TMI Blog2017 (7) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... ation over and above 2% on High Sea Sales. The Ld.A.R also did not bring any evidence relating to the expenditure incurred on High Sea sales 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 confirmed.- Decided against assessee. Addition in respect of the Exchange Rate - Held that:- 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.CIT(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 the matter back to the file of AO. Accordingly, we set-aside the orders of the lower authorities on this issue and remit the matter back to the file of the AO to decide the issue afresh - ITA Nos.265 & 820/Mds/2014 - - - Dated:- 12-5-2017 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER, AND SHRI D.S.SUNDER SINGH, ACCOUNTANT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .02.2006. Subsequently, the assessment was re-opened by issue of notice u/s.148 on 18.03.2010, that is beyond the limit 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 fresh material is bad in law and required to be quashed. On the other hand, the Ld.DR argued that the assessee has made High Sea sales of ₹ 1,03,55,040/- and received the income of ₹ 1,75,01,599/- as exchange rate difference 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-opening of assessment. 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.147 of Income Tax Act, no action can be taken u/s.147 in a case where the assessment is completed u/s.143(3) unless the income chargeable to tax has escap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 of the Act. 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 income means, - i. Understatement of income or claim of excessive loss, deduction, allowance or relief in the return (where the return of income has not been 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/computation of excessive loss or depreciation allowance or any other allowance, if the return was already subjected to scrutiny assessment u/s.143(3). 4.1.2 Whereas in the instant case, as per the information contained in the copies of Commercial Tax Department s assessment order the assessee during the financial year 2002-03 had made high sea sales of ₹ 1,03,55,040/-. The company also received an income of ₹ 1,75,01,599/- as Exchange Rate difference. However, the assessee has not included these two incomes in its P L account of the year. Neither the assessee disclosed these details in its return of income filed, nor the Assessing Officer was awar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gularize 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 ₹ 1,03,55,040/-, Exchange Rate difference of ₹ 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 doesn t apply to the facts of the present situation. 4.1.4 Further, when there is no discussion on the issue 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 change 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 856 (Mad) EMA India Ltd. Vs ACIT 3ODTR 82 (All) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of High Sea Sales and purchases hence the same was not included in the Profit Loss A/c both debit and 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. Accordingly, 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% over and above the invoice value and argued that CIT(A) has rightly confirmed the addition and no interference is called for. 7.2 We heard both the parties and perused the material placed before us. In the Assessment Order, the AO has given a finding that the assessee is entitled for the consideration of 2% over 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 brought any evidence to prove that the assessee has not received the consideration over and above 2% on High Sea Sales. The Ld.A.R also did not bring any evidence relating to the expenditure incurred on High Sea sales over and above the amount debited to P L account. Therefore, we do not find a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revailing 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 Income 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 exchange rate fluctuation should be reduced from the sales. The assessee argued 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.CIT(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 the matter back to the file of AO. Accordingly, we set-aside the orders of the lower authorities on 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 direction of this Tribunal. 12.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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