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2019 (7) TMI 1557
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....he ACIT 12(3)(2),Mumbai on 18.03.2016 for the A.Y.2013-14 allowing the loss to be carried forward and accepting the returned income as Nil. During the year, the assessee company has mainly traded in various types of edible oil on high seas basis. During the A.Y.2013-14 the company has declared business loss of Rs. 9,11,71,698/- from total turnover of Rs. 405,20,20,855/-. This turnover includes the high seas sales of edible oils of Rs. 386,03,28,219/-. Service charges received of Rs. 4,15,00,649/- and Income from other sources of Rs. l5,01f90,987/-[Other receipts at Rs. 1,91,987+Clainis & settlements at Rs. 15,00,00,000/]. 4. The learned Commissioner of income tax in this case noted that scrutiny of records indicated that during the assessment year under consideration, the assessee company had purchased Crude Palm Oil on high seas of an amount of Rs. 4,10,21,70,317/- and the same were sold out on high seas at a consideration of Rs. 3,86,03,28,219/-. These high seas purchase and sale transactions were executed on 16 different occasions on back to back basis, It is important to note that all these transaction were entered into within a short period of about two months and except tw....
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....xy, JNPT Port Ruchi Soya Industries Ltd. RBD Palolein 24.12.2012 7499.91 51157.5 383676646 RSIL 7 Bunga Alamanda Kandla port Ruchi Soya Industries Ltd Crude Palm Oil 31.10.2012 2500 48605.75 121514375 RSIL 8 Fecng Hai JNPT Ruchi Soya Industries Ltd Crude Palm Oil 3.11.2012 5100 45739 233268900 RSIL 9 You Shen Chennai Port Ruchi Soya Industries Ltd. Crude palm Oil 07.11.2012 5500.388 47498 261257429 RSIL 10 Titan Glory, Haldia Port Aishwarya marktrade (India) P. Ltd. Crude palm oil 03.11.2012 4000 46221.25 184885000 - 11 Atlantic Qqueen , Kakinada Port Aishwara Marktrade (India) Pvt Ltd Crude Palm Oil 12.11.2012 1000 62337.5 62337500 12 Tiatan Glory Haldia Port Vishal Victory Qiltech Pvt Ltd Crude Palm Oil 23.11.201 2 2000 43246 86492000 13 STX Hero Kandla Port. Ruchi Off Shore Marketing Pvt Ltd Crude Palm Oil 23.11.2O12 13999.13 42744.5 598388078 14 Royal Flos Chennai Port Stride Mult....
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.... Crude Palm Oil 03.11.2012 4000 42120.25 168481000 RSIL 11 Atlantic Queen Kakinada Ruchi Infrastructure Limited Crude Palm Oil 15.12.2012 62337250 RSIL Titan Gloy, HaIdia Port Imperial Marktrade (India) Pvt Ltd Crude Palm Oil 23.11.'201 2 2000 39279.25 7S558500 13 STX Hero Kandla Port Vishal Soyamul Pvt. Ltd. Crude Palm Oil 23.11.2012 139999.1 83 40262 553635106 14 Royal Flos Chennai Port Ruchi Soya Industries Ltd Crude Palm Oil 30.11.2012 5999.943 43774.5 262644505 I5 STX Infinity, Haldia Port Nirbhay Enterprise Pvt. Ltd Crude Palm Oil 19.12.3012 9555.83 39525 377693786 16 RUN ZE Chennai Port Dynacom Trading Pvt Ltd Crude Oil 17.12.2012 17.12.2012 39766.75 59760279 Date wise and c....
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.... except two transactions, where total profit of Rs. 6280/- was booked, losses amounting to Rs, 241842096/- in total were booked in these 16 back to back transactions. Moreover, these transactions are entirely non-delivery based, This unusual pattern of the trade is found to be highly suspicious in nature and is apparently devoid of any commercial angle, particularly when in all the transactions consignee is the same party i.e. M/S. Ruchi Soya Industries Limited and transactions are made in short span of time with huge loss in almost all transactions. From the records, it emerges that the Assessing officer has not made proper inquiry into these suspicious transactions to unearth real nature of such transactions and to ascertain real substance of these transactions over the form. It is further noticed that during the course of assessment proceedings, the assesses had also furnished the one page document le, High Sea Purchase and sales contract (HS Contract) in support of the purchase price and sale consideration. These transaction confirmation contracts in support of purchase and sale of commodities included the quantity, rate of commodities, delivery period and pla....
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....section 263 of the IT, Act, particularly in light of explanation 2 to section 263 of the IT.Act, 1961 as the assessment order is passed without making inquiries or verification which should have been made and loss of Rs. 24,18,42,096/- form, high seas sale and purchase transactions was allowed to the assessee without proper inquiry. Therefore, you are required to show-cause as to why to assessment order dated 18.03.2016 passed by the assessing office for A. Y. 2013-14 in your case should not be set aside and Assessing Officer be directed to make fresh assessment." 6. Learned CIT noted that assessee's response as under :- "the assessment order under consideration is neither erroneous nor prejudicial to the interest of the revenue as the same has been passed by the A.O in exercise of his qusi-judicial power vested in him with due application, of mind in accordance with law in compliance to the principles of natural justice. Further the issue under revision has been duly examined by the AO (though not discussed in the assessment order) as mentioned here under: * The assesses company submits that during the course of assessment proceedings the assessee company has ....
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....ual pattern of the trade is found to be highly suspicious in nature and is apparently devoid of any commercial angle, particularly when in all the transactions consignee is the same party i.e. M/S. Ruchi Soya Industries Limited and transactions are made in short span of time with huge loss in almost all transactions. That from the records, it emerges that the Assessing officer has not made proper inquiry into these suspicious transactions to unearth real nature of such transactions and to ascertain real substance of these transactions over the form. 8. The learned CIT-A also noted the following response of the assessee :- Assessee in its reply further argued that "it has been misconstrued that one page document filed during the course of assessment proceedings as High Seas document where as in fact the same is a forward contract. The High seas contracts were annexed to the high seas purchase and sales hills. These High seas contracts are executed on Rs. 100/- adhesive stamp papers. Further argued that the law has not prescribed that the forward contracts are not required to be made on any legal paper and law has not prescribed any particular format," 9. But the learn....
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....per the international market, which is the party to whom the goods were finally delivered and genuineness of loss claimed. 7. The A.O. was unable to see this larger picture and could not make proper inquiry or verifications on these points. Thus the Assessing Officer has not applied his mind. His actions of allowing loss of Rs. 241842096/- claimed on high seas sales and purchase of edible oils is an erroneous act and prejudicial to the interest of revenue. Therefore, I set aside the order passed by the Assessing Officer u/s 143(3) of the Act for A.Y. 2013-14, which he passed on 18.03.2016 and direct him to verify genuineness the loss claimed in light of the points discussed above on high seas sales and purchase of edible oils. The Assessing Officer must give an opportunity of being heard to the assessee." 11. Against above order assessee is in appeal before us. 12. We have heard both the counsel and perused the records. Learned counsel of the assessee contended that assessee has duly explained the nature of business of the assessee and given details of purchase and sale, bank book, copy of high sea sale bills, high sea sale agreements, Bill of lading etc. Hence learn....
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....back basis. The origins of the goods where the same and ultimate destination was same that is Ruchi Soya limited. The transactions were entered into in a short period of 2 months . Except for 2 transactions where small profit of Rs. 6,280/- was booked, losses of Rs. 241842096/- were booked. All these transactions are entirely nondelivery based. The contracts for the high sea sales were entered mid of September 2012 to October 2012. The contracts were not registered. In these circumstances it was amply clear that the transactions were dubious in nature and required proper explanation. The fact that the transactions were unusual the ultimate consignee was Ruchi Soya Ltd. was glaring. The assessing officer has asked the assessee to give details of its sister concern's. But the assessee never gave the details. The detail of sister concern would certainly shed light on the parties with whom the transactions have been entered as to whether they are at arm's length with each or not. The unusual loss hence obviously needed explanation. The assessing officer asked the assessee to explain the reason for the unusual loss. The assessee never gave any explanation. The assessing officer with....