9911796707
TMI Blog2022 (12) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... f income u/s 139 of the Act, declaring an income of Rs. 42,35,08,700/- which was subsequently revised dated 12/06/2018 declaring the same amount of income. However, the assessee further revised its return of income dated 19/03/2019 declaring total income at Rs. 41,34,30,940/- only. However, the assessment was finally framed u/s 143(3) of the Act, dated 30/12/2019 at Rs. 71,00,42,527/- only. 4. The Ld. PCIT, having examined the assessment records of the assessee, found that the assessee has claimed foreign fluctuation loss of Rs. 1,14,10,638/- with respect to foreign currency loan which was converted into the shares of the company. The assessee in the original return of income disallowed such loss treating the same as capital in nature. This fact was also arising from the tax audit report in form 3 CD wherein it was certified that the impugned loss of Rs. 1,14,10,638/- is capital loss. However, the assessee in the revised return of income has claimed such loss as revenue in nature by virtue of the provision of section 43AA of the Act, which was brought by Finance Act, 2018 with retrospective effect from the Assessment Year 2017-18 i.e. the year under consideration. Thus the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature and therefore the same cannot be allowed as deduction. However, the AO without considering the same has allowed loss to the assessee which was claimed by it in the revised return of income filed dated 19/03/2019. Thus, the Ld. PCIT held that the order passed by the AO under the provision of section 143(3) of the Act, is erroneous in so far prejudicial to the interest of revenue on account of non-verification. The Ld. PCIT has also made reference to the explanation of 263 of the Act, holding that the necessary inquiries were not conducted by the AO during the assessment proceedings. 7. Being aggrieved, by the order of the Ld. PCIT, the assessee is in appeal before us. 8. The Ld. A.R before us filed a paper book running from pages 1 to 108 reiterated the contention as made before the ld. PCIT and drew our attention on the claim made in the revised return which is placed on pages 8 to 15 of paper book. The reason for filing the revised return of income was also furnished by the assessee which can be verified from page 12 of paper book. The Ld. AR further drew our attention on the submission made to the AO during the assessment proceedings which are placed on pages 66 to 70 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in or loss on realized foreign exchange fluctuation which is not covered by section 43A will be taxable if it is gain and will be tax deductible if it is loss. In view of the amendment in Act was applicable from assessment year 2017-18, assessee has filed revised return on 19-03-2019 and disallowance of Rs.1,14,10,638/- made in original return for loss on foreign exchange fluctuation not covered by section 43A has been removed from the computation of total income treating the same as tax deductible. This has resulted in reducing the total taxable income by Rs.1,14,10,638/- on this one ground. Assessee submits that while finalizing the assessment, above claims made in revised return be considered and exchange rate fluctuation expense of Rs.1,14,10,638/- be allowed as tax deductible revenue expense under section 43AA. It is submitted that in the intimation for processing made by CPC it is appearing that the above deduction of Rs.1,14,10,638/- as per revised return is not allowed to the assessee it is therefore again requested that the amount of Rs.1,14,10,638/- is allowable expense as claimed in revised return be allowed. 9.2 We also find that that the assessee has furnished nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has found that in the order passed by the PCIT, Explanation 2 of section 263 of the Act, 1961 is made applicable. The Tribunal observed that the PCIT has not mentioned in the show cause notice to invoke the Explanation 2 of section 263 of the Act 1961. Therefore, by invocation of Explanation in the order without confronting the assessee and giving an opportunity of being heard to the assessee is not appropriate and sustainable in law. 9.6 Be that as it may be, the Hon'ble Court in the series of cases held that the order is erroneous in so far prejudicial to the interest of revenue if the inquiry has not been conducted during the assessment proceeding. In this regard we find support and guidance from the judgment of High court of Himachal Pradesh in case of Vidharba Singh (HUF) vs. PCIT reported in 86 taxmann.com 113 where it was held as under: 116. It is in this backdrop, Tribunal found the inquiryconducted by the Assessing Officer not to be in accordance with law (Pages 137 to 148) and the view taken by the Officer not to be a plausible one (Pages 148- 153), holding that since it was a case of "no inquiry", Commissioner rightly remitted the case back to the Assessing Officer, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
