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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’, NEW DELHI
Before: SH. C.M. GARG & SH. O.P. KANT
PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 17/08/2016 of the Ld. Commissioner of Income-tax (Appeals)-2, New Delhi (in short ‘the CIT-A’) for assessment year 2012-13 raising following grounds:
On the facts and circumstances of the case, the order passed by the learned Assessing Officer (AO) is bad both in the eye of law and on facts.
2(i) On the facts and circumstances of the case, the learned AO has erred both on facts and in law in passing the exparte order in violation of principle of natural justice. (ii) That the non-appearance before the learned CIT(A) was on account of reason beyond the control of the assessee. 3(i) On the facts and circumstances of the case, the learned AO has erred both on facts and in law in confirming the disallowance of an amount of Rs.1,82,30,997/- made by AO being loss on account of forward contract transaction. (ii) That the said loss has been disallowed wrongly treating the transaction to be speculative in nature. (iii) That the loss has been confirmed ignoring the fact that the loss on account of forward contract cancellation is not in the nature of speculative transaction.
That the appellant craves leave to add, amend or alter any of the grounds of appeal.”
Facts in brief of the case are that the assessee company was engaged in the trading and export of rice and other foodgrain during relevant period. For the year under consideration, the assessee filed return of income on 30/09/2012 declaring total income of Rs.1,05,47,410/-. The case was selected for scrutiny and notice under section 143(2) and 142 (1) of the Income-tax Act, 1961 (in short “the Act”) was issued and complied with. During assessment proceeding, the Assessing Officer observed loss of Rs.1,82,30,997/- incurred on cancellation of forward contracts in respect of US dollar. The Assessing Officer asked for copy of export invoices raised, copy of agreement of related forward contracts booked and matured in the year under consideration etc. information in respect of the loss claimed, however, no such information was submitted to the Assessing Officer and in those circumstances, the Assessing Officer disallowed the said loss of Rs.1,82,30,997/- and assessed the total income at Rs.2,87,78,407/- in the assessment order completed under section 143(3) of the Act on 30/03/2015. Aggrieved, the assessee filed appeal before the Ld. CIT-A, who issued notice on 07/04/2016 fixing the hearing on 28/04/2016. The matter was adjourned on two occasions on the request of the assessee to 20/05/2016 and 07/06/2016 respectively. On 07/06/2016 none appeared before the Ld. CIT-A and thus the fresh notice was issued on 12/07/2016 fixing the hearing on 02/08/2016. On said date also none appeared nor any adjournment application was filed and thus the Ld. CIT-A passd the order ex-parte qua the assessee and upheld the disallowance of Rs.1,82,30,997/-. Aggrieved, the assessee is in appeal before the Tribunal raising the grounds as reproduced above.
At the outset, the Ld. counsel of the assessee submitted that the ld. Authorized Representative representing the assessee, could not appear before the Ld. CIT-A due to his personal or family matters, which resulted into an ex-party order. The Ld. counsel further submitted that to avoid any losses on account of foreign exchange fluctuation, the assessee entered into hedging through forward contract transactions in respect of the specified export invoices. In those contracts, the assessee agreed to receive the sales proceeds at predetermined exchange value of foreign currency from the banks, in the event of decline/rise in the exchange value of the foreign currency at the time of receipt of sales consideration. Thus, the net result was that there was no loss in such hedging transactions. The Ld. counsel requested that in the interest of Justice, the matter may be restored to the file of the Ld. CIT-A. 4. On the contrary, the Ld. Senior DR supporting the order of the lower authorities, submitted that the assessee was allowed sufficient opportunity by the Assessing Officer as well as Ld. CIT-A, however, the assessee did not file the required information in respect of the forward contract loss and thus the assessee may not may allowed further opportunity.
We have heard the rival submissions and perused the relevant material on the record. From the orders of the lower authorities, we find that the assessee did not file the relevant documentary evidence in support of loss of Rs.1,82,30,997/- claimed against forward contracts. For ascertaining, whether the said loss was a speculative, the assessee was required to furnish copy all such forward contract agreements with banks or any other entity, copy of relevant export invoices duly stamped from custom authorities, evidence of foreign currency received against such export invoices from buyers, details of amount received from banks against shortfall in invoice amount if any or excess amount received/deducted by the bank, copy of ledger accounts of buyer parties etc or any other document which could justify or explain the forward contract loss claimed by the assessee. The Ld. CIT-A decided the appeal ex party due to non-representation by the assessee or its Authorized Representative. The Ld. counsel has explained before us the circumstances under which the assessee could not be represented before the Ld. CIT-A. In our opinion, the assessee should not be allowed to suffer Justice due to any omission on the part of the Authorized Representative.
In view of the circumstances above and in the interest of Justice, we feel it appropriate to restore the matter to the file of the Ld. CIT-A, for deciding the appeal afresh in accordance with law and direct the assessee to appear before the Ld. CIT-A on 22.05.2017, and produce all the necessary documentary evidences, in support of its claim of loss on forward contract. The Ld. CIT-A may call for a remand report from the Assessing Officer on the additional evidences, if any, filed by the assessee in accordance with law. We order accordingly.
In the result, appeal of the assessee is allowed for statistical purpose. The decision is pronounced in the open court on 26th April, 2017.