TMI Blog2003 (1) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with law - - - - - Dated:- 29-1-2003 - Judge(s) : S. H. KAPADIA., J. P. DEVADHAR. JUDGMENT The judgment of the court was delivered by J. P. DEVADHAR J.-The Revenue has filed this tax appeal under section 260A of the Income-tax Act, 1961 ("the I. T. Act" for short), against the order passed by the Income-tax Appellate Tribunal (the "ITAT" for short), dated September 28, 2000, stating therein that the following substantial question of law arises out of the order of the Tribunal : "Whether, on the facts and in the circumstances of the case, the Income tax Appellate Tribunal was justified in law in deleting the addition of Rs. 12,50,000 made by the Assessing Officer under section 40(A)(2)(b) of the Income-tax Act, 1961 ?" The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income-tax (Appeals). Hence, this appeal at the instance of the Revenue. Mr. R. V. Desai, learned senior counsel appearing on behalf of the Revenue, submitted that once the parties were falling within the categories specified in section 40A(2)(b) of the Income-tax Act then the Assessing Officer was justified in making disallowance to the extent the price paid found to be excessive or unreasonable. Mr. Desai submitted that against the decision of the Tribunal in the case of the assessee for the assessment year 1987-88 the Revenue has filed tax appeal under section 260A of the Income-tax Act and the same is pending. Mr. Mehta, learned counsel appearing on behalf of the assessee, on the other hand, submitted that all the necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordinarily not available at the time of assessment because immediately on importation, the rough diamonds are cut and polished and thereafter exported. Therefore, all the documents pertaining to the imports whichever were available with the assessee have been furnished by the assessee and even certificate from the approved valuer have been furnished to establish that there is no over-invoicing. Accordingly, Mr. Mehta submitted that the addition of Rs. 12,50,000 under section 40A(2)(b) was unjustified and the Tribunal has rightly deleted the disallowance. The undisputed facts are that the assessee and Paras Gems from whom the assessee has imported rough diamonds, fall within the category specified under section 40A(2)(b). Therefore, if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the price paid by it to Paras Gems was the fair market value and that there is no over-invoicing. It is also an admitted fact that no evidence was led by the assessee to establish that the price paid by it to Paras Gems were as per the prevailing international market price. Even the Commissioner of Income-tax (Appeals) as well as the Tribunal have not gone into this aspect and by merely relying upon their decisions in the case of the assessee in the earlier years have deleted the disallowance. In our opinion, once the imports are made by the assessee from the persons falling under the category under section 40A(2)(b), the burden is upon the assessee to establish that the price paid by it is not excessive or unreasonable. It is importan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt because the transaction is not at arm's length. In the circumstances, we have reframed the question as follows: "Whether, on the facts and circumstances of the case, the assessee who had imported the rough diamonds from a concern falling under section 40A(2)(b) of the Income-tax Act, had discharged its burden by adducing cogent evidence and established that the price of rough diamonds paid by it to Paras Gems was not excessive or unreasonable ?" Since all the authorities below have not gone into this aspect of the matter, we think it necessary, in the interest of justice, to set aside all the orders passed by the authorities below and remit the matter back to the Assessing Officer to decide afresh the question of disallowance under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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