TMI Blog2022 (10) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... , accordingly we do not find any infirmity in the observation of the learned PCIT. Differences in the import purchases, payment of custom duty and ITS data/CBES - Assessee before the learned PCIT has categorically submitted that the information provided in ITS data/CBES data was not pertaining to the year under consideration and therefore based on that no adverse inference can be drawn against the assessee. The submission of the assessee has not been controverted by the learned PCIT. From the finding of the Ld. PCIT, reproduced above, we find that there was no tangible material referred by the PCIT highlighting the differences between the value of purchases and the custom duty as discussed above. Based on this we hold that the learned PCIT has assumed the jurisdiction on this issue on wrong assumption of facts. Thus on this count, the assessment order framed under section 143(3) of the Act cannot be categorized as erroneous insofar prejudicial to the interest of revenue. No verification of the contribution made by the assessee towards the Provident fund - There was no query raised by the AO during the assessment proceedings with respect to the delay in the payment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value for the custom purposes were not matching. As such there were huge differences in the invoices value shown by the assessee, custom value, amount of duty paid and the date available in the ITS. iii. There was payment towards the Provident fund of ₹ 7,35,447.00 which is subject to the provisions of section 36(1)(va) of the Act and the conditions laid down under the provisions of section 43B read with section 36(1)(v) of the Act. As such the impugned amount was not allowable as deduction. 4. In view of the above the learned CIT proposed to hold the assessment framed under section 143(3) of the Act as erroneous insofar prejudicial to the interest of Revenue by issuing the show cause notice under section 263 of the Act. 5. The assessee in response to such show cause notice submitted that the ITS data which was considered to point out the difference in the amount of import purchases, custom duty payment etc. was pertaining to the earlier years. As such the differences observed by the learned PCIT was based on wrong assumption of facts. As such the current year data of the ITS, custom, CBEC can only be compared with the data of the relevant years of the assessee to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the year under consideration. Further the reconciliation submitted is unverifiable for want of complete details and documents in support. Therefore the same would have to be done by the AO in the subsequent proceedings as per the directions in the subsequent paras of this order. Thus the AO has failed to examine the huge difference of the invoice value and assessable value in the books of account vis-a-vis the as per the custom records/other records. So there was difference in the assessable value for customs and the invoice value which the AO has failed to examine in the assessment proceedings. So there was lack of enquiry at the time of completion of assessment. Further with regard to the non-payment of the employees contribution within the specified dates for the reason of express provisions u/s. 36(1)(v) the same is required to be disallowed and added in the total income, which the AO has failed to do so while completing the assessment. 14. The above facts will indicate that AO has not conducted any inquiries/verification in respect of issues discussed above during the course of assessment proceedings which ought to have been done so. It may be mentioned that two es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear including squared up loans in the format. On perusal of such query, it is transpired that there was no question with respect to the diversion of interest-bearing loan for noncommercial purposes. Thus, in the absence of any query, assessment order can be held as erroneous insofar prejudicial to the interest of revenue. It is also significant to note that, the assessee before us is a partnership firm and whatever capital is owned by the partnership firm belongs to the partners on which the firm generally bears the interest expenses. Thus, we are of the view that generally the partnership firm does not have any interest free fund with it. Therefore, it appears to us that the assessee cannot be given the benefit that it (the assessee) has given advances out of its own interest free funds and reserves. Thus to our understanding, this aspect as pointed out by the learned PCIT was supposed to be verified by the AO during the assessment proceedings. But the same has not been done by the AO, accordingly we do not find any infirmity in the observation of the learned PCIT. 10.2. With respect to the 2nd allegation that there were differences in the import purchases, payment of custom du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue on wrong assumption of facts. Thus on this count, the assessment order framed under section 143(3) of the Act cannot be categorized as erroneous insofar prejudicial to the interest of revenue. 10.4. With respect to the 3rd allegation that there was no verification of the contribution made by the assessee towards the Provident fund, in this regard we have referred the paper book filed by the assessee and find that there was no query raised by the AO during the assessment proceedings with respect to the delay in the payment of the contribution towards the PF which is subject to the conditions of section 36(1)(v)/36(1)(va) read with section 43B of the Act. Thus, on this count as well, we are of the view that the order framed under section 143(3) of the Act suffers from infirmity so far the necessary facts were not verified by the AO during the assessment proceedings. In view of the above, after considering the facts in totality we confirm the order of the learned PCIT in part as discussed above. Hence, the ground of appeal of the assessee is allowed in part. 11. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the Court on 14/09/2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
