TMI Blog2022 (4) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Vs Woodward Governor India (P) ltd. [ 2009 (4) TMI 4 - SUPREME COURT] held that the loss suffered by the assessee on account of foreign exchange fluctuation difference as on the date of balance sheet is an item of expenditure allowable under section 37. Therefore, the order of AO in allowing the foreign exchange loss in assessment order will not render his action as erroneous. Pr. CIT while issuing show cause notice on his observation as recorded in para 2(i)(ii) that the statutory auditor has qualified foreign exchange loss in absence of details. We find that the assessee filed detailed reply to the said show cause notice under section 263. The ld. Pr.CIT instead of giving any independent finding on the reply so furnished by the assessee repeated his observation that assessment order was passed without making enquiries or verification. The Hon'ble Jurisdictional High Court in Aryan Arcade Ltd., [ 2017 (8) TMI 535 - GUJARAT HIGH COURT] held that merely because Commissioner held a different belief that would not permit him to take the order in revision, it if further held that when Assessing Officer made full enquiry, he made up his mind, the notice of revision is not va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by ld. Pr. CIT by invoking his power jurisdiction under section 263 of the Act. The ld. Pr. CIT, on perusal of records noted that on perusal of Profit and Loss Account it was seen that the financial cost of ₹ 2.05 crore includes foreign exchange loss of ₹ 35,31,404/-. Further from the Annexure-B to the auditor s report, it was noted that at the year ended on 31.03.2013, the auditor had qualified foreign exchange loss in absence of requisite details. The above qualification made by auditor s raises serious doubts on the correctness of foreign exchange loss by Assessee Company was ascertainable and same was required to be disallowed. On the bases of aforesaid observation, the ld. Pr. CIT issued show cause notice to assessee on 05.03.2018 in fixing the date on 12.03.20163 as to why the assessment order should not be set-aside as it is erroneous and prejudicial to the interest of the Revenue. 3. In response to the show cause notice, the assessee filed its reply on 14.03.2018. The reply of the assessee is extracted in para 4 of order of ld. Pr. CIT. In reply to the assessee contended that remarks of auditor s absence of details does not make the assessment order errone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-aside the assessment order and directed to pass the assessment order after giving opportunity of hearing to the assessee. Aggrieved by the order of ld.Pr.CIT, the assessee filed present appeal before this Tribunal. 5. We have heard the submission of ld. Authorised Representative (ld.AR) of the Assessee and ld. Commissioner of Income Tax [CIT-DR] for the Revenue. The ld.AR of the assessee submits that the assessment order passed by the AO is not erroneous and in so far prejudicial to the interest of the Revenue. The ld. Pr. CIT issued show cause notice by taking view that statutory auditor refused comment on the details of foreign exchange gain, hence, foreign exchange loss was not ascertainable. In response to show cause notice under section 263 of the Act, the assessee explained that the claim of foreign exchange loss was examined and verified by the AO while passing the assessment order under section 143(3) of the Act. The AO during the assessment vide his show cause notice dated 24.08.2015 asked the assessee to furnish complete details of exchange fluctuation . The AO further required details on foreign exchange fluctuation loss vide order sheet entry dated 17.12.2015. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T-DR for the Revenue submits that there is no whisper in the assessment order whether the issue examined or verified by the AO while passing the assessment order. Since the assessment order is silent on the issue and was passed without making proper enquiry, the order is erroneous and in so far as prejudicial to the interest of the Revenue. The auditor has not examined the details of such foreign exchange fluctuation as no details were provided to him. 9. We have considered the rival submission of both the parties and perused the material available on record. We have also deliberated on various case laws relied by the ld AR for the assessee. There is no dispute that in the assessment order there is no reference about the examination of foreign exchange fluctuation loss. However, we find that during the assessment proceeding the AO issued notice first notice dated 26.08.2015 and sought various information therein. In para 2(x) of the said notice, the AO sought complete details of expenses including loss of foreign exchange loss on foreign currency. We find that the assessee vide its reply dated 14.09.2015 furnished the details of expenses including loss of foreign currency. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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