2023 (7) TMI 674 - AT - Income Tax

Tribunal Partially Allows Assessee's Appeal, Remits Issues for Fresh Adjudication

The Tribunal partly allowed the assessee's appeal for statistical purposes. The issues concerning ad-hoc disallowance and reversal of Cenvat credit were ... Disallowance @ 10% of total expenses - Addition made on the basis that the assessee failed to furnish the supporting evidences - HELD THAT:- As we allow the application of the assessee and admit these evidences. Upon admission of the additional evidences, parties have agreed that the issue may be restored to the file of the AO for fresh adjudication. The impugned order is hereby set aside and the AO would verify the correctness of the claim of the assessee and decide the issue afresh after giving adequate opportunity of hearing to the assessee. Thus, Ground raised by the assessee are allowed for statistical purposes. CIT(A) empowered by law for setting aside the issue to file of the AO for fresh adjudication - CIT(A) in case of appeal against an order of assessment, he may confirm, reduce or annul the assessment. However, in the present case, the Ld.CIT(A) has set aside the issues for fresh adjudication after making verification. This act of Ld. CIT(A) in our considered view is in excess of powers conferred on him. CIT(A) ought to have verified himself or should have sought a Remand Report from AO in this regard. Therefore, considering the totality of facts, we hereby modify the order of Ld.CIT(A). AO is hereby, directed to delete the addition in respect of disallowance of exchange fluctuation loss. As the issue is squarely covered by the judgement of Woodward Governor India Private Limited [2009 (4) TMI 4 - SUPREME COURT] Ground Nos. 4 to 4.1 raised by the assessee are allowed for statistical purposes. Disallowance of reversal of cenvat credit - We remit this issue to the file of AO for verification of correctness of the claim of the assessee that the amount in question is actual reversal of cenvat credit, if found correct, same may be deleted. Appeal of the assessee is partly allowed for statistical purposes. Issues Involved:1. Ad-hoc disallowance of various expenses.2. Disallowance of reversal of Cenvat credit.3. Disallowance of foreign exchange fluctuation loss.Summary:1. Ad-hoc Disallowance of Various Expenses:The assessee challenged the ad-hoc disallowance of 10% of total expenses amounting to INR 92,56,638 made by the AO, which was upheld by the CIT(A). The Tribunal noted that the impugned addition was made due to the assessee's failure to furnish supporting evidences. The assessee submitted additional evidences, which were admitted by the Tribunal. The Tribunal restored the issue to the AO for fresh adjudication, directing the AO to verify the correctness of the claim and decide the issue afresh after giving adequate opportunity of hearing to the assessee. Thus, Grounds Nos. 2 to 2.3 were allowed for statistical purposes.2. Disallowance of Reversal of Cenvat Credit:The CIT(A) had directed the AO to verify the nature of the Cenvat credit reversal amounting to INR 12,64,648, which was claimed to be actual Cenvat credit reversal and not penal in nature. The Tribunal found that the CIT(A) exceeded his jurisdiction by setting aside the issue for fresh adjudication, which is not within his powers under Section 251 of the Act. The Tribunal remitted the issue to the AO for verification of the correctness of the claim and directed that if found correct, the addition should be deleted. Grounds Nos. 3 to 3.1 were allowed for statistical purposes.3. Disallowance of Foreign Exchange Fluctuation Loss:The CIT(A) had set aside the issue of foreign exchange fluctuation loss amounting to INR 31,39,751 for fresh adjudication by the AO. The Tribunal held that the CIT(A) exceeded his jurisdiction by setting aside the issue. The Tribunal directed the AO to delete the addition, as the issue is covered by the judgment of the Hon'ble Supreme Court in the case of CIT vs. Woodward Governor India Private Limited (312 ITR 254) (2009). Grounds Nos. 4 to 4.1 were allowed for statistical purposes.Conclusion:The appeal of the assessee was partly allowed for statistical purposes. The Tribunal restored the issues related to ad-hoc disallowance and reversal of Cenvat credit to the AO for fresh adjudication and directed the AO to delete the addition related to foreign exchange fluctuation loss. The order was pronounced on 14th July, 2023.