2023 (1) TMI 1078 - AT - Income Tax

Addition u/s 69C - Addition on difference between the invoice value and the accessible value of the imports - assessee has failed to produce the Invoices Value- wise of the total figure in question before the assessing officer as well as Ld. CIT(A) - CIT(A) is of the opinion that accessible value of the goods is the value on which the custom duties are calculated and ultimately deleted the addition - HELD THAT - The transaction value of the goods (invoice values) are accessible value as defined in Section 14 of Customs Act, 1962. If declared invoice value appears to be low terms of Rule 12 of Customs Valuation Rules, 2007, then a new value is re-determined in terms of Rule 4 to 9 of Customs Valuation Rules, 2007 and this determined value becomes accessible value and custom duties collected on the said determined value even though transaction value is different. Thus, it appears that accessible value which has been considered by the A.O. is not suppression of purchase price or unaccounted purchase. Moreover, the value of the goods assessed/re-determined by the custom authorities as per valuation norms for the purpose of calculation of custom duty on the import. Therefore, the same would not attract the provisions of Section 69C of the Act, since, it has not been established as unexplained expenditure actually incurred by the assessee. CIT(A) has considered the remand report and pass the order impugned. Therefore, restoring the file back to CIT(A) for fresh adjudication does not arise. A.O. has conducted proper enquiry while preparing the remand report. In our considered opinion, CIT(A) has committed no error in come to such conclusion and deleting the addition made by the Ld. A.O. thus, the grounds of Appeal No. 1 to 8 of the Revenue are devoid disamissed.

Summary

Issues:
1. Consideration of Remand Report by CIT(A)
2. Reconciliation of item-wise purchases
3. Deletion of addition by CIT(A)
4. Discrepancies in import values
5. Assessment of accessible value for custom duty

Issue 1: Consideration of Remand Report by CIT(A)
The appeal was filed by the Revenue against the order of the CIT(A) for the assessment year 2015-16. The Revenue raised substantive grounds of appeal related to the consideration of the Remand Report by the CIT(A). The Revenue contended that the CIT(A) erred in considering the Remand Report submitted by the Assessing Officer and claimed the non-availability of the report while deciding the case. The Revenue questioned the decision to delete the addition made by the Assessing Officer based on the facts and conclusions recorded by the CIT(A) during the case.

Issue 2: Reconciliation of Item-wise Purchases
The Assessing Officer had made an addition to the income of the assessee for the year under consideration, stating that the assessee had not shown purchases through import worth a specific amount. The CIT(A) allowed the appeal filed by the assessee by deleting this addition. The Revenue contended that the assessee failed to reconcile the item-wise purchases made during the assessment, leading to discrepancies in the declared values.

Issue 3: Deletion of Addition by CIT(A)
The CIT(A) deleted the addition made by the Assessing Officer based on the explanation provided by the assessee regarding the differences in import values. The assessee justified the discrepancies by explaining the valuation norms used by CBEC for custom duty calculations, which resulted in a significant difference between the assessed value and the invoice value of imports. The CIT(A) considered the remand report and information received from the Commissioner of Customs, ultimately concluding that the accessible value for custom duties was correctly assessed, leading to the deletion of the addition.

Issue 4: Discrepancies in Import Values
The Assessing Officer had raised concerns about discrepancies between the invoice value and the accessible value of imports, leading to the addition in the assessment. The assessee provided detailed explanations regarding the valuation process for custom duty calculations, highlighting the differences in values determined by CBEC and the actual purchase values. The CIT(A) analyzed the remand report and information from the Customs authorities to ascertain the correctness of the accessible value for custom duty purposes, ultimately supporting the deletion of the addition.

Issue 5: Assessment of Accessible Value for Custom Duty
The CIT(A) emphasized that the accessible value for custom duties was determined based on valuation norms for custom duty calculations and did not represent unexplained expenditure by the assessee. The CIT(A) clarified that the accessible value, as determined by the custom authorities, was not a suppression of purchase price or unaccounted purchase, thereby not attracting the provisions of Section 69C of the Act. The CIT(A) concluded that the Assessing Officer had conducted a proper inquiry, and the deletion of the addition was justified based on the correct assessment of accessible value for custom duties.

In conclusion, the appeal filed by the Revenue was dismissed, and the order of the CIT(A) deleting the addition was upheld based on the detailed analysis of the import values and the correct assessment of accessible value for custom duties.