in making an arbitrary addition of INR 59,238,100 in computation of income and taxes without any reference for such addition either in the draft assessment order or in the final assessment order passed for the relevant A Y. E. Erroneous additions made for the purpose of calculation of book profit under section 115JB of the Act 11. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in making erroneous additions beyond the contours of section 115JB of the Act for the purpose of calculation of book profit/ loss which is not sustainable in law. F. Incorrect setting-off of entire available brought forward business losses and unabsorbed depreciation & 2061/DEL/2022 12. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in not allowing the setting-off of entire available brought forward business losses and unabsorbed depreciation for the relevant A Y against the taxable income of the Appellant determined after considering the transfer pricing and corporate tax adjustments made in the final assessment order. Other Grounds: 13. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in levying interest under sections 234B and 234C of the Act in the final assessment order passed for relevant AY.
14. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under sections 270A and 271 AAC of the Act in the final assessment order passed of relevant AY.”
3. At the time of hearing, ld. AR of the assessee submitted that Ground No.1 is general in nature and grounds no.2 & 10 are not pressed by the assessee. Grounds No.11 to 14 are consequential in nature. Accordingly, all these grounds are dismissed as such.
4. Coming to Ground No.3 raised by the assessee, the relevant facts are, assessee is manufacturer and trader of plasterboard-based wall, ceiling lining systems and accessories in Asia, Australia and the Middle East. Assessee filed its return of income on 31.11.2017 and subsequently revised its return of income on 30.03.2019 declaring its total income at Rs.nil after claiming set off of brought forward loss and Rs.(-) 14,88,27,460/- as deemed income u/s 115JB of the Act. The case was selected for complete scrutiny. Accordingly, notices u/s 143(2) and international transactions in its annual report in Form 3CEB.
Accordingly, the case was referred to TPO. The TPO observed that assessee has declared purchase of finished goods from its AE for the value of Rs.61,05,60,691. He observed that as per the report submitted by the assessee, assessee has declared margin of 10.05% (GP/Sales) in this segment on the basis of management account. The assessee has conducted a search on the Prowess and Capitoline Plus plus databases and arrived at a set of four comparables. The average of these comparables are at 11.10%. The same is reproduced below :-
Sl.No. Data Company Name GPB 2015 GPB 2016 GPB 2017 Weighted Source (%) (%) (%) Average (%) 1 AR OK Glass Fibre Ltd. 12.41 10.65 NA 11,47 NA 2 AR Rafbrix Ltd. 6.54 6.18 6.31 NA 3 AR Solid Stone Co. Ltd. 20.50 14.69 17.58 NA 4 Prowess Mineral Oriental Ltd. 8.10 10.36 9.07 (Name change to Intelipro Aviatech Ltd.) Arithmetic Mean 11.10
The TPO rejected the above TP study with the observation that it is based on management accounts instead of audited financial statements and only two years data was taken in respect of comparable companies instead of three years data. He also observed that he proposes to adopt no margin on sales at the PLI against GP/Sales taken by the assessee in its TP study as the effect of marketing, selling and distribution functions, market and & 2061/DEL/2022 credit risk etc. does not get captured in the PLI selected by the assessee. In view of the above shortcomings, the TPO rejected the comparable companies whose data is not available in public domain and he adopted various filters and conducted fresh search using prowess data base and accordingly, he selected two comparables as under:- S.No. Company Name Weighted NPM (i) TBK Deepgiri Tile bath 0.69% Kitchen Pvt. Ltd. (ii) Solid Stone Co. Ltd. 1.88% Average 1.29% and the AO determined the ALP as under :-
Particulars Amounts Purchase of finished goods 61,05,63,681 Arm’s Length Margin 1.29% Assessee’s margin -12.4% Difference of margin 13.69% Adjustment 8,19,75,929
Accordingly, he computed the ALP adjustment at Rs.8,19,75,929/- and TPO issued a show-cause notice in this regard. In response, assessee has submitted various objections to exclusion of comparables selected by the assessee which are reproduced below :-
After considering the submissions of the assessee, the TPO rejected the submissions of the assessee and dealt with the same as under :-
Accordingly, he sustained the ALP determined by him at Rs.8,19,75,929/-.
Aggrieved with the above order, assessee filed objections before the ld. DRP and ld. DRP, after considering the detailed submissions and findings of TPO, rejected the objections raised by the assessee. Assessee also objected before the DRP for rejection of RPM as Most Appropriate Method (MAM) adopted by the assessee and substituted the same by TNMM by the TPO. It was submitted that RPM with gross profit margin as PLI was accepted by the TPO in all preceding assessment years and the FAR of the assessee in the year under consideration is identical to the FAR of the preceding years. Assessee made detailed submissions before the ld. DRP. After considering the detailed submissions of the assessee, ld. DRP observed that assessee has filed detailed submissions before the TPO vide letter dated 25.01.2021, however there is no discussion in the TPO order as to what submissions were made by the assessee as regards the justification for RPM as the MAM or gross profit margin as PLI. The TPO was directed to consider the argument of the assessee in support of RPM as MAM and RPM as PLI and directed the TPO to pass a speaking order justifying applicability of MAM and PLI keeping in view the FAR profile of the assessee. Further assessee has raised objection on the issue & 2061/DEL/2022 of denying working capital adjustment under Rule 10B(1)(c) of the Rules for determination of ALP to account for differences in working capital employed by the assessee vis-à-vis comparable companies. After considering the submissions of the assessee, ld. DRP directed the TPO to compute the working capital in accordance with the OECD Guidelines as follows ;- “(a) Compute the average of opening and closing balances of inventories, trade debtors/receivables, trade creditors/payables of both the tested party and the comparables for the relevant year on revenue account only. (b) Compute the net working capital ratio (in percentage) after dividing the net working capital by operating cost/sales or such denominator (as is used in the PLI) both for the tested party and the comparables. (c) Determine the difference between the tested party’s ratio with that of each comparable. (d) Multiply the above difference by the interest rate i.e. SBI Prime Lending Rate as on 30th June of the relevant financial year. (e) The above adjustments shall be added to the profit margin of comparable companies as finally determined in accordance with the directions of this Panel. (f) Credits received from various group concerns or loans etc., should not be taken into account.”
The TPO in order giving effect discussed the TNMM over RPM method as under:-
& 2061/DEL/2022 “ The assessee stated that the TPO had not provided any reason/ explanation for rejecting the application of RPM for the trading segment and comparable companies given in the TP documentation in the final set. The assessee has applied RPM for the trading segment and comparable companies in its TP documentation in the final set. It is pertinent to mention here the criteria for applicability of RPM. The RPM is applied when a product that has been purchased from an AE is resold to an independent enterprise. RPM is normally used in cases involving the purchase and resale of tangible goods, property or services in which there is no substantial value addition by the reseller either by physically altering such goods or by using marketing intangibles. RPM evaluates the arm's length nature of a controlled transaction by reference to the gross profit margin realized in a comparable uncontrolled transaction. RPM requires close comparability of functions performed or risks assumed by controlled parties and performed or risks assumed between the controlled and uncontrolled transactions, RPM becomes less reliable. A perusal of the Rule 108(1 )(b) which lays down the steps for the application the RPM method, the reseller of goods is compensated for the costs incurred and an appropriate profit is provided for functions performed, tangible and intangible assets employed, and risks borne. RPM takes the price at which a product/service is resold to an independent third party and reduces the resale price by an appropriate gross margin, representing the amount out of which the reseller would seek to cover its selling and operating expenses and, in the light of its functions and risks, make an appropriate profit. Knauf India Private Limited is not a pure distributor of tangible products. As per TP study report, it relates to sale of traded goods, purchase of finished goods, availing of engineering support services, business support services and IT expenses income which means that this method is prima facie unlikely to be appropriate for assessing whether the proposed pricing of the company's international associated enterprises transactions is at arm's length. Hence, RPM would not be appropriate for the benchmarking of the impugned transaction. For the above mentioned reasons, the use of RPM for the purpose of benchmarking by the taxpayer is rejected. Since, TNMM is tolerant to above mentioned inconsistencies and also a reasonable adjustments can be made on account of various expenditures grouped together if it is not possible to identify and adjust on account of the differences in individual line items of expenditure indicating differences in functions.”
With the above observation, TPO has justified in adopting TNMM as the MAM.
& 2061/DEL/2022 12. TPO observed in its order that DRP vide its order has directed the TPO to consider the submissions of the assessee including the FAR profile of the assessee and pass a speaking order justifying on the net profit margin is the MAM for PLI for benchmarking the transactions under consideration. However, TPO analysed audited financials of three financial years from financial years 2014-15 to 2016-17 in the case of TBK Deepgiri Tile Bath Kitchen Pvt. Ltd. and came to the conclusion that the above comparable failed in RPT filter.
After considering the observations of the TPO in OGE, in our considered view, ld. DRP has directed the TPO to pass a speaking order why the RPM is MAM adopted by the assessee and same method was adopted by the assessee in earlier years having the same FAR in the preceding assessment years. We failed to understand why TPO in OGE has not passed a speaking order on the above said directions and merely carried out the RPT filter against one of the comparables. The TPO has not given a clear finding on the aspect of similar FAR in the current assessment year as well as earlier assessment years in which RPM was accepted as MAM. The TPO has merely observed that assessee is not a pure distributor of tangible products. He has grossly rejected the plea of the assessee and proceeded to determine the ALP on the basis of TNMM.
& 2061/DEL/2022 14. After giving adjustment of working capital in one of the comparables i.e. Solid Stone Co. Limited, he determined the final adjustment of ALP of Rs.7,33,89,756/-.
Aggrieved with the above order, assessee is in appeal before us.
AT the time of hearing, ld. AR of the assessee submitted that assessee is dealing in international transaction of finished goods and assessee has adopted RPM method, however TPO has noticed that it has adopted other method. He brought to our notice OGE of TPO after direction of DRP and submitted that TPO has not followed the directions of DRP in giving speaking order on the aspect of applicability of RPM in the case of the assessee. In this regard, ld. AR of the assessee brought to our notice TP study report submitted by the assessee before the TPO and he brought to our notice page 276 of the paper book wherein assessee has submitted FAR analysis and trading functions of the assessee wherein assessee purchases goods from its AE and sell the same to customers. He submitted that same method of trading was adopted by the assessee over the years. Further he brought to our notice page 334 of the paper book wherein assessee has submitted a segmental profitability before the TPO wherein assessee has clearly bifurcated the manufacturing segment and trading segment separately. He submitted that assessee has earned GP/Sales of 43% in manufacturing segment and in trading segment with & 2061/DEL/2022 its AE, achieved profit of 10.05% and with non-AE it has achieved 10% and in overall entity level, the assessee has achieved 26%. He submitted that TPO has not considered the abovesaid segmental report. He further submitted that assessee is not doing any value addition with regard to trading activities. In this regard, he relied on the decision of Hon’ble High Court of Delhi in the case of Pr.CIT vs. Fujitsu India Pvt. Ltd in ITA 34/2019 & ors. order dated 12.10.2023; Mumbai Bench of ITAT in ITO vs. L’oreal India (P.) Ltd. vs. (2012) 24 taxmann.com 192 (Mum.); Delhi Bench in Karcher Cleaning Systems Private Ltd. in order dated 18.10.2023 and Delhi Bench in D Light Energy P. Ltd. vs. Assessing Officer in ITA No.516/Del/2022 order dated 10.06.2024.
In all the above cases, Hon’ble High Court of Delhi as well as coordinate Benches has accepted the RPM method in trading activities. He relied on the same. He also brought to our notice page 2271 of the Paper Book wherein assessee has filed a copy of invoices of purchase of material from its AE, Star-USG Building Materials Co. Ltd. and relevant customs clearance document and he prayed that the issue under consideration in which the TPO has not given a clear finding on the aspect of applicability of RPM in the case of the assessee which was adopted by the assessee & 2061/DEL/2022 over the years and also submitted that TPO has not followed the directions of the DRP.
On the other hand, ld. DR of the Revenue objected to the above submissions and relied on the findings of the lower authorities.
Considered the rival submissions and material available on record. We observed that assessee has filed TP study report before the TPO and also filed a segmental report before the TPO. However, TPO rejected the same with the observation that it is based on management report rather than audited report. We also observed that the segmental report submitted by the assessee before the TPO is without any certification. The TPO has rejected the method adopted by the assessee and proceeded to determine ALP based on the TNMM method. The DRP no doubt accepted the submissions of the assessee and remitted the issue back to the file of TPO to pass a speaking order on the aspect of applicability of RPM method in the case of the assessee considering the fact that same method was adopted by the assessee in the earlier assessment years and the same was accepted by the Revenue, considering the fact that there is no change in the FAR adopted by the assessee in the impugned assessment years and earlier assessment years. We observed that in OGE, TPO has passed the order rejecting the RPM method with the observation that assessee is not a pure distributor of tangible products and & 2061/DEL/2022 he also observed that assessee has availed engineering support services, business support services and IT expenses/income which shows that RPM method is prima face unlikely to be appropriate for assessee. Therefore, RPM would not be appropriate for benchmarking of the impugned transactions. In our considered view, TPO has misunderstood the clear directions of the DRP on the aspect of FAR profile of the assessee and applicability of RPM in the case of the assessee which was accepted by the Revenue in the earlier assessment years. There is no clear finding on the aspect of non-applicability of RPM and TPO merely and grossly rejected the RPM with the observation that assessee is not a pure distributor and it also does manufacturing activity. In our considered view, the TPO has grossly misunderstood the business of the assessee and proceeded to complete the ALP on the basis of TNMM method. In our considered view, the TPO has to redo the ALP adjustment on the basis of various details available on record which shows that assessee has two segments – (a) manufacturing and (b) trading activities – and the ALP of the trading activities was accepted by the Revenue in the earlier assessment years on the basis of RPM. Therefore, we are inclined to remit this issue back to the file of AO/TPO to redo the ALP adjustment on the basis of RPM and at the same time, we direct the assessee to file audited segment report before the AO/TPO and bring on record FAR submissions to the AO/TPO. It is needless to say that TPO may provide opportunity of being heard to the assessee. Accordingly, grounds no.3 to 7 are allowed for statistical purposes.
With regard to Ground No.8, relevant facts are, during assessment proceedings, the Assessing Officer observed that various expenses incurred by the assessee during the year are much higher than the expenses incurred in the immediate preceding year. The Assessing Officer compared the data of AYs 2016-17 & 2017-18 and observed that assessee has incurred expenses of Rs.15,59,09,015/- whereas in the previous assessment year it was at Rs.10,70,00,000/-. He observed that expenses are increased @ 45.71% compared to immediately preceding year which is abnormal. At the same time, he also observed that the revenue from operation was increased @ 35% whereas the expenses were increased to 45.71%. The assessee was asked to submit the relevant ledger copy and bills/invoices/vouchers of the following expenses involving Rs.1 lakh and part of each head of expenses :-
Sr.No. Nature of Expenses Claimed as expenses in ITR 1 Sales Promotion including publicity Rs.5,50,77,743/- 2. Advertisement Rs.2,06,21,155/- 3. Travelling exp. Rs.3,88,93,224/- 4. Telephone Exp. Rs.1,08,32,253/- 5. Packing Material Exp. Rs. 58,01,351/- 6. Repairing to Building Rs. 88,57,580/- 7. Repairing to Machinery Rs.2,27,43,715/- 8. Misc. Exp. Rs. 39,14,247/- Total Rs.16,67,41,268/-
In response, assessee filed reply dated 08.04.2021. After considering the submissions of the assessee, Assessing Officer observed that the assessee has not produced bills/vouchers/invoices in respect of expenditure claimed in ITR, therefore, he was not able to verify the genuineness of the expenses. Accordingly, he proceeded to disallow 10% of the total expenditure u/s 37 of the Act. Accordingly, he disallowed Rs.1,66,74,127/-.
Aggrieved with the above order, assessee preferred objections before the ld. DRP and ld. DRP called for the remand report and since remand report was not submitted on time, the issue was remitted back to the Assessing Officer to consider the additional evidences submitted by the assessee and allow the same as per law. In final assessment order, Assessing Officer considered the additional evidences submitted by the assessee and analysed each expenditure in detail and to the extent of vouchers/bills submitted by the assessee, he allowed the same and to the extent of Rs.41,41,229/- no evidences were submitted. Accordingly, he sustained the addition.
Aggrieved with the above order, assessee is in appeal before us raising ground of appeal and before us, assessee has filed application for admission of additional evidences. After considering the submissions of the assessee, we are inclined to remit this issue to the file of Assessing & 2061/DEL/2022 Officer to verify the additional evidences submitted by the assessee. Accordingly, we direct the Assessing Officer to verify the additional evidences and allow the claim of the assessee as per law, after giving proper opportunity of being heard to the assessee. Accordingly, ground no.8 raised by the assessee is allowed for statistical purposes.
24. With regard to ground no.9, relevant facts of the case are, during assessment proceedings, Assessing Officer observed that as per CBEC Export Import data available with the Department, assessee had paid customs duty of Rs.17,09,31,904/-. Accordingly, notices u/s 142(1) along with questionnaire were issued to the assessee to submit the same. In response, assessee submitted that the assessee does not route any customs duty paid from its profit & loss account and accordingly customs duty paid as per export import data is not matched with the ITR in the subject year. The Assessing Officer, not satisfied with the submissions made by the assessee, issued another notice u/s 142(1) of the Act to the assessee and was asked to furnish supporting documents along with details of customs duty paid on input invoice value of Rs.79,79,93,478/-. Since no response from the assessee, several notices were issued to the assessee. In absence of any supporting documents or response from the assessee, Assessing Officer proceeded to make the addition u/s 69C for the value of Rs.17,09,39,104/-.
& 2061/DEL/2022 25. Aggrieved assessee preferred objections before the ld. DRP. Before the ld. DRP, assessee filed additional evidences in support of its claim and ld. DRP forwarded the same to Assessing Officer for furnishing remand report. Since no remand report was received from the Assessing Officer before finalization of the order, ld. DRP remitted back the issue to the file of Assessing Officer with a direction to pass a speaking order regarding the genuineness of the claim of the assessee.
In final assessment order, the Assessing Officer considered the additional evidences submitted before the ld. DRP. The Assessing Officer observed that as per the ledger and documents submitted by the assessee to the extent of Rs.16,24,34,730/- whereas as per the CBEC Export Import data available with the department, the customs duty paid by the assessee of Rs.17,09,31,904/-. No proper explanation with respect to the difference of Rs.84,97,174/- was furnished by the assessee. Accordingly, he proceeded to sustain the addition to that extent.
Aggrieved with the order, assessee is in appeal before us.
At the time of hearing, ld. AR of the assessee brought to our notice findings of the Assessing Officer at page 9 of the final assessment order and submitted that the Assessing Officer has not furnished details of customs duty paid by the assessee and also submitted that the assessee has not claimed any expenditure with respect to payment of customs duty & 2061/DEL/2022 and the same cannot be disallowed by the Assessing Officer. However, he prayed that the issue may be remitted back to the Assessing Officer to reconcile the difference and assessee will furnish the details before Assessing Officer.
On the other hand, ld. DR of the Revenue relied on the orders of the lower authorities.
Considered the rival submissions and material placed on record. We observed that the Assessing Officer received information from CBEC export and import data and the assessee has submitted relevant information available with them. However, still there is a difference of Rs.84,97,174/- and the Assessing Officer has disallowed the same merely relying on the information available from CBEC export and import data. From the assessment order, we observed that even Assessing Officer does not have details of customs duty paid by the assessee. For the sake of justice, we are inclined to remit back this issue to the file of Assessing Officer to collect the information from assessee. Assessing Officer cannot make the addition merely on the basis of CBEC export import data and Assessing Officer has to collect the total imports made by the assessee during the year and reconcile the same with customs duty paid by the assessee. Needless to say that assessee may be given an opportunity of being heard and we direct the assessee also to submit the & 2061/DEL/2022 relevant information before the Assessing Officer. Accordingly, ground no.9 raised by the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee being for AY 2017-18 is partly allowed for statistical purposes. 32. With regard to appeal for AY 2018-19, since the facts are exactly similar to AY 2017-18 our above findings in AY 2017-18 are applicable mutatis mutandis in AY 2018-19. Accordingly, the appeal being