TaxTMI 
TaxTMI 
2016 (12) TMI 744
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....ies Ltd @ Rs. 4 per share through Ripple Investments Ltd for Rs. 1 crore. In continuation to that MoU, on 12.6.2006, it entered into an M0U wherein Ripple Investments Ltd was to buy back the 25 lakh shares @ Rs. 8 per share. During a y 2006-07, it has written off the investment to the extent of Rs. 1 crore and claimed it as a revenue expenditure. In the assessment made for ay 2006-07 u/s.143(3) dated 31.12.2008, the Assessing Off icer has disallowed that Rs. 1 crore stating that it is a capital expenditure and hence it was not allowed as an expenditure to be charged to the P & L account under section 37(1). This order attained finality as the assessee has not contested it at all. 03. Consequent to a search and seizure action, the assessee was required to file a return under sec. 153A. In its revised return filed for a y 2007-08, the assessee , inter alia, credited Rs. 60 lakhs received from Valuemart Info Technologies Ltd on 31.03.2007 as "income from other sources ( as Bad Debts recovered )" in its P& L A/c but reduced Rs. 1 crore in the computation memo and arrived its total income. In the assessment made u/s. 153A rws 143(3) for ay 2007-08 on 31.03.2013, the AO accepted such re....
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....ecific issue to the file of the AO to re-examine the claim of the assessee and decide in accordance with law after giving a reasonable and sufficient opportunity to the assessee. Aggrieved, the assessee filed this appeal with following grounds of appeal : 1. The Order of the learned Principal Commissioner of Income Tax is opposed to law, facts and circumstances of the case. 2. The Order is passed in haste, without providing sufficient and reasonable opportunity of being heard. 3. The Order is passed against the principle of natural justice and thus liable to be quashed. 4. The Ld. Principal CIT erred in issuing the order u/s. 263 of the Income Tax Act, 1961. 5. The Ld. Respondent erred in holding that the assessment carried out was erroneous and prejudicial to the interest of the Revenue. 6. The Ld. Respondent erred in not appreciating that section 145 of the IT Act requires an assessee to follow the Accounting Standards notified by the Central Government and the appellant has only complied with the requirement of Accounting Standard 13 by writing off the investment to P & L A/c. 7. The Order of Ld. Respondent is contrary to the decision of Hon'ble Karnataka High Court a....
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....n'ble ITAT , Pune "B" Bench decision in the case of Shri Shankar Junjhunwala v ACIT , Central Circle, Aurangabad in ITA 225/PN/2004-05 dt 31.07.2012 wherein following the special bench decision of the the Hon'ble ITAT, Mumbai in ITA Nos 5018 to 5022 & 5059 /M/10 dt 06.07.12 in Al Cargo Global Logistics v DCIT , Cent Circle 44, Mumbai it held that the assessment made u/s 153A is to be made only on the basis of "incriminating material", and the return filed by the assessee u/s 139 attained finality. In other words, the DR submitted that a new claim of deduction or allowance could not be entertained in the reassessment proceedings and hence the order of the Pr.CIT is in accordance with law. 09. We heard the rival contentions. The facts remain that during a y 2006-07, the assessee has written off the investment of Rs. One crore & claimed it as a revenue expenditure. In the assessment made for ay 2006-07 u/s.143 (3) dated 31.12.2008, the A O has disallowed it as a capital expenditure and that order had attained finality. Out of that one crore , the assessee recovered Rs. 60 lakhs on 31.03.2007, ie during the period relevant to the a y 2007-08 & Rs. 40 lakhs on 03.04 & 30.4.2007....
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....es and FOB value of Rs. 9,90,33,413/-. The FOB rate per weighing metric tonne amounted to Rs,1,955/- (under invoicing to the extent of 53%). The extent of under invoicing was calculated on the basis of information provided by the Customs Department of Marmagao and Panjim ports for the year 2008-09. The report by the Shah Commission Report is on the basis of average sale FOB price for the same grade of iron on the same day since it is based on the average freight on board (FOB). On a review of records, the Pr CIT not iced that the A O has not verified the pricing adopted by the assessee while making exports so as to examine whether there is any under invoicing resorted by them. The A O did not make any enquiries/verification and reconciliation of sales. Since the A O, while completing the assessment, has not considered the issue of under invoicing by conducting necessary enquiries, the Pr. CIT considered that the action of the A O resulted in under assessment and the same is erroneous and prejudicial to the interests of Revenue and hence issued a show cause notice under section 263 to the assessee. After hearing the assessee, considering the relevant materials etc, the PCIT(C) held ....
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....ndustries Limited and not M/s. ILC Industries Ltd (the assessee). 8. The Ld. Respondent erred in not considering the submissions and explanations provided by the Appellant before passing the order u/s. 263. 9. The Ld. Respondent erred in calculating teh under invoicing using the data for the financial year 2008-09 as opposed to relevant financial year 2007-08. 10. The Ld. Respondent erred in placing reliance on case laws which are factually different to the present case. 11. The AR submitted that during the proceedings under sec. 153A r.w.s. 143(3), the AO has directed the assessee to furnish shipment wise details of sales made during the year, which were duly furnished vide reply dated 24-Dec-2012 (enclosed in page 11 to 15 of the paper book). Subsequently, it furnished the following details in connection with the exports made during the year: A. Details of iron ore exported (month wise) in abstract with the following information: a. Details of shipment b. Name and address of the buyer c. Date of sales contract along with copy of sale contract / letter of credit d. Contract quantity and description of commodity (MTS and FE%) e. Base price/any penalty or bonus of shipment....
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....independent enquiry to satisfy himself that the Appellant had resorted to under invoicing that has caused prejudice to the interest of the Revenue. Merely relying on the report of Shah Commission, which in itself is inconclusive to record satisfaction will not satisfy the requirements laid down in sec. 263. The AR distinguished the judgement of Hon'ble Income Tax Appellate Tribunal, Panaji in the case of Sadiq Seikh in ITA Nos. 170 & 172/PNJ/2014 and ITA Nos. 171 & 173/PNJ/2014 viz in that case of Sadiq Seikh, the assessee had failed to submit any reply to the query raised by the AO. The AO was completely debarred from making any examination of the impugned transaction. Whereas in its case, the Appellant duly furnished the specific details to the AO which were carefully examined by him while completing the assessment proceedings. The impugned export of 50,650 MT of iron ore shipped on 21 st Apri l 2007 where the Appel lant is al leged to have resorted to under invoicing was sold to M/s. Sinosteel International Macao Commercial Offshore Limited. Sinosteel Corporation is a Central State owned enterprise of the Government of People's Republic of China and M/s. Sinosteel Intern....
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....mation provided by the Customs Department of Marmagao and Panjim ports for the year 2008-09. The Shah Commission report is on the basis of average sale FOB price for the same grade of iron on the same day since it is based on the average freight on board (FOB). On a review of records, the Pr CIT found that the AO has not verified the pricing adopted by the assessee while making exports so as to examine whether there is any under invoicing resorted by them. The A O did not make any enquiries/verification and reconciliation of sales. Since the A O has not considered the issue of under invoicing by conducting necessary enquiries, on the transactions recorded by the Shah commission, the Pr. CIT held that his action resulted in under assessment and the same is erroneous and prejudicial to the interests of Revenue. On the other hand, the assessee could not furnish any material to dislodge the findings of the Pr. CIT to say that the AO has examined this issue and then recorded his findings in the impugned order. The Hon'ble jurisdictional High Court in the case of CIT v Infosys Technologies Ltd 17 taxmann.com 203 (Kar), held as an under : "24. In the present situation, the Commissioner h....