SKF Engineering & Lubrication India Pvt. Ltd. Vs DCIT (ITAT Bangalore)
The ITAT Bangalore held that duty drawback is taxable only on actual receipt basis, and not merely on accrual or portal data, thereby deleting both the addition and penalty.
The AO made an addition based on CBEC/ICEGATE portal data, alleging higher duty drawback income than recorded in books. The assessee had consistently recognized duty drawback only upon actual receipt in bank, in line with Section 145B(3).
The Tribunal observed:
- As per law, duty drawback becomes income in the year of receipt
- Assessee’s bank statements (refer page 10–11) clearly showed actual receipt of only ₹1.20 lakh
- AO relied on external portal data without sharing it with assessee, violating natural justice
- No evidence was brought to prove higher receipt than what was recorded
Accordingly, the addition of ₹21.7 lakh was deleted.
On penalty:
- Since quantum addition itself was deleted
- And there was no misreporting of income, only a difference in perception
Penalty u/s 270A was also deleted.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These are the appeals filed by the assessee challenging the quantum order as well as the penalty order of the NFAC, Delhi both dated 13/06/2025 in respect of the A.Y. 2018-19 and raised the following grounds:
