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TMI Blog2020 (1) TMI 296X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the determination of the Arm's Length Price ('ALP') at NIL by the learned Transfer Pricing Officer ('TPO'J in his order under section 92CA by treating the specified domestic transactions ('SDT'J as bogus and sham transactions. The reference made to the learned TPO by the learned Assessing Officer under section 92CA is merely for the purpose of verification and determination of the ALP of the SDT and therefore, the learned TPO exceeded his jurisdiction by characterizing the SDT as bogus transactions without undertaking any benchmarking / functional analysis of the same. Therefore, the transfer pricing adjustments aggregating to Rs. 245,45,18,050 confirmed by Hon'ble DRP is bad in law and needs to be deleted. 2.0) Disallowance / transfer pricing adjustment of high seas purchases of Crude Palm Oil amounting to Rs. 1,22,70,68,280 2.1) On the facts and circumstances of the case and in law, the Hon'ble DRP erred in rejecting the objection raised by the Appellant that the date of entering into contract for purchase of crude palm oil and the actual date of import mentioned in the tax invoice were interchanged by the learned TPO based on which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to Rs. 21,91,99,540 On the facts and circumstances of the case and in law, the learned Assessing Officer erred in making protective addition of the sales returns amounting to Rs. 21,91,99,540 by stating that the learned TPO has not verified the details of sales return upon reference made to him even after specific direction issued by the Hon'ble DRP. Accordingly, the transfer pricing adjustment of sales return of guar seeds amounting to Rs. 21,91,99,540 is bad in law and needs to be deleted. 5.0) Disallowance of loss on high sea sales of crude palm oil amounting to Rs. 8.82,90,741/- 5.1) On the facts and circumstances of the case and in law, the Hon'ble DRP erred in confirming the disallowance of the alleged loss on high seas sales of Rs. 8,82,90,741 made by the learned Assessing Officer ignoring the submissions of the Appellant that the figures considered by the learned Assessing Officer does not pertain to the Appellant's case and ignoring the fact that the Appellant has actually earned profit of Rs. 13,05,01,658 from the high seas of crude palm oil. 5.2) Hon'ble DRP erred in confirming the observations made by the learned Assessing Officer ignoring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,490/- 7. In the purchases made from all the above parties, the TPO has observed that the date of purchase as per the invoice copy submitted by the assessee was different from the date of purchases as per the invoice copy of the third party. The TPO has also observed that the assessee had shown an earlier date of purchase in its invoice copy as against the date of the original buyer which is much after the date of the purchases shown by the assessee. Since the dates as mentioned by the assessee in the invoice did not match with the date of purchase of the original buyer, the same could not be treated as high seas purchase as the same was bogus purchase shown by the assessee. 8. With regard to purchase of guar split, the TPO has observed that the assessee had written a letter to the warehouse on 4/3/2013 informing the warehouse about the sale of guar split which was purchased by the assessee from Stride Multi-trade Limited as per the letter dated 1/3/2013 to the warehouse owner, however, the purchase was booked by the assessee on 31/03/2013. Therefore, considering the difference in the date of letter issued to the warehouse and the date of purchase as taken by the assessee, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed and the objection of the assessee is rejected. 1.2.23 As regards purchases of Guar Split by the assessee it is observed by the panel that the letters issued to the warehouse owners is much before the purchase date of the goods by the assessee i.e. if the purchases Itself are done on 31/03/2013 then how could the supplier intimate the warehouse on 01/03/2013 about the future purchases. Hence, the order of the TPO on addition of Rs. 100,82,50,230/- treating the purchase of guar split as bogus purchases is confirmed and the objection of the assessee is rejected. An attempt was made to furnish certain additional evidence in the form of purported acknowledgement copies of letters submitted to the godown by Stride Multi trade and by the company. However, no reasons have been given as to why these could not be produced before the AO. In fact, no application adverting to DRP Rules for adducing evidence has been submitted. We find these documents to be self serving. As the transactions have been held as bogus, we turn down the request and dismiss the assessee's request. 1.2.24 As regards Purchases of guar seeds by the assessee it is observed that the assessee has by mistake s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual High Seas sales were done by Ruchi Soya Industries Limited and the assessee company was merely an intermediary company where the purchases were shown and also the sale was shown on the same day itself at a much lower price. * Hence, the assessee company had shown the transaction in the books of accounts without actually executing any documents / taking delivery of the goods etc. 13. Upon assessee's objection the DRP upheld the assessing officer's action by observing as under:- "2.2.3 We have gone through the assessment order, The AO has mentioned in detail the entire transaction of High Seas Sate & Purchase executed by the assessee and it is also seen that the AO has taken efforts to carry out the investigation through the details available on record of M/s Ruchi Soya Industries to come to a final conclusion. We concur with the findings given by him on the basis of data emanating four records. Hence, the disallowance of Loss on account of High seas Purchase and sale by the AO is upheld and the objection filed by the assessee is rejected." 14. Against the above assessee is in appeal before the ITAT. We have heard the learned departmental representative. It is note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y explanation. The assessing officer without any application of mind and without bringing on record the reply or the result of any further enquiry laconically passed the summary assessment order allowing the huge loss. 15. In these circumstances the Learned counsel of the assessee's contention that assessee has provided all the necessary details and the assessing officer has applied his mind is clearly not sustainable. The case laws referred by the Ld counsel of the assessee are not applicable on the facts of the case. In our considered opinion on the facts of this case the decision of honourable Supreme Court in the case of Deniel Merchants P. Ltd. and Anther (supra) is fully applicable. In the said case honourable apex court has expounded that "In all these cases, we find that the Commissioner of Income Tax had passed an order under Section 263 of the Income Tax Act, 1961 with the observations that the Assessing Officer did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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