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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Rajpal Yadav, Vice- & Shri Rajesh Kumar]
ORDER
Per Shri Rajesh Kumar, AM:
This is an appeal preferred by the assessee against the order of the Principal Commissioner of Income Tax-2, Kolkata [hereinafter referred to as ‘PCIT’] passed u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as the Act) dated 11.05.2020 for the assessment year 2015-16.
The only issue raised by the assessee in the various grounds of appeal is against the wrong jurisdiction exercised u/s 263 of the Act by Ld. PCIT thereby revising the assessment framed u/s 143(3) of the Act without appreciating the fact that issue proposed by the Ld. PCIT has already been examined in the original assessment proceedings.
Facts in brief are that the assessment u/s 143(3) of the Act was framed vide order dated 28.08.2017 assessing total income at Rs. 2,22,730/-. The Ld. PCIT thereafter upon perusal of the assessment records came to the conclusion that the AO has not examined properly the mismatch of sales of goods shown in the ITR vis a vis ITS data and accordingly the assessment order so framed is erroneous in so far as prejudicial to the interest of the revenue. Accordingly a show cause notice was issued u/s 263 of the Act by calling upon the assessee to show cause as to why the assessment
Krishna Agrotech Ltd. framed u/s 143(3) of the Act should not be revised/cancelled. The assessee replied the said show cause notice by submitting that the necessary reconciliation of sales as per ITR vis-à-vis data available in ITS were duly produced before the AO and the difference was adequately explained with evidences and it is only thereafter the AO accepted the contentions of the assessee and framed the assessment u/s 143(3) of the Act . The arguments of the assessee did not find favour with the Ld. PCIT and he revised the assessment by directing the AO to verify the issue as proposed in the show cause notice after giving an opportunity to the assessee and reassess the income accordingly.
Ld. A.R. vehemently submitted before the Bench the issue of mismatch of sales between ITR and ITS data were duly explained before the AO during the assessment proceedings with proper reconciliation and supporting the evidences. The ld. Counsel of the assessee drew our attention to notice issued u/s 143(2) of the Act evidencing that the case of the assessee was selected for limited scrutiny in respect of three issues namely sales turnover mismatch, export turnover mismatch and duty drawback received/receivable. The Ld. Counsel for the assessee submitted that the case of the assessee was selected for limited scrutiny only to examine the above three issues and these were properly examined by the AO with reference to the necessary evidences with reconciliation filed by the assessee explaining that there is no mismatch and consequently only an addition of Rs. 2,222/- was made to the income of the assessee on account of difference in duty drawback received and shown in ITR Rs. 1,05,239/- vis-à-vis reported in AIR of Rs. 1,07,461/-. The Ld. Counsel of the assessee submitted before the bench that the said mismatch of sales has occurred because of sales return by East African Supplies & Logistics Ltd. amounting to Rs. 54,55,758/- made vide two respective sales bills amounting to Rs. 38,82,510/- and Rs. 15,73,248/- . The Ld. Counsel for the assessee submitted that the said sale was returned by the customer as evidenced by the copy of the confirmation issued by Export Credit Guarantee Corporation of India Ltd. which is nodal agency in connection with export of goods on behalf of Govt. Of India copy of which is placed at page 98 of PB showing details
Krishna Agrotech Ltd. as to shipment date, bank reference no. and value of shipment of both consignment and settlement of claim of the assessee and also approval for re-sale of goods as returned by East African Suppliers & Logistics Ltd. to M/s Vijay Bhagirath, Netherlands and M/s Basske Traders, Sierra Leone . The Ld. A.R. submitted that since the issue of sale return and further re-sale to two parties have been approved by the Govt. of India through Export Credit Guarantee Corporation of India Ltd. and was duly examined by the AO in the scrutiny proceedings, therefore the jurisdiction as exercised by the Ld. PCIT u/s 263 of the Act on the same issue is bad in law and so the is assessment framed u/s 263 of the Act.
The Ld. D.R. on the other hand relied on the order of Ld. PCIT by submitting that the exercise of revisionary jurisdiction has not caused any prejudice to the assessee and in the set aside assessment proceedings the assessee would be given full opportunity to explain his position with respect to mismatch of sales and thus prayed before the bench that the appeal of the assessee may kindly be dismissed.
Having heard the rival submissions and perusing the material available on record, we find that the PCIT has exercised jurisdiction u/s 263 of the Act revising the assessment framed u/s 143(3) dated 28.08.2017 on the ground that the mismatch of sales as per ITR vis-à-vis ITS data were not properly examined by the AO. After examining the letter dated 10.03.2015 as filed at page no. 19 to 21 which mentioned the sale returned through two shipments on 01.08.2014 amounting to Rs. 38,82,510/- and second on 01.09.2014 amounting to Rs. 15,94,000/- respectively and claim of the assessee in respect of sale returned. We note that in the said letter the Export Credit Guarantee Corporation of India Ltd. informed the assessee that a claim of Rs. 31,26,354/- admitted for payment in full and final settlement against the buyer. We also note that the Export Credit Guarantee Corporation of India Ltd. vide letter dated 05.11.2014 authorized the assessee to resell the goods pertaining to above two bills to alternate buyers at an aggregate loss of Rs. 37,52,562/-. In view of these facts, we are of the view that the jurisdiction has been exercised by Ld. PCIT without appreciating the facts correctly as the AO has properly examined the issue of Krishna Agrotech Ltd. mismatch of sales with supporting evidences produced by the assessee and therefore the exercise of jurisdiction u/s 263 of the Act cannot be sustained. Thus the order passed by the AO is neither erroneous nor prejudicial to the interest of the revenue and accordingly we set aside the order passed by the Ld. PCIT by allowing the appeal of the assessee.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 27th June, 2022