2024 (10) TMI 418 - AT - Income Tax

Addition pertaining to the undisclosed export sales bill - assessee received the foreign remittance qua invoice No. SSL 1920/Ex 101 and Dena Bank has recovered the sum credited to the Assessee on such bill discounted, from the foreign remittance and credited the balance value of the above recovery and bank charges in the Assessee s account - HELD THAT - From the export invoice it clearly appears that the Assessee has exported SS round bars worth Euro Dollars 47,985.55 which was discounted by the Dena Bank and the same was shown as contingent liability in clause 21(g) of the financials/audit report as on 31.03.2021, wherein it is clearly written (contingent liability for bill discounted since realized Rs. 34,34,000/-) and on dated 15.04.2020, the Assessee ultimately has received foreign remittance of the aforesaid amount of Rs. 34,34,000/-being credited by Dena Bank. It is also an admitted fact that said amount was offered for taxation. Hence considering the peculiar facts and circumstances in totality, addition on this context is un-sustainable. Accordingly, the addition under consideration pertaining to the export sales bill i.e. invoice No.SSL 1920/Ex 101 is deleted.

Summary

Issues:
Challenge to addition of Rs. 34,34,000 in income tax computation for A.Y. 2020-21. Dismissal of appeal by Ld. Addl./Joint Commissioner for non-prosecution.

Analysis:
The Assessee filed a rectification application challenging the addition of Rs. 34,34,000 in the income tax computation for A.Y. 2020-21. The CPC rectified the order but maintained the same computation, leading to the Assessee's appeal before the Ld. Commissioner. Despite sending three notices, the Assessee did not respond, resulting in the dismissal of the appeal by the Ld. Addl./Joint Commissioner for non-prosecution. The Assessee then appealed to the Appellate Tribunal ITAT Mumbai against this dismissal.

The Appellate Tribunal noted that the Ld. Addl./Joint Commissioner did not adjudicate on the Assessee's submissions, prompting a review of the case's merits. The Assessee contended that it exported stainless steel bright bars, and Dena Bank credited the Assessee's account with Rs. 34,34,000 instead of the full amount. The Assessee treated this as a contingent liability in its financial report. Upon receiving foreign remittance, the Assessee repaid the credited amount to Dena Bank. The Ld. D.R. did not dispute these facts.

Upon reviewing the ledger account and export invoices, the Tribunal found that the Assessee had indeed exported goods and received foreign remittance to cover the credited amount. The Tribunal concluded that the addition of Rs. 34,34,000 in the income tax computation was unwarranted, as the Assessee had accounted for the transaction appropriately. Therefore, the Tribunal allowed the Assessee's appeal and deleted the addition.

In conclusion, the Appellate Tribunal ITAT Mumbai ruled in favor of the Assessee, finding that the addition of Rs. 34,34,000 in the income tax computation was unjustified. The Tribunal held that the Assessee had correctly accounted for the transaction involving the export of goods and subsequent repayment to Dena Bank. The appeal was allowed, and the addition was deleted.