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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI GIRISH AGRAWAL
आयकर अपील सं./ITA No.: 12/CHNY/2022 िनधा�रण वष� /Assessment Year: 2016-17 Shri Rajamanickam Veerappan, The Income Tax Officer, 87/A-1, Ganeshapuram Pillaiyar v. Ward -1, Kovil Street, Namakkal – 637 001. Namakkal. PAN: AFOPR 0208J (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri S. Sridhar, Advocate ��यथ� क� ओर से/Respondent by : Shri Chinthapalli Mehar Chand,JCIT सुनवाई क� तार�ख/Date of Hearing : 24.05.2022 घोषणा क� तार�ख/Date of Pronouncement : 08.06.2022 आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Center, Delhi in Appeal No.CIT(A), Salem/10090/2019-20 dated 29.11.2021. The assessment was framed by the ACIT, Circle 1, Namakkal for the assessment year 2016-17 u/s.143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide order dated 13.12.2018. The rectification order was passed by the AO u/s.154 of the Act (the order under dispute) dated 18.06.2019.
2 2. The only issue in this appeal of assessee is against the order of CIT(A), NFAC confirming the action of AO in rejecting the rectification application u/s.154 of the Act.
At the outset, the ld.counsel for the assessee took us through the assessee’s rectification application wherein the issue under consideration was the receipt of duty drawback and foreign exchange profits which were to be treated as gross receipts in business for the purpose of estimating the profit u/s.44AD of the Act. The assessee filed rectification application u/s.154 of the Act dated 02.01.2019 and in this, he relied on guidance note issued by Institute of Chartered Accountant of India on tax audit u/s.44AB of the Act. The relevant para 5.16 (ii) & (iv) of the guidance note reads as under:- a) Duty drawback received against Exports under the Customs and Central Excise Duties and Service Tax Rules, 199 and b)The net exchange rate difference on export sales during the year …. would be covered by the term “Gross Receipts in business.”
3.1 The ld.counsel stated the factual aspect of total turnover as mentioned in the rectification application which reads as under:- Turnover reported in Original return Rs. 6474754 Add : Duty Drawback 532281 Add : Foreign Exchange Profit 231257 TOTAL TURNOVER 7238292
3 3.2 The ld. counsel stated that the AO has not at all deliberated on the issue. Subsequently he took us through the findings of the CIT(A) and read out the same in para 4.1 as under:- “4.1 The ground no.4, 5 and 6 of appeal are in respect of addition of Rs.7,63,538/- made u/s 143(3). In this regard, facts of the case, the assessment order u/s 143(3) and rectification order u/s 154 and the written submission of the appellant have duly been considered. In this case assessment order u/s 143(3) was passed on 13.12.2018 in which addition of Rs.7,63,538/- was made on the ground of unaccounted income from duty drawback and foreign exchange profit. Against the said order, the appellant filed rectification application u/s 154 which was rejected vide order dated 18.06.2019 holding that the issues involved in the assessment order were debatable and there was no mistake apparent from the records. Against the said order u/s 154, the appeal has been filed. On perusal of the facts of the case, I agree with the view of the AO that the issues involved are beyond the purview of section 154 and I also find that there was no mistake apparent from record which could be rectified u/s 154. In view of the above the ground of appeal in this regard is dismissed.” 3.3 He stated that even the CIT(A) has not applied his mind, how these amounts are not to be treated in the gross receipts for the purpose of computation of income u/s.44AD of the Act. In term of the above, the ld.counsel for the assessee only made request that matter may be restored back to the file of the AO and AO be directed to consider the assessee’s rectification application and decide the same accordingly.
Per contra, the ld. Senior DR only stated that the issue is highly debatable and it cannot be dealt with while acting u/s.154 of the Act. Hence, he supported the orders of lower authorities.
4 5. After hearing rival contentions and going through the orders of the authorities i.e, the AO deciding rectification application and the order of CIT(A), it is noticed that both the orders are non- speaking and issue is not at all discussed on merits. Hence, we set aside both the orders passed by lower authorities and remand the matter back to the file of the AO, who will decide the rectification application filed by the assessee afresh without influenced by any of the orders or observations either ours or CIT(A). The appeal of the assessee is allowed for statistical purposes.
In the result, the appeals filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 8th June, 2022 at Chennai.