M/S Ashoka Impex , Plot NO. 1, V. Income Tax Officer Ward-1, Solan

ITA 330/CHANDI/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8451 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-01-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: HARRY RIKKY
• Keywords: Cost of acquisition
• Section: 80IB; 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 330/CHD/2015 ASSESSMENT YEAR : 2010-11 M/S ASHOKA IMPEX, PLOT NO.1 VS. INCOME TAX OFFICE R WARD-1 EPIP, PHASE1, JHARMAJRI, SOLAN BADDI, DISTT. SOLAN (HP) PAN NO.AAMFA6472A (APPELLANT) (RESPONDENT) APPELLANT BY : SH. HARRY RIKKY RESPONDENT BY : SH. S.K. MITTAL DATE OF HEARING : 07/01/2016 DATE OF PRONOUNCEMENT : 04/03/2016 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), SHIMLA DATED 27.01.2015. 2. THE ASSESSEE HAD RAISED THE FOLLOWING GROUNDS OF APPEAL: 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) - SHIMLA IS UNJUSTIFIED IN UPHOLDING THE ADDITION OF RS.24,73,9 83/- ON ACCOUNT OF INCENTIVE RECEIVED UNDER DUTY ENTITLEMENT PASS BOOK (DEPB) S CHEME AS THE SAME HAS DIRECT NEXUS WITH THE MANUFACTURING ACTIVITY CARRIE D ON BY THE APPELLANT AND IS EXEMPT U/S 80IC OF THE INCOME TAX ACT, 1961. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) - SHIMLA IS UNJUSTIFIED IN UPHOLDING THE ADDITION OF RS.37,49,5 36/- ON ACCOUNT OF ADDITION MADE TO PARTNER'S CAPITAL ACCOUNT AS THE SAID AMOUN T HAS BEEN RECEIVED UNDER AN EXPORT ORDER WHICH HAS BEEN ADJUSTED AGAINST THE EXPORT SHIPMENTS AND ACCOUNTED FOR IN THE SUBSEQUENT YEARS. 3. GROUND NO. 2 RAISED BY THE ASSESSEE IS AGAINST T HE UPHOLDING OF THE ADDITION OF RS. 24,73,983/- BEING INCENTIVE RECEIVE D UNDER DEPB SCHEME ON THE GROUND THAT THE SAME HAS NO DIRECT NEXUS WITH THE M ANUFACTURING ACTIVITY CARRIED ON BY THE ASSESSEE AND HENCE IS NOT ENTITLE D TO BE CLAIMED AS DEDUCTION U/S 80IC OF THE INCOME TAX ACT, 1961. 2 4. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A SSESSEE FIRM IS ENGAGED IN THE MANUFACTURING OF ELECTRICAL AND MECHANICAL ITEMS AN D IS ENTITLED TO CLAIM DEDUCTION U/S 80IC. DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE RETURNED NET PROFIT OF RS. 45,42,880/- AND CLAIMED 100% DEDUCTION U/S 80IC. DURING ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IC ON EXPORT INCENTIVES OF DEPB AMO UNTING TO RS. 24,73,983/-. THE AO HELD THAT THE SAID RECEIPTS WERE NOT DERIVED FROM INDUSTRIAL UNDERTAKING AND HAD NO DIRECT NEXUS WITH THE SAME. FURTHER RELY ING ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF M/S LIBERTY INDIA VS. CIT 317 ITR 218 THE A.O. DISALLOWED DEDUCTION U/S 80IC TO THE EXTENT OF RS. 24,73,983/- AND MADE ADDITION OF THE SAME TO THE INCOME OF THE ASSESSEE. 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) WHO UPHELD THE ADDITION MADE. AGGRIEVED BY THE SAME THE ASSESSEE F ILED THE PRESENT APPEAL BEFORE US. 6. BEFORE US LD. AR PLEADED THAT THE INCENTIVE WAS GIVEN AS A REFUND / COMPENSATION OF THE INPUT TAXES AND DUTIES ON VARIO US PURCHASE OF RAW MATERIALS REQUIRED FOR MANUFACTURE OF EXPORT GOODS AND HAS DIRECT NEXUS WITH THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE. LD. AR THEREFORE PLEADED THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IC OF THE A CT. LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT THE CASE IS SQUARELY COVERED AGAINST THE ASSESSEE IN VIEW OF TH E DECISION OF THE APEX COURT IN THE CASE OF LIBERTY INDIA [SUPRA]. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE RAISED IN THIS GR OUND IS THE ALLOWABILITY OF DEDUCTION CLAIMED U/S 80IC ON EXPORT INCENTIVES BEI NG DEPB. WE FIND THAT THIS ISSUE HAS BEEN SETTLED BY THE DECISION OF THE HONBLE APEX COURT IN LIBERTY INDIA VS. CIT 317 ITR 218 WHEREIN IN THE CONTEXT OF SECTI ON 80IB THE APEX COURT HAS HELD THAT THE EXPORT INCENTIVE DID NOT HAVE FIRST DEGREE NEXUS WITH THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE BUT WAS DERIVED ON ACCO UNT OF THE SCHEME OF THE GOVERNMENT AND THUS CANNOT BE CLAIMED TO BE PROFITS DERIVED FROM INDUSTRIAL UNDERTAKING. THE HONBLE APEX COURT HELD AS FOLLOWS :- THE IT ACT BROADLY PROVIDES FOR TWO TYPES OF TAX IN CENTIVES, NAMELY, INVESTMENT LINKED INCENTIVES AND PROFIT LINKED INCENTIVES. CHA PTER VI-A WHICH PROVIDES FOR INCENTIVES IN THE FORM OF TAX DEDUCTIONS ESSENTIALL Y BELONG TO THE CATEGORY OF 'PROFIT LINKED INCENTIVES'. THEREFORE, WHEN S. 80-I A/80-IB REFERS TO PROFITS DERIVED FROM ELIGIBLE BUSINESS, IT IS NOT THE OWNERSHIP OF THAT BUSINESS WHICH ATTRACTS THE INCENTIVES. WHAT ATTRACTS THE INCENTIVES UNDER S. 8 0-IA/80-IB IS THE GENERATION OF PROFITS (OPERATIONAL PROFITS). IT IS FOR THIS REASO N THAT PARLIAMENT HAS CONFINED DEDUCTION TO PROFITS DERIVED FROM ELIGIBLE BUSINESS ES MENTIONED IN SUB-SS. (3) TO 3 (11A) (AS THEY STOOD AT THE RELEVANT TIME). ONE MOR E ASPECT NEEDS TO BE HIGHLIGHTED. EACH OF THE ELIGIBLE BUSINESSES IN SUB -SS. (3) TO (11A) CONSTITUTES A STAND-ALONE ITEM IN THE MATTER OF COMPUTATION OF PR OFITS. THAT IS THE REASON WHY THE CONCEPT OF 'SEGMENT REPORTING' STANDS INTRODUCE D IN THE INDIAN ACCOUNTING STANDARDS (IAS) BY THE ICAI. ANALYSING CHAPTER VI-A , IT IS FOUND THAT SS. 80-IB AND 80-IA ARE THE CODE BY THEMSELVES AS THEY CONTAIN BO TH SUBSTANTIVE AS WELL AS PROCEDURAL PROVISIONS. THEREFORE, THE COURT NEEDS T O EXAMINE WHAT THESE PROVISIONS PRESCRIBE FOR 'COMPUTATION OF PROFITS OF THE ELIGIBLE BUSINESS'. IT IS EVIDENT THAT S. 80-IB PROVIDES FOR ALLOWING OF DEDU CTION IN RESPECT OF PROFITS AND GAINS DERIVED FROM THE ELIGIBLE BUSINESS. THE WORDS 'DERIVED FROM' ARE NARROWER IN CONNOTATION AS COMPARED TO THE WORDS 'ATTRIBUTABLE TO'. IN OTHER WORDS, BY USING THE EXPRESSION 'DERIVED FROM', PARLIAMENT INTENDED TO COVER SOURCES NOT BEYOND THE FIRST DEGREE. ON ANALYSIS OF SS. 80-IA AND 80-I B IT BECOMES CLEAR THAT ANY INDUSTRIAL UNDERTAKING, WHICH BECOMES ELIGIBLE ON S ATISFYING SUB-S. (2), WOULD BE ENTITLED TO DEDUCTION UNDER SUB-S. (1) ONLY TO THE EXTENT OF PROFITS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING AFTER SPECIFIED DATE(S) . HENCE, APART FROM ELIGIBILITY, SUB-S. (1) PURPORTS TO RESTRICT THE QUANTUM OF DEDU CTION TO A SPECIFIED PERCENTAGE OF PROFITS. THIS IS THE IMPORTANCE OF THE WORDS 'DE RIVED FROM INDUSTRIAL UNDERTAKING' AS AGAINST 'PROFITS ATTRIBUTABLE TO INDUSTRIAL UNDE RTAKING'.CIT VS. KIRLOSKAR OIL ENGINES LTD. (1985) 44 CTR (BOM) 98 : (1986) 157 IT R 762 (BOM) APPROVED. DEPB IS AN INCENTIVE. IT IS GIVEN UNDER DUTY EXEMPT ION REMISSION SCHEME. ESSENTIALLY, IT IS AN EXPORT INCENTIVE. NO DOUBT, T HE OBJECT BEHIND DEPB IS TO NEUTRALIZE THE INCIDENCE OF CUSTOMS DUTY PAYMENT ON THE IMPORT CONTENT OF EXPORT PRODUCT. THIS NEUTRALIZATION IS PROVIDED FOR BY CREDIT TO CUSTOMS DUTY AGAINST EXPORT PRODUCT. UNDER DEPB, AN EXPORTER MAY APPLY FOR CREDIT AS PERCENTAGE OF FOB VALUE OF EXPORTS MADE IN FREELY C ONVERTIBLE CURRENCY. CREDIT IS AVAILABLE ONLY AGAINST THE EXPORT PRODUCT AND AT RA TES SPECIFIED BY DGFT FOR IMPORT OF RAW MATERIALS, COMPONENTS ETC. DEPB CREDI T UNDER THE SCHEME HAS TO BE CALCULATED BY TAKING INTO ACCOUNT THE DEEMED IMP ORT CONTENT OF THE EXPORT PRODUCT AS PER BASIC CUSTOMS DUTY AND SPECIAL ADDIT IONAL DUTY PAYABLE ON SUCH DEEMED IMPORTS. THEREFORE, DEPB/DUTY DRAWBACK ARE I NCENTIVES WHICH FLOW FROM THE SCHEMES FRAMED BY CENTRAL GOVERNMENT OR FROM S. 75 OF THE CUSTOMS ACT, 1962, HENCE, INCENTIVES PROFITS ARE NOT PROFITS DER IVED FROM THE ELIGIBLE BUSINESS UNDER S. 80-IB. THEY BELONG TO THE CATEGORY OF ANCI LLARY PROFITS OF SUCH UNDERTAKINGS. SEC. 75 OF THE CUSTOMS ACT, 1962 AND S. 37 OF THE CENTRAL EXCISE ACT, 1944 EMPOWER GOVERNMENT OF INDIA TO PROVIDE FOR REP AYMENT OF CUSTOMS AND EXCISE DUTY PAID BY AN ASSESSEE. THE REFUND IS OF T HE AVERAGE AMOUNT OF DUTY PAID ON MATERIALS OF ANY PARTICULAR CLASS OR DESCRI PTION OF GOODS USED IN THE MANUFACTURE OF EXPORT GOODS OF SPECIFIED CLASS. THE RULES DO NOT ENVISAGE A REFUND OF AN AMOUNT ARITHMETICALLY EQUAL TO CUSTOMS DUTY OR CENTRAL EXCISE DUTY ACTUALLY PAID BY AN INDIVIDUAL IMPORTER-CUM-MANUFAC TURER. SUB-S. (2) OF S. 75 OF THE CUSTOMS ACT REQUIRES THE AMOUNT OF DRAWBACK TO BE DETERMINED ON A CONSIDERATION OF ALL THE CIRCUMSTANCES PREVALENT IN A PARTICULAR TRADE AND ALSO BASED ON THE FACTS SITUATION RELEVANT IN RESPECT OF EACH OF VARIOUS CLASSES OF GOODS IMPORTED. BASICALLY, THE SOURCE OF DUTY DRAWB ACK RECEIPT LIES IN S. 75 OF THE CUSTOMS ACT AND S. 37 OF THE CENTRAL EXCISE ACT. ANALYSING THE CONCEPT OF REMISSION OF DUTY DRAWBACK AND DEPB, IT BECOMES CLEAR THAT THE REMISSION OF DUTY IS ON ACCOUNT OF THE STA TUTORY/POLICY PROVISIONS IN THE CUSTOMS ACT/SCHEME(S) FRAMED BY THE GOVERNMENT OF I NDIA. IN THE CIRCUMSTANCES, PROFITS DERIVED BY WAY OF SUCH INCEN TIVES DO NOT FALL WITHIN THE EXPRESSION 'PROFITS DERIVED FROM INDUSTRIAL UNDERTA KING' IN S. 80-IB. THE COST OF PURCHASE INCLUDES DUTIES AND TAXES (OTH ER THAN THOSE SUBSEQUENTLY RECOVERABLE BY THE ENTERPRISE FROM TAXING AUTHORITI ES), FREIGHT INWARDS AND OTHER EXPENDITURE DIRECTLY ATTRIBUTABLE TO THE ACQUISITIO N. HENCE TRADE DISCOUNTS, REBATE, DUTY DRAWBACK, AND SUCH SIMILAR ITEMS ARE D EDUCTED IN DETERMINING THE COSTS OF PURCHASE. THEREFORE, DUTY DRAWBACK, REBATE ETC. SHOULD NOT BE TREATED AS ADJUSTMENT (CREDITED) TO COST OF PURCHASE OR MAN UFACTURE OF GOODS. THEY SHOULD BE TREATED AS SEPARATE ITEMS OF REVENUE OR I NCOME AND ACCOUNTED FOR ACCORDINGLY. THEREFORE, FOR THE PURPOSES OF AS-2, C ENVAT CREDITS SHOULD NOT BE INCLUDED IN THE COST OF PURCHASE OF INVENTORIES. EV EN ICAI HAS ISSUED GUIDANCE NOTE ON ACCOUNTING TREATMENT FOR CENVAT/MODVAT UNDE R WHICH THE INPUTS CONSUMED AND THE INVENTORY OF INPUTS SHOULD BE VALU ED ON THE BASIS OF PURCHASE COST NET OF SPECIFIED DUTY ON INPUTS (I.E. DUTY REC OVERABLE FROM THE DEPARTMENT AT LATER STAGE) ARISING ON ACCOUNT OF REBATES, DUTY DR AWBACK, DEPB BENEFIT ETC. 4 PROFIT GENERATION COULD BE ON ACCOUNT OF COST CUTTI NG, COST RATIONALIZATION, BUSINESS RESTRUCTURING, TAX PLANNING ON SUNDRY BALA NCES BEING WRITTEN BACK, LIQUIDATION OF CURRENT ASSETS ETC. THEREFORE, DUTY DRAWBACK, DEPB BENEFITS, REBATES ETC. CANNOT BE CREDITED AGAINST THE COST OF MANUFAC TURE OF GOODS DEBITED IN THE P&L A/C FOR THE PURPOSES OF S. 80-IA/80-IB AS SUCH REMISSIONS (CREDITS) WOULD CONSTITUTE INDEPENDENT SOURCE OF INCOME BEYOND THE FIRST DEGREE NEXUS BETWEEN PROFITS AND THE INDUSTRIAL UNDERTAKING. IN THE CIRC UMSTANCES, DUTY DRAWBACK RECEIPTS/DEPB BENEFITS DO NOT FORM PART OF THE NET PROFITS OF ELIGIBLE INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF S. 80-I/80-IA/80-IB .LIBERTY INDIA VS. CIT (2007) 207 CTR (P&H) 243 : (2007) 293 ITR 520 (P&H), LAKHWINDE R SINGH VS. CIT (2008) 219 CTR (P&H) 69 : (2008) 8 DTR (P&H) 299 AND CIT VS. RITES H INDUSTRIES LTD. (2004) 192 CTR (DEL) 81 : (2005) 274 ITR 324 (DEL) AFFIRMED. IN THE PRESENT CASE THE ASSESSEE HAS CLAIMED DEDUCT ION U/S 80IC OF THE ACT, WHICH ALSO GRANTS DEDUCTION TO PROFITS DERIVED BY AN UNDERTAKING OR ENTERPRISE FROM ANY BUSINESS. THE DECISION RENDERED IN THE CAS E OF LIBERTY INDIA(SUPRA) THEREFORE SQUARELY APPLIES TO THE ASSESSEE AND RELY ING UPON THE SAME WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) UPHOLDING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IC ON DEPB AMOUNTIN G TO RS. 24,73,983/-. 8. THIS GROUND OF APPEAL OF ASSESSEE IS DISMISSED. 9. GROUND NO. 3 RAISED BY THE ASSESSEE IS AGAINST T HE UPHOLDING OF THE ADDITION OF RS. 37,49,536/- BEING ADDITION MADE TO THE CAPITAL ACCOUNTS OF THE PARTNERS. 10. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURI NG ASSESSMENT PROCEEDINGS AO NOTED THAT THE PARTNERS CAPITAL ACCOUNT OF SH. SAN DEEP VERMA AND SMT. VEENA VERMA WAS CREDITED WITH THE SUM OF RS. 18,74, 768/- EACH. WHEN CONFRONTED WITH THE SAME THE ASSESSEE STATED THAT T HE RECEIPTS WERE ON ACCOUNT OF CHARGES FOR DEVELOPMENT OF DIES AND DESI GNS WHICH WERE INADVERTENTLY CREDITED TO THE PARTNERS CAPITAL ACC OUNT. THE ASSESSEE FURTHER STATED THAT THESE AMOUNTS WERE INCLUDABLE IN THE IN COME OF THE ASSESSEE AND BEING ATTRIBUTABLE TO THE INDUSTRIAL ACTIVITIES OF THE ASSESSEE, DEDUCTION U/S 80IC WAS ALSO ADMISSIBLE ON THE SAME. THE AO DID NOT ACC EPT THE ASSESSEE CONTENTION AND ADDED SUM OF RS. 37,49,536/- TO THE INCOME OF THE ASSESSEE TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AN D FURTHER DENIED DEDUCTION U/S 80IC FOR THE REASON THAT THE RECEIPT DID NOT HAVE FIRST DEGREE NEXUS WITH THE INDUSTRIAL ACTIVITY OF THE ASSESSEE. 11. THE MATTER WAS CARRIED IN APPEAL BEFORE LD. CIT (A) WHERE THE ASSESSEE ARGUED THAT THE IMPUGNED AMOUNT REPRESENTED ADVANCE RECEIVED AGAINST EXPORT ORDER AND FURTHER STATED THAT PROPER EXPLANA TION COULD NOT BE FILED BEFORE THE A.O. SINCE THE WORKING PARTNER OF THE FI RM WAS BUSY WHEN THE FINAL 5 PROCEEDINGS WERE ON BEFORE THE AO. THE ASSESSEE FIL ED THE NECESSARY EVIDENCES RELATING TO THE EXPLANATION OFFERED BUT T HE LD. CIT(A) BRUSHED ASIDE THE ASSESSEES CONTENTION BY STATING THAT THE ASSES SEE HAD BEEN CHANGING ITS STAND TIME AND AGAIN AND UPHELD THE ADDITION MADE. 12. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PR ESENT APPEAL BEFORE US:- 13. BEFORE US LD. AR REITERATED THE CONTENTION MADE BEFORE THE LD. CIT(A) AND STATED THAT THE AMOUNTS CREDITED IN THE PARTNER S CAPITAL ACCOUNT REPRESENTED ADVANCES RECEIVED AGAINST EXPORT ORDERS . LD. AR STATED THAT EXPORT SALES AGAINST THIS ADVANCE RECEIVED, WAS MADE IN SU CCEEDING YEAR SHIPMENTS. LD. AR DREW OUR ATTENTION DETAILS OF THE SHIPMENTS AND COPIES OF INVOICES FILED IN THE PAPER BOOK. FURTHER LD. AR STATED THAT THE BALA NCE AMOUNT WAS ADJUSTED IN THE SAME INVOICES BY REDUCTION OF PRICES WHICH WAS VERIFIABLE FROM THE INVOICE AND CUSTOM SHIPPING BILL FILED ALONG WITH THE PAPER BOOK. LD. AR FURTHER STATED THAT AN AMOUNT OF R.S 11,58,735/- OUT OF THE IMPUGN ED ADVANCE WAS UTILIZED FOR PURCHASE OF RAW MATERIAL FOR TOOLS AND DIES AND ITS FABRICATION FOR FURTHER PRODUCTION OF GOODS WHICH WAS AS PER AGREEMENT WITH THE CUSTOMER. COPY OF THE AGREEMENT AND COPY OF THE PURCHASE BILLS ALONG WITH LEDGER ACCOUNTS WAS ALSO FILED BEFORE US. THUS THE LD. AR STATED THAT T HE AMOUNT CREDITED IN THE CAPITAL ACCOUNT WAS IN FACT ADVANCE RECEIVED FROM E XPORT CUSTOMERS AND HAD BEEN INADVERTENTLY CREDITED TO THE PARTNERS CAPITA L ACCOUNT. LD. AR THEREFORE, STATED NO ADDITION ON ACCOUNT OF THE SAME WAS TO BE MADE TO INCOME OF THE ASSESSEE . LD. DR ON THE OTHER HAND RELIED UPON THE ORDERS OF THE A.O. AND CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE DOCUMENTS FILED BEFORE US. WE FIND THAT THE ASSESSEE HAD OFFERED EX PLANATION REGARDING NATURE OF CREDIT IN THE PARTNERS CAPITAL ACCOUNT STATING THE SAME TO BE ADVANCE RECEIVED AGAINST EXPORT ORDERS AND ALSO AMOUNT RECE IVED FOR DEVELOPING TOOLS AND DIES FOR FUTURE ORDERS. EVIDENCES IN THE FORM O F BANK STATEMENT SHOWING RECEIPT OF AFORE-STATED AMOUNT, DETAILS OF INVOICES ALONG WITH COPY OF INVOICES AGAINST WHICH ADVANCE WAS ADJUSTED, EVIDENCE OF RED UCTION IN PRICES OF THE INVOICES AND ALSO THE CUSTOM SHIPPING BILLS AND FUR THER AGREEMENT FOR DEVELOPMENT OF TOOLS AND DIES FROM THE ADVANCE RECE IVED WAS ALSO FILED. THE LD. CIT(A) WE FIND HAS SIMPLY BRUSHED ASIDE ALL THE SE EVIDENCES BY STATING THAT THE ASSESSEE HAS BEEN GIVING DIFFERENT EXPLANATIONS BEFORE THE AO AND BEFORE 6 HER. WE FIND THAT THE ASSESSEE HAD STATED THAT THE EXPLANATIONS TO THE AO & CIT(A) DIFFERED SINCE AT THE TIME OF ASSESSMENT THE WORKING PARTNER OF THE ASSESSEE FIRM WAS BUSY IN OBTAINING VISA AS HE WAS LEAVING FOR GERMANY, AND THEREFORE CORRECT EXPLANATION COULD NOT BE OFFERED TO THE AO. THIS HAS NOT BEEN CONTROVERTED BY THE AUTHORITIES BELOW. IN THIS BACK DROP THE LD. CIT(A) COULD NOT HAVE REFUSED TO EVEN CONSIDER THE ASSESSEES EXPLANA TION. WE FURTHER FIND THAT THESE DOCUMENTS HAVE NOT BEEN EXAMINED AND VERIFIED BY THE AUTHORITIES BELOW. THEREFORE WE CONSIDER IT FIT TO RESTORE THE MATTER BACK TO THE FILE OF THE AO TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF EVID ENCES FILED BY THE ASSESSEE. WE FURTHER DIRECT THE AO TO GIVE DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER CONSI DERING ALL EXPLANATIONS AND EVIDENCES FILED BY THE ASSESSEE. 15. THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04/03/2016. SD/- SD/- (H.L. KARWA) (ANNAPURNA MEHROTRA) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 04/03/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR