Kimplas Piping Systems Pvt. Ltd Vs DCIT (ITAT Mumbai)
Addition for Unreconciled DGFT Figures Set Aside Due to Lack of Proper Verification; ITAT Sends Back Case After Assessee Claims DGFT Data Used by AO Was Not Provided; DGFT Import and Export Mismatch Addition Remanded for Fresh Reconciliation by ITAT; ITAT Orders Fresh Adjudication Because Revenue Later Confirmed Availability of Complete DGFT Data.
In the case of Kimplas Piping Systems Pvt. Ltd. Vs DCIT before the Income Tax Appellate Tribunal, the assessee challenged the order passed by the Commissioner of Income Tax (Appeals) for Assessment Year 2020-21 regarding additions made due to unreconciled import and export figures obtained from the Directorate General of Foreign Trade (DGFT).
The assessee argued that the Assessing Officer (AO) and the CIT(A) wrongly confirmed additions without furnishing complete details of the figures reported by the DGFT. According to the assessee, despite repeated requests, the data relied upon by the Revenue authorities was not provided, making reconciliation impossible. The assessee also contended that complete details of imports and exports as per audited accounts had already been furnished.
The Tribunal noted that the assessee was engaged in manufacturing and trading electrofusion, compression, and irrigation fittings. The assessee had filed its return declaring income of Rs. 11.65 crore. During assessment proceedings, the AO observed that imports reported by the DGFT amounted to Rs. 31.67 crore, whereas purchases disclosed in the return were Rs. 9.64 crore. The assessee clarified that the purchases reflected only finished goods and submitted a reconciliation statement showing imports of Rs. 31.69 crore, resulting in an unreconciled difference of Rs. 2.12 lakh. Since the assessee claimed it did not possess the DGFT data relied upon by the Department, it stated that exact verification could not be carried out. The AO added the unreconciled import difference of Rs. 2.12 lakh and also made an addition of Rs. 63.41 lakh relating to export differences.
The CIT(A) upheld both additions, after which the assessee appealed before the Tribunal. During the hearing, the assessee reiterated that the detailed DGFT data had not been supplied despite several requests and therefore additions based on unreconciled figures were unjustified.
The Departmental Representative produced sample export data for April 2019 and stated that detailed import and export data for the entire year was available with the AO. It was submitted that due to the volume of records, only sample data had been placed on record, but complete details would be provided to the assessee. The Revenue requested restoration of the issue to the AO for fresh adjudication after verification.
After considering the submissions, the Tribunal observed that the additions arose solely because of unreconciled differences between DGFT data and the figures disclosed in the return of income. The Tribunal noted that the assessee had substantially reconciled the import figures and that only a limited amount remained unreconciled. Similar observations were made regarding exports.
The Tribunal further recorded that the Revenue had now acknowledged the availability of complete DGFT data and had agreed to furnish it to the assessee. In these circumstances, the Tribunal restored the matter to the jurisdictional AO for fresh adjudication. It directed the AO to provide complete import and export details received from the DGFT and instructed the assessee to reconcile the figures after receiving the data. The Tribunal also directed that no order should be passed without granting reasonable opportunity of hearing. All contentions of the assessee were kept open. Consequently, the impugned order was set aside and the appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
