Floring Shoes P Ltd., CHENNAI V. DCIT, CHENNAI

ITA 265/CHNY/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4671 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 13-03-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 04-02-2014
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Business income; Depreciation; Difference of opinion; Revised return; Reason to believe; Change of opinion
• Section: 147; 148; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . . . , '.. % , * BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NOS.265 & 820/MDS/2014 + + /ASSESSMENT YEAR: 2003-04 M/S.FLORIND SHOES PVT. LTD., 29, COLLEGE ROAD, CHENNAI-600 006. VS. THE DY. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE- II (1), CHENNAI. [PA N: AAACF 0490 J ] ( . /APPELLANT) ( /0. /RESPONDENT) . 1 / APPELLANT BY : MR.A.S.SRIRAMAN, ADV. /0. 1 /RESPONDENT BY : MR.SUPRIYOPAL, JCIT 1 /DATE OF HEARING : 13.03.2017 1 /DATE OF PRONOUNCEMENT : 12.05.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THESE CROSS APPEAL ARE FILED BY THE ASSESSEE AND T HE REVENUE AGAINST THE ORDER DATED 29.11.2013 OF COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI, IN ITA NO.423/2013-14 FOR TH E AY 2003-04. ITA NOS.265 & 820/MDS/2014 :- 2 -: ITA NO.265/MDS/2014 AY 2003-04 (ASSESSEES APPE AL): 2.0 THE ASSESSING OFFICER (IN SHORT AO) FOUND THAT T HE ASSESSEE HAS MADE THE HIGH SEA SALES OF RS.1,03,55,040/- AND RE CEIVED THE INCOME OF RS.1,75,01,599/- EXCHANGE DIFFERENCE WHICH WAS NOT DISCLOSED IN THE RETURN OF INCOME. THEREFORE, THE AO HAS REOPENED T HE ASSESSMENT U/S.147 AND COMPLETED THE RE-ASSESSMENT BY AN ORDER DATED 31.11.2010 U/S.143(3) R.W.S.147 OF INCOME TAX ACT ON TOTAL INC OME OF RS.2,22,63,367/-. DURING THE REVISED ASSESSMENT, THE ASSESSEE FURNISHED THE COPIES OF AGREEMENTS AND INVOICES, ETC., AND AS PER THE AGREEMENT THE ASSESSEE IS ENTITLED FOR A CONSIDERATION OF 2% OVER AND ABOVE THE INVOICES VALUE CLEAR OF ALL THE EXPENSES. THE ASSESSEE HAS NOT FURNISHED ANY MATERIAL TO SHOW THAT THE SALES WERE DONE ON NO PR OFIT & LOSS BASIS. THEREFORE, THE AO ESTIMATED THE INCOME AT THE RATE OF 2% ON GROSS HIGH SEA SALES AND BROUGHT TO TAX THE EXCHANGE RATE FLUC TUATION OF RS.1,75,01,599/- AS INCOME. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND CHALL ENGED THE ORDER OF THE AO IN RESPECT OF BOTH REOPENING AND THE ADDITIO NS MADE IN THE REASSESSMENT ORDER. THE LD CIT(A) CONFIRMED THE REO PENING OF ASSESSMENT, ESTIMATION OF INCOME AND DELETED THE AD DITION OF EXCHANGE RATE FLUCTUATION. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSESSEE FILED APPEAL BEFORE US. ITA NOS.265 & 820/MDS/2014 :- 3 -: 3.0 THE ASSESSEE RAISED TWO ISSUES IN ITS GROUNDS OF APPEAL. THE FIRST ISSUE IS RELATED TO THE RE-OPENING OF ASSESSMENT AN D THE SECOND ISSUE IS THE ESTIMATION OF INCOME @2% ON HIGH SEA SALES. 4.0 GROUND NOS.1 & 10 ARE GENERAL IN NATURE WHICH DO N OT REQUIRE SPECIFIC ADJUDICATION. 5.0 GROUND NOS.2 TO 6 ARE RELATED TO THE RE-OPENING OF ASSESSMENT. THE LD.AR DURING THE APPEAL HEARING ARGUED THAT TH E ASSESSEE FILED THE RETURN OF INCOME IN THIS CASE ON 13.11.2003 ADM ITTING THE TAXABLE INCOME OF RS.1,29,60,090/- AND THE ASSESSMENT WAS C OMPLETED U/S.143(3) ON TOTAL INCOME OF RS.1,38,74,513/- BY A N ORDER DATED 27.02.2006. SUBSEQUENTLY, THE ASSESSMENT WAS RE-OP ENED BY ISSUE OF NOTICE U/S.148 ON 18.03.2010, THAT IS BEYOND THE LI MIT OF 4 YEARS WITHOUT HAVING ANY FRESH MATERIAL BEFORE THE AO. THEREFORE , THE LD.AR ARGUED THAT THE ISSUE OF NOTICE U/S.148 WITHOUT HAVING FRE SH MATERIAL IS BAD IN LAW AND REQUIRED TO BE QUASHED. ON THE OTHER HAND, TH E LD.DR ARGUED THAT THE ASSESSEE HAS MADE HIGH SEA SALES OF RS.1,03,55, 040/- AND RECEIVED THE INCOME OF RS.1,75,01,599/- AS EXCHANGE RATE DIF FERENCE AND THE SAME WAS NOT DISCLOSED BY THE ASSESSEE IN THE INCOME TAX RETUR AND THE SAME CAME TO THE NOTICE OF THE AO THROUGH COMMERCIAL TAX DEPARTMENT WHICH CONSTITUTES THE ADDITIONAL INFORMATION AND HENCE AO HAS RIGHTLY RE-OPENED THE ASSESSMENT AND THERE IS NO ERROR IN THE RE-OPEN ING OF ASSESSMENT. ITA NOS.265 & 820/MDS/2014 :- 4 -: 6.0 WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. IN THIS CASE, THE ASSESSMENT WAS COMPLETED U/S.143 (3) ON 27.02.2006 AND THE NOTICE U/S.147 WAS ISSUED ON 18. 03.2010 BEYOND THE PERIOD OF FOUR YEARS. AS PER THE PROVISO TO SEC.14 7 OF INCOME TAX ACT, NO ACTION CAN BE TAKEN U/S.147 IN A CASE WHERE THE ASS ESSMENT IS COMPLETED U/S.143(3) UNLESS THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSE E. FOR READY REFERENCE, WE EXTRACT THE RELEVANT PROVISIONS OF INCOME TAX AC T AS UNDER: 147. IF THE 21 [ASSESSING] OFFICER 22 [HAS REASON TO BELIEVE 23 ] THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT 23 FOR ANY ASSESSMENT YEAR, HE 23 MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, A SSESS OR REASSESS 23 SUCH 23 INCOME 23 AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH H AS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS 23 UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE D EPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 1 53 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT Y EAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR 24 , UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE 24 ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS 24 NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: IN THIS CASE, THE ASSESSEE HAS MADE THE HIGH SEA SALES OF RS.1,03,55,040/- AND RECEIVED THE INCOME OF RS.1,7 5,01,599/- WHICH HAS COME TO THE NOTICE OF THE INCOME TAX DEPARTMENT FRO M THE COMMERCIAL TAX DEPARTMENT AND THE ASSESSEE HAS NOT DISCLOSED T HE ABOVE RECEIPTS IN THE INCOME TAX RETURNS. FROM A QUERY RAISED FROM T HE BENCH, THE LD.AR ITA NOS.265 & 820/MDS/2014 :- 5 -: FAIRLY CONCEDED THAT THE INFORMATION REGARDING THE HIGH SEA SALES AND THE EXCHANGE FLUCTUATION WAS NOT DISCLOSED IN INCOME TA X RETURN IN THE ORIGINAL RETURN. THUS THERE IS A FAILURE ON THE PAR T OF THE ASSESSEE IN NOT DISCLOSING THE INCOME. THE LD.CIT(A) ALSO DEALT WI TH THE ISSUE IN DETAIL IN HIS ORDER IN PARA NO.4.1 TO 4.1.6 WHICH IS EXTRACTE D HERE UNDER FOR THE SAKE OF CONVENIENCE. 4.1.1 FROM THE ABOVE PROVISIONS, IT IS CLEAR THAT A S AND WHERE THERE IS AN ASSESSABLE INCOME FOR ANY OF THE ASSESSMENT YEARS AND THE SAME WAS NOT BROUGHT TO TAX, IT CONSTITUTES A REASON FOR RE-OPENING THE RETURN U/S.147 OF THE AC T. FURTHER, WHAT CONSTITUTES THE ESCAPEMENT OF INCOME HAS ALSO BEEN PROVIDED IN THE ABOVE PROVISIONS OF SEC. 147 OF THE ACT. AS PER THESE PROVISIONS, THE ESCAPEMENT OF INC OME MEANS, - I. UNDERSTATEMENT OF INCOME OR CLAIM OF EXCESSIVE LOSS , DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN (WHERE THE RETURN OF INCOME HAS NOT B EEN SUBJECTED TO SCRUTINY ASSESSMENT U/S.143(3)); OR II. UNDERASSESSMENT OF TAXABLE INCOME, OR ASSESSING THE INCOME AT TOO LOW A RATE, OR GRANTING OF EXCESSIVE RELIEF, OR GRANTING/COMPUTATIO N OF EXCESSIVE LOSS OR DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, IF T HE RETURN WAS ALREADY SUBJECTED TO SCRUTINY ASSESSMENT U/S.143(3). 4.1.2 WHEREAS IN THE INSTANT CASE, AS PER THE INFOR MATION CONTAINED IN THE COPIES OF COMMERCIAL TAX DEPARTMENTS ASSESSMENT ORDER THE AS SESSEE DURING THE FINANCIAL YEAR 2002-03 HAD MADE HIGH SEA SALES OF RS.1,03,55,040/- . THE COMPANY ALSO RECEIVED AN INCOME OF RS.1,75,01,599/- AS EXCHANGE RATE DIFFERE NCE. HOWEVER, THE ASSESSEE HAS NOT INCLUDED THESE TWO INCOMES IN ITS P&L ACCOUNT OF TH E YEAR. NEITHER THE ASSESSEE DISCLOSED THESE DETAILS IN ITS RETURN OF INCOME FILED, NOR TH E ASSESSING OFFICER WAS AWARE OF THESE FACTS AT THE TIME OF COMPLETING THE ORIGINAL ASSESSMENT U /S.143(3) OF THE ACT. FURTHER, THIS INFORMATION WAS RECEIVED FROM AN EXTERNAL SOURCE (C OMMERCIAL TAX DEPARTMENT). IN ADDITION, THE ASSESSEE FAILED TO EXCLUDE 90% OF THE NON-BUSINESS INCOME WHILE COMPUTING THE DEDUCTION U/S.80HHC OF THE ACT. THUS, THERE IS A N UNDERASSESSMENT OF TAXABLE INCOMES, WITHIN THE MEANING OF SEC.147 OF THE ACT. THIS IS S UFFICIENT REASON FOR RE-OPENING THE ASSESSMENTS U/S.147. ACCORDINGLY, AFTER RECORDING TH ESE REASONS, THE ASSESSING OFFICER RE- OPENED THE ASSESSMENT U/S.147 OF THE ACT, BY ISSUING NOTICE U/S.148. THE ASSESSING OFFICER ALSO COMMUNICATED THESE REASONS TO THE ASSESSEE DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. IN FACT, THESE FACTS ARE CLEARLY AVAIL ABLE FROM THE ASSESSMENT ORDER ITSELF, WHICH IS REPRODUCED AS UNDER: THE ASSESSEE COMPANY HAS FILED RETURN OF INCOME FOR THE ASST YEAR 2003- 2004 ON 13.11.2003 RETURNING TAXABLE INCOME OF RS.1,29,60,0 90/-. THE RETURN WAS PROCESSED U/S.143(1) ON 21.08.2004. THEN, THE ASSESSE E FILED A REVISED RETURN OF INCOME ON 4.3.2005 RETURNING A TOTAL INCOME OF RS.1 ,15,24,380. LATER, SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 27 .02.2006 AND THE TAXABLE INCOME WAS DETERMINED AT RS.1,38,74,513/-. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE CIT(APPEALS). TH E CIT (APPEALS)-III, VIDE ORDER IN ITA NO.58/2006-07 DATED 04.06.2007, DELETED CERTAIN DISALLOWANCES / ADDITIONS MADE IN THE ASSESSMENT ORDER AND CONSEQUE NTLY, THE TAXABLE INCOME WAS REVISED AT RS.1,33,70,916/- AND A REFUND OF RS.14,5 9,060/- WAS DETERMINED, WHICH WAS FULLY ADJUSTED AGAINST DEMAND OF ASSESSMENT YEA R 2004-05. SUBSEQUENTLY, FROM THE COPIES OF COMMERCIAL TAX DEP ARTMENTS ASSESSMENT ORDER IT IS SEEN THAT THE ASSESSEE HAS MADE HIGH SEA SALE S OF RS.1,03,55,040/- AND IT APPEARED THAT THE ASSESSEE RECEIVED AN INCOME OF RS .1,75,01,599/- AS EXCHANGE ITA NOS.265 & 820/MDS/2014 :- 6 -: RATE DIFFERENCE. THE ASSESSEE HAS NOT DISCLOSED THE SE RECEIPTS IN THE P&L ACCOUNT AS TURNOVER AND UNDER OTHER INCOME RESPECTIVELY. IN VIEW OF THE ABOVE, THE ASSESSMENT WAS REOPENED U /S.147-OF THE ACT AND A NOTICE U/S.148 WAS ISSUED ON 18.03.2010. IN RESPONSE, THE A SSESSEE FILED A LETTER ON 08.04.2010, REQUESTING TO TREAT THE ORIGINAL RETURN AS COMPLIANCE TO NOTICE U/S.148. A NOTICE U/S.143(2) DATED 19.04.2010 WAS ISSUED TO R EGULARIZE THE ASSESSMENT. AS REQUIRED BY THE ASSESSEE, THE REASONS FOR REOPENING THE ASSESSMENT WERE COMMUNICATED. 4.1.3 THUS, AS DISCUSSED IN DETAIL BY THE ASSESSING OFFICER IN HIS ORDER, THE ISSUES OF HIGH SEA SALES OF RS.1,03,55,040/-, EXCHANGE RATE DIFFER ENCE OF RS.1,75,01 599/- AND ALSO THE ISSUE OF EXCLUSION OF 90% OF THE OTHER NON-BUSINESS INCOME FROM THE ELIGIBLE PROFITS FOR THE PURPOSE OF DEDUCTION U/S.80HHC WERE NEVER CONSIDERED AT THE TIME OF ORIGINAL ASSESSMENT U/S.143(3). HENCE, THE QUESTION OF CHANGE OF OPINION DOESNT APPLY TO THE FACTS OF THE PRESENT SITUATION. 4.1.4 FURTHER, WHEN THERE IS NO DISCUSSION ON THE I SSUE IN THE ASSESSMENT ORDER AND NO DETAILS WERE CALLED FOR BY THE ASSESSING OFFICER OR FILED BY THE ASSESSEE ON THE ISSUE, AN NO FINDING EITHER POSITIVE OR NEGATIVE WAS ARRIVED AT DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS, THERE IS NO QUESTION OF CHA NGE OF OPINION, AS HELD BY SEVERAL COURTS, LIKE - A.L.A. FIRM VS CIT 102 ITR 622 (MAD), ESS KAY ENGINEERING CO (P) LTD. VS CIT 247 ITR 818 ( SC) REVATHY C.P. EQUIPMENTS LTD. VS DCLT & ORS 241 ITR 8 56 (MAD) EMA INDIA LTD. VS ACIT 3ODTR 82 (ALL) CHANGE OF OPINION COMES TO RESCUE OF ASSESSEE ONLY WHEN ASSESSING OFFICER HAS TAKEN ONE OF PERMISSIBLE VIEWS AT THE TIME OF ORIGI NAL PROCEEDINGS. A WRONG APPLICATION OF LAW CANNOT BE HELD AS PERMISSIBLE VIEW AND THAT CAN ALWAYS BE CHANGED FOR APPRECIATING LAW, AS HELD BY KOLKATA BENCH OF ITAT IN THE CASE O F SORN DUTT BUILDERS (P) LTD. VS DCIT 98 LTD 78 (KOL). 4.1.5 MORE IMPORTANTLY, SINCE THE INFORMATION REGAR DING THE ESCAPEMENT OF INCOME HAS COME FROM THE EXTERNAL SOURCE (OTHER THAN THE DETAI LS CONTAINED IN THE RETURN OF INCOME AND ASSESSMENT FOLDERS), EVEN THE RESTRICTIONS IMPO SED BY THE PROVISO TO SEC. 147 THAT NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE O N THE PART OF THE ASSESSEE TO [...] DISCLOSE FULLY AND TRULY, ALL MATERIAL FACTS NECESS ARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR, WILL NOT COME TO THE RESCUE OF THE ASSESSEE. 4.1.6 THEREFORE, IN VIEW OF THE ABOVE DISCUSSIONS A ND THE JUDICIAL PRONOUNCEMENTS, THE ASSESSING OFFICERS ACTION OF RE-OPENING THE ASSESSM ENTS U/S.147 OF THE ACT, IS AS PER THE ACT AND HENCE CONFIRMED. THE ASSESSEE FAILS IN ITS APPEALS IN THIS REGARD. 6.1 SINCE THE INCOME HAS ESCAPED FROM THE ASSESSMENT B ECAUSE OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS FOR THE ASSESSMENT, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF THE LD.CIT(A) AND UPHOLD THE SAME. ACCORDINGLY, GROUND NOS.2 TO 6 ARE DISMISSED. ITA NOS.265 & 820/MDS/2014 :- 7 -: 7.0 GROUND NOS.7 & 8 ARE RELATED TO THE ESTIMATION OF INCOME ON HIGH SEA SALES: THE ASSESSEE MADE HIGH SEA SALES OF RS.1,03,55,040 /- WHICH WAS NOT DISCLOSED IN THE INCOME TAX RETURNS. THE ASSES SEE FURNISHED THE AGREEMENTS COPIES OF INVOICES, ETC., AND AS PER THE AGREEMENT THE ASSESSEE IS ENTITLED FOR A CONSIDERATION OF 2% OVER AND ABOVE THE INVOICE VALUE CLEAR OF ALL THE EXPENSES. THE ASSESSEE HAS NOT FURNISHED ANY MATERIAL TO SHOW THAT THE SALES WERE DONE ON NO PR OFIT & LOSS BASIS. THEREFORE, THE AO ESTIMATED THE INCOME AT THE RATE OF 2% ON GROSS SALES AND THE FIRST APPELLATE AUTHORITY HAS CONFIRMED THE ADDITION. 7.1 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE LD.AR FILED THE APPEAL BEFORE US AND ARGUED THAT THE HIGH SEA SALES WERE MADE OUTSIDE THE COUNTRY BY WAY OF HIGH SEA SALES AND PURCHASES HENCE THE SAME WAS NOT INCLUDED IN THE PROFIT & LOSS A/C BOTH DEBIT A ND CREDIT SIDES. THE LD.AR SUBMITTED THAT THE HIGH SEA SALES WERE MADE AT COST PRICE AND THERE WAS NO PROFIT ELEMENT IN THE TRANSACTION. AC CORDINGLY, THE LD.AR CONTENDED THAT THE ADDITION MADE BY THE AO REQUIRED TO BE DELETED. ON THE OTHER HAND, THE LD.DR INVITED OUR ATTENTION TO THE OBSERVATIONS MADE BY THE AO REGARDING RECEIPT OF CONSIDERATION @ 2% O VER AND ABOVE THE INVOICE VALUE AND ARGUED THAT CIT(A) HAS RIGHTLY CO NFIRMED THE ADDITION AND NO INTERFERENCE IS CALLED FOR. ITA NOS.265 & 820/MDS/2014 :- 8 -: 7.2 WE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL PLACED BEFORE US. IN THE ASSESSMENT ORDER, THE AO HAS GIVEN A FINDING THAT THE ASSESSEE IS ENTITLED FOR THE CONSIDERATION OF 2% OV ER AND ABOVE THE INVOICE VALUE ON HIGH SEA SALES. ALL THE EXPENSES WOULD BE BORNE BY EITHER PURCHASER OR SELLER. THE LD.AR HAS NOT BROU GHT ANY EVIDENCE TO PROVE THAT THE ASSESSEE HAS NOT RECEIVED THE CONSID ERATION OVER AND ABOVE 2% ON HIGH SEA SALES. THE LD.A.R ALSO DID NO T BRING ANY EVIDENCE RELATING TO THE EXPENDITURE INCURRED ON HIGH SEA SA LES OVER AND ABOVE THE AMOUNT DEBITED TO P&L ACCOUNT. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS CONFIRME D. GROUND NOS.7 & 8 OF THE ASSESSEE ARE DISMISSED. 8.0 GROUND NO.9 IS RELATED TO NOT GIVING PROPER OPPORT UNITY BY THE LD.CIT(A): THE LD.AR HAS NOT MADE ANY ARGUMENT ON THIS GROUND AND AS PER THE LD.CIT(A) ORDER, THE ORDER WAS PASSED AFTER GIV ING SUUFICIENT OPPORTUNITIES TO THE ASSESSEE. THEREFORE, THIS GRO UND OF APPEAL IS DISMISSED. 9.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. ITA NOS.265 & 820/MDS/2014 :- 9 -: ITA NO.820/MDS./2014 AY 2003-04 (REVENUES APPEAL ) 10.0 THE REVENUE HAS FILED THE APPEAL AGAINST THE CIT( A) ORDER ON DELETION OF ADDITION IN RESPECT OF THE EXCHANGE R ATE OF RS.1,75,01,595 APPEARING FOR THE REVENUE, LEARNED DEPARTMENTAL RE PRESENTATIVE (IN SHORT LD.DR) ARGUED THAT THE ASSESSEE HAD REP ORTED TURNOVER OF RS.168,23,12,632/- IN THE INCOME TAX RETURN AND THE TURNOVER REPORTED FOR CST WAS RS.171,45,06,509/- WHICH WAS INCLUSIVE OF EXCHANGE FLUCTUATION GAIN OF RS.1,75,01,599/- WHICH SHOULD H AVE BEEN ACTUALLY OFFERED BY THE ASSESSEE UNDER THE HEAD OTHER INCOME . THE AO HAS CALLED FOR THE DETAILS DURING THE ASSESSMENT PROCEEDINGS U /S.142(1) OF INCOME TAX ACT (IN SHORT THE ACT) BUT THE ASSESSEE HAS N OT FURNISHED THE DETAILS SUCH AS PARTY WISE DETAILS OF EXPORT SALES, PREVAIL ING RATE OF EXCHANGE AS ON THE DATE OF INVOICE AND THE DATE OF REALIZATION ETC., HENCE THE AO TREATED THE ENTIRE EXCHANGE RATE FLUCTUATION AS INC OME AND ADDED BACK TO THE INCOME. ON THE OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE (IN SHORT LD.AR) RELIED ON THE LD.CIT(A) ORDER. 11.0 WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE BOT H THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. ITA NOS.265 & 820/MDS/2014 :- 10 -: AS PER THE ASSESSMENT ORDER, THE ASSESSEE HAS MADE HIGH SEA SALES OF RS.150355340/- AND IT HAD RECEIVED THE INCOME RS .1,75,01,599/- AS EXCHANGE RATE DIFFERENCE. DURING THE ASSESSMENT PR OCEEDINGS, THE AO HAS CALLED FOR THE DETAILS U/S.142(1) BUT THE ASSESSEE HAS FAILED TO FURNISH THE DETAILS CALLED FOR. THE ASSESSEE HAS FILED THE REV ISED RETURN ADMITTING THE TURNOVER OF RS.168,23,12,632/- AGAINST THE TOTAL TU RNOVER OF RS.171,45,06,509/-. THE INCOME OF RS.1,75,01,599/- RECEIVED AS EXCHANGE RATE DIFFERENCE WAS NOT INCLUDED IN THE TU RNOVER ADMITTED FOR INCOME TAX PURPOSES. THE ASSESSEE HAS NOT FURNISHED THE PARTY-WISE BREAK UP OF DETAILS IN RESPECT OF EXPORT SALES, PREVAILIN G RATE OF EXCHANGE ON THE DATE OF INVOICE AND THE DATE OF REALIZATION, ETC., EVEN THOUGH THE SAME WAS CALLED FOR BY THE AO BY NOTICE U/S.142(1) OF IN COME TAX ACT DATED 11.11.2010. THE LD.AR ARGUED THAT THE EXCHANGE RATE FLUCTUATION WOULD NOT FORM PART OF THE TOTAL SALES. HENCE, THE EXCHA NGE RATE FLUCTUATION SHOULD BE REDUCED FROM THE SALES. THE ASSESSEE ARGU ED THAT THE EXCHANGE RATE HAS RESULTED IN LOSS BUT NOT THE GAIN. WHETHER THE EXCHANGE RATE FLUCTUATION WAS LOSS OR GAIN, WHETHER IT SHOULD BE REDUCED FROM THE SALES OR TO BE TAXED SEPARATELY, REQUIRED TO BE VERIFIED FROM THE BILLS AND INVOICES RAISED BY THE ASSESSEE, BOOKS OF ACCOUNTS AND THE RECORDS. NO SUCH EXERCISE WAS DONE BY EITHER THE AO OR THE LD.C IT(A). THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD GO BACK TO THE FILE OF AO TO VERIFY WHETHER THE EXCHANGE RATE FLUCTUATION WAS IN FACT LOSS OR GAIN. BOTH THE PARTIES HAVE AGREED FOR REMITTING T HE MATTER BACK TO THE FILE OF AO. ACCORDINGLY, WE SET-ASIDE THE ORDERS O F THE LOWER AUTHORITIES ON ITA NOS.265 & 820/MDS/2014 :- 11 -: THIS ISSUE AND REMIT THE MATTER BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH ON MERITS IN THE LIGHT OF THE ABOVE DI RECTION OF THIS TRIBUNAL. 12.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH MAY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ' . . % ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 6 /DATED: 12 TH MAY, 2017. TLN 1 /%7 87 /COPY TO: 1. . /APPELLANT 4. 9 /CIT 2. /0. /RESPONDENT 5. 7 / /DR 3. 9 ( ) /CIT(A) 6. + /GF