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Income Tax Appellate Tribunal, [ DELHI BENCH ‘SMC’ “I (2
Before: MS. SUCHITRA KAMBLE & SHRI PRASHANT MAHARISHI
This appeal is filed by assessee wherein the disallowance of Rs.1,85,201/- under Section 37 of the Income Tax Act, 1961 (the Act) is contested. The assessee is a company engaged in the business of trading and manufacturing of electric components like rectifiers and diodes. It filed its return of income on 29.03.2015 declaring income of Rs.24,540/-. The case was selected for scrutiny under limited scrutiny. The issue of limited scruti8ny was examined by the Assessing Officer as per para No. 2 of the assessment order and found it to be satisfactory. However, as per para No. 5 Assessing Officer found that assessee has imported goods from China during the financial year 2014-15. However, the invoice of Chinese company is dated 24.03.2014. He noted that as assessee is maintaining the books of accounts on accrual basis the above expenditure should have been booked on 24.03.2014 in the financial year 2013-14. Therefore, he disallowed a sum of Rs.1,85,201/- being the import price of Rs.1,77,517/- and freight of Rs.7,684/- and determined the total income of the assessee at Rs.2,09,775/-. The assessee preferred an appeal before the learned CIT (Appeals) who confirmed the addition.
Against this the assessee is in appeal before us.
Despite notice none appeared before us and, therefore, the issue is decided on the merits of the case.
The learned Departmental Representative vehemently supported the orders of the lower authorities.
We have carefully considered the rival contentions and perused orders of the lower authorities. The fact shows that the case of the assessee was selected for scrutiny by issue of notice under Section 143(2) of the Act on 01.08.2016 to examine the Custom Duty payment mismatch. This fact is available at page No. 8 of the order of the learned CIT (Appeals) wherein the scanned copy of the notice under section 143(2) of the Act is pasted. As per para No. 2 of the order of the learned Assessing Officer it is apparent that the case of the assessee was found satisfactory with respect to the reasons for which case of the assessee was picked up for limited scrutiny. Apparently the addition has been made of Rs.1,85,201/- in the hands of the assessee stating that the above expenditure should have been booked in assessment year 2014-15 and not in assessment year 2015-16. From the order of the learned Assessing Officer as well as the learned CIT (Appeals) we could not gather that the case of the assessee was selected or converted for complete scrutiny. For conversion of case from limited scrutiny case to complete scrutiny case there are certain approvals required. While dealing with the issue of limited scrutiny the income of the assessee can be disturbed only on the issues in which the case of the assessee is selected for scrutiny. For the present case the learned Assessing Officer has exceeded the jurisdiction by touching upon the issues not covered under the limited scrutiny without obtaining any approval. This ground itself deserves the addition to be quashed. Thus, the addition deserves to be deleted.
Even otherwise it is apparent that the goods landed in India on 02.04.2014. Custom Duty is also paid on that date. Therefore, property in the goods passed into the hands of the assessee probably on that date. Therefore, even otherwise the expenses are incurred only in assessment year 2015-16. On this issue also addition deserves to be deleted.
In the result, the appeal filed by the assessee, is allowed.
Order pronounced in the open court on : 26.02.2020.