RAWMET COMMODITIES P. LTD.,,KOLKATA vs. DCIT, CIR. 12(1), KOLKATA, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘B’, KOLKATA [Before Shri P.M. Jagtap, AM & Shri S.S. Viswanethra Ravi, JM] Assessment Year: 2003-04 Rawmet Commodities Pvt. Ltd................................………………...........................Appellant 40/7, Ballygunge Circular Road, Kolkata – 700 019 [PAN: AACCR 2374 M] D.C.I.T., CIR – 12(1), Kolkata...................……………………………………………...Respondent Kolkata. Appearances by: Shri S. Joshi, FCA appearing on behalf of the Assessee. Shri S. Dasgupta, Addl. CIT, DR appearing on behalf of the Revenue. Date of concluding the hearing : July 05, 2018 Date of pronouncing the order : August 31, 2018

ORDER

Per P.M. Jagtap, AM:

Assessment Year: 2003-04 Rawmet Commodities Pvt. Ltd.

Assessment Year: 2003-04 Rawmet Commodities Pvt. Ltd. iv. The payment against the invoices were deposited in the following bank accounts of the assessee - HSBC Bank Ltd., Shakespeare Sarani A/c No. 025347725511(EEFC) HSBC Bank Ltd., Shakespeare Sarani A/c No. 025347725001 (INR) v. The remittance received from Sudamin being in USD, were equally split by the bank for credit of 50% into EEFC account and balance 50% was converted and credited into INR. The assessee was explained that this was necessary as per RBI guidelines at the relevant time. For each and every remittance received in USD, the bankers', HSBC, issued a remittance certificate - Foreign Inward Remittance Certificate(FIRC) which is an advise as well as evidence of receipt of foreign currency on behalf of the assessee. The certificate contained added information of the name of the remitter, remitting bank, amount remitted in USD and purpose of remittance. Bank may also provide details of conversion of USD in INR and account of the receiver to which the remittance is credited. vi. There is no dispute regarding remittance from Ispat. The impugned remittance relates to Sudamin on which the assessee raised invoices and received payment including an advance of USD 2000. In case of remittance from Sudamin, the bank issued the FIRC but the information contained in the FIRC and those as per invoice do not tally. vii. Due to the difference in the said information, the Ld. ITO, relying solely on the erroneous information in FIRC, disregarded to information as per ledger, books of accounts, profit & loss account, bank statement and the explanation and information furnished by the assessee. viii. The impugned invoices are as under – Invoice No. Bill Amount in USD RCPL/02-03/03 16257.17 RCPL/02-03/05 29025.12 RCPL/02-03/08 6865.97 RCPL/02-03/09 12721.76 RCPL/02-03/10 12603.99 Total USD 77474.01

Number dated Amount as per FIRC Corresponding invoice no in FIRC 341334 60848.24 3, 5

Assessment Year: 2003-04 Rawmet Commodities Pvt. Ltd. 344815 8837.87 8 346514 81025.13 9, 10 Total USD 150711 Considering the above difference between the impugned FIRCs (USD 150711.24) and impugned invoice (USD 77474.01), the Ld. ITO concluded that the assessee had concealed income of USD 73,237.23, i.e. INR 34,56,797/-. ix. However, in coming to the above conclusion the Ld. ITO totally ignored the following facts which were brought on record and necessary evidence submitted to her in the course of assessment proceedings - a) That the assessee has raised invoice on Sudamin for total USD 304,031.16 against which it received payment of USD 306031.06. The difference of USD 2000 was adjusted in subsequent invoice in FY 2003-04 (AY 2004-05). b) That the remittance against the impugned invoices and FIRCs were credited in the bank account of HSBC, Shakespeare Sarani Account of the assessee. The said account is disclosed in the books of account, all entries relating to the credit in the said account is recorded in the books as also each and every single invoice raised upon Sudamin. She failed to appreciate that when the account itself is recorded and each and every single invoice as well as the remittance is recorded in the books of account and the Balance Sheet and Profit & Loss account are in agreement with the books of account, there cannot be case of concealment of income. c) The Ld. ITO relied heavily on the presumption that neither the bank nor the foreign company could make any error but the assessee cannot be fault free. The assessee had produced books of account, bank statement, invoice and every single detail called for and no abnormality was found in the same. She did not show that the invoices were not recorded in the books, nor did she state that the remittance evidenced by the impugned FIRCs was not recorded in the books of account. In the absence of any such observation, it is out of place to presume that the there was excess receipt and/or there was concealed income. d) The Ld. ITO did not appreciate that there are some invoices, reference for which is not made in the FIRC. She failed to examine the entire position of invoicing and remittance from Sudamin and she only some of Assessment Year: 2003-04 Rawmet Commodities Pvt. Ltd. the invoices were picked up, she felt into belief that there is a case of excess income not disclosed by the assessee. x. The appellant submits herewith a statement of invoice raised upon Sudamin, its entries in the books of accounts, FIRCs against evidencing payment received, entries of remittances received in the books, statement of bank account to corroborate the fact that there is no case of concealment and the assessee has received just USD 2000 in excess from Sudamin against one remittance, which was subsequently adjusted by the debtor in FY 2003-04. It is also submitted that the payments against the invoice raised in FY 2002-03 were received partly in FY 2002-03 and partly in FY 2003-04. xi. The appellant submits herewith the following documents- a. Statement of reconciliation page nos 1 to 2 b. Copy of invoice and corresponding FIRCs page nos 3 to 24 C. Copy of EEFC bank statement page nos 25 to 30 d. Copy of INR bank statement page nos 31 to 41 e. Copy of ledger account Commission-INR page nos 42 to 43 Commission-USD page nos 44 f. Copy of ledger account Sudamin page nos 45 to 48 Sudamin-FY 2003-04 page nos 49 50 to 64 g. Financial Statement FY 2002-03 page nos In view of the above, the appellant prays for- Deletion of the addition of Rs. 34,56,797/- and all consequences thereof.

Assessment Year: 2003-04 Rawmet Commodities Pvt. Ltd. 34,56,797/- during the relevant assessment year. I find that the contention of the AR that the A.O. has made addition solely on the basis of FIRC certificate is incorrect. I find that the A.O. has examined the explanations with respect to details furnished by the appellant in course of assessment proceedings and then given his finding. I further find that the claim of the appellant before the A.O. that the excess sum was subsequently adjusted by way of credit note is unsubstantiated and as far as this AY is concerned the AR of the appellant has neither controverted the findings of the A.O. nor has explained its claim in the matter with any material. I also find that if a credit note has been issued in a subsequent year, the claim of the A.O. is substantiated that there was under reporting of income by the appellant. The claim of credit note being issued and adjustment made with other invoices of the party is just an afterthought and held to be not reliable. Therefore, I uphold the action of A.O. in making the addition of Rs. 34,56,797/- as income of the appellant for year under consideration.”

Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.

Assessment Year: 2003-04 Rawmet Commodities Pvt. Ltd. accounted for by the assessee, there was no concealment of any income from consultancy fees. He has submitted that similarly the amount of US$ 81025.13 was received by the assessee against Invoice No. 9, 10, 11 and 12 but in the relevant FIRCs, a reference was wrongly made by the bank only to the invoice no 9 and 10. He has invited our attention to the copies of invoice no 11 and 12 placed at Paper Book No. 34 and 36 to point out that the said invoices raised during the year under consideration on 25th March, 2003 were duly accounted for by the assessee company. He has contended that the remaining amount of US$ 1971.9 was actually paid by the concerned foreign company in excess and after realising this mistake, the same was duly adjusted by the said company in the next year while settling the invoice dated 23.05.2003 raised by the assessee. He has contended that the excess payments thus did not represent any consultancy fees that had been concealed by the assessee as alleged by the authorities below and the addition made on this issue is liable to be deleted.

Assessment Year: 2003-04 Rawmet Commodities Pvt. Ltd. now offered on behalf of the assessee before the Tribunal was offered by the assessee even during the course of assessment proceedings, but the Assessing Officer could not appreciate the same and proceeded to treat the excess receipts as concealed consultancy fees of the assessee without properly verifying the explanation of the assessee from the relevant documentary evidence. Similarly, the Ld. CIT(A) also failed to appreciate the submissions of the assessee as regards the alleged excess receipts in the right perspective and proceeded to confirm the addition made by the A.O. by treating the said receipts as concealed consideration fees of the assessee on irrelevant consultancy. Keeping in view all these facts of the case, we are of the view that the revenue cannot be given the second innings especially when a period of more than 15 years has already lapsed and the fault for the same does not lie with the assessee. We accordingly delete the addition of Rs. 34,56,797/- made by the A.O. and confirmed by the Ld. CIT(A) and allow this appeal of the assessee.