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TMI Blog2021 (12) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... AT HIGH COURT] . However, we are conscious of the fact that issue is not raised before us for our consideration. CIT(A) after appreciation on the fact held that Assessing Officer made the addition without understanding the accounting and facts of the case. CIT(A) held that assessee was right in booking the purchase at the custom rate which is fixed for some period as per trading norm and same point of method is followed by Custom Department for charging custom duty on the imported goods as the RBI rate fluctuating in daily at the time of actual payment in foreign exchange for imported bills. The assessee had adopted actual rate, which the bank has debited to their accounts and it is the rate taken by the bank during the day, the trading rate which almost very closed to rate of RBI - all purchases of the assessee was settled during the year by payment through credit so difference, if any, booking rate at the time of purchase automatically being settled in the year itself in the profit and loss account - if the view of AO is accepted then the purchases would be booked at the time of RBI s fixed rate and when actual payment will be made, the exchange rate difference would be les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was selected for scrutiny and assessment was completed u/s 143(3) r.w.s 14 4of the Act on 27.12.2011. Subsequently, the case of assessee was re-opened under section 147 of the Act. The case of assessee was re-opened by Assessing Officer by taking view that on verification of details available on record, it was noticed that during the relevant year, the assessee imported diamonds and debited ₹ 1.91 crores towards exchange difference for payments of imported diamonds. As per details available on record, the diamonds were imported on 23.07.2008.The assessee adopted rate of dollar at ₹ 40/- per dollar, whereas the payment of same date the rate was taken at ₹ 41.925/- per dollar. Therefore, the actual foreign exchange loss should have been ₹ 3.08 crores instead of foreign exchange loss of ₹ 1.91 crores claimed by assessee. Thus, the Assessing Officer was of the view that assessee has suppressed the loss and circulated black money thereby income of assessee has escaped to the extent of ₹ 1.91 Crores. 3. The Assessing Officer after recording the reasons issued notice under secetion148 of the Act on 29.03.2016. In response to notice under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at RBI s prevailing rate then what will be effected is his purchase, either it will be increase or decrease and the net result will be no exchange difference because as and when he will make the payment the profit / loss on payment will be the exchange difference of that transaction. 5. The Ld. CIT(A) after considering the explanation of assessee held that the Assessing Officer passed the assessment order with pre-determined mind set of making additions, which is clearly evident from the facts and without going through the submission and evidence placed before him. The assessee debited of sum of ₹ 1.91 crores as exchange difference for the payment of imported diamonds and all the purchase settled during the year by payment through buyer s credit. The assessee had booked purchased at industry rate and difference between the purchase rate and actual payment is claimed at exchange rate difference . If the method suggested by Assessing Officer then the end result would remain the same because in case of purchases will be booked on higher amount due to rate of exchange being higher and with corresponding exchange different rate would be reduced end result would remain the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of import and date of payment, the claim of assessee for exchange rate difference was not supported by documentary evidence. The Ld. Sr. DR prayed for reversing the order of Ld. CIT(A) and restored the order of Assessing Officer. 8. We have considered the submission of Ld. Sr. DR of the Revenue, statement of facts furnished by Assessing Officer and the order of Ld. CIT(A). We find that in the statement of fact, the Assessing Officer recorded that the case of assessee was re-opened on audit objection. The re-assessment order was passed after verification and consideration of submission made by assessee. We find that re-opening on audit objection is not valid as it has been held by Hon'ble jurisdictional High Court in the case of Torrent Power of SEC Ltd Vs ACIT ( 392 ITR 330 Guj)/ [(2017) 77 taxmann.com 57 Gujarat]. However, we are conscious of the fact that issue is not raised before us for our consideration. 9. We further find that in the assessment order, the Assessing Officer made addition solely on the basis of his view that rate of dollar adopted by assessee at ₹ 40/- per dollar. However while making payment on the same date, the rate was taken at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after appreciation on the fact held that Assessing Officer made the addition without understanding the accounting and facts of the case. The Ld. CIT(A) held that assessee was right in booking the purchase at the custom rate which is fixed for some period as per trading norm and same point of method is followed by Custom Department for charging custom duty on the imported goods as the RBI rate fluctuating in daily at the time of actual payment in foreign exchange for imported bills. The assessee had adopted actual rate, which the bank has debited to their accounts and it is the rate taken by the bank during the day, the trading rate which almost very closed to rate of RBI. The Ld. CIT(A) also held that all purchases of the assessee was settled during the year by payment through credit so difference, if any, booking rate at the time of purchase automatically being settled in the year itself in the profit and loss account. The Ld. CIT(A) also appreciated the facts that if the view of Assessing Officer is accepted then the purchases would be booked at the time of RBI s fixed rate and when actual payment will be made, the exchange rate difference would be less and the purchase cost woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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