Case Law Details
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
The assessee has filed the present appeal against the impugned order dated 15.10.2025, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2020-21.
2. In this appeal, the assessee has raised the following grounds: – “1. Natural Justice
1.1 The learned Commissioner of income tax (Appeals) [‘the ld. CIT(A)] erred in confirming the action of Assessing Officer- Assessment Unit ‘the A.O.] of addition made to total income of the Appellant of unreconciled difference of reported figure with books of accounts.
1.2 The CIT(A) failed to appreciate that the no details of reported figure have been furnished by AO to Appellant.
1.3 The Appellant prays that on the facts and circumstances of the cases and in law the addition made to total income not justifiable.
General
2. The Assessing officer has erred in computing gross total income of Rs. 12,31,01,391/- as against the income return by appellate of Rs. 11,65,47,682/- on account of variation in data furnished by Directorate General of Foreign Trade (DGFT) with financial data of the appellant without providing details of it.
3. Without Prejudice to the above:
i. The Id. CIT (A) erred in confirming the action of A.O. on the ground that no reconciliation have been furnished by Appellant of reported figure by DGFT with audited accounts whereby the A.O. treated the amount of Rs. 65,53,709/-to income as per income filed.
ii. While doing so, the Id. CIT (A) filed to appreciate that:
(i) No details have been furnished by AO of the amount reported by DGFT during the course of assessment for reconciling the difference.
(ii) Appellant has provided completed details of Export & Import as per audited accounts.
iii. It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for.”
3. The solitary grievance of the assessee is against the addition made on account of un-reconciliation with the figures of import and export provided by the Director General of Foreign Trade (“DGFT”).
4. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is engaged in the manufacturing and trading of electrofusion, compression and irrigation fittings. For the year under consideration, the assessee filed its return of income, declaring a total income of Rs.11,65,47,682/-. During the assessment proceedings, upon the perusal of the quantum of imports reported by the DGFT, it was observed that the assessee’s total imports for the year under consideration were Rs. 31,67,05,414/-. However, as per the return of income filed by the assessee, the assessee has declared purchases amounting to Rs.9,64,24,137/-. Accordingly, the assessee was asked to explain the reasons for the difference and reconcile the same. In response, the assessee submitted that in the return of income, the purchases only pertained to finished goods. However, the total imports are of Rs.31,69,17,677/-. Accordingly, the assessee filed a reconciliation statement, wherein there was a difference of Rs.2,12,263/- in the quantum of imports as reported by the DGFT and that of the assessee. It was further submitted that due to the unavailability of the details provided by the DGFT with the assessee, the variation cannot be exactly verified. Accordingly, the Assessing Officer (“AO”), vide order dated 27.09.2022, passed under section 143(3) read with section 144B of the Act, made an addition of Rs. 2,12,263/-, being the difference which remained unreconciled to the total income of the assessee. Similarly, as there was a difference of Rs. 63,41,446/- in the quantum of exports as reported by the DGFT and as reported by the assessee in its return of income, the AO made an addition of Rs. 63,41,446/- to the total income of the assessee.
5. The learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on this issue and upheld the addition made by the AO on account of the difference made on imports and exports. Being aggrieved, the assessee is in appeal before us.
6. During the hearing, the learned Authorised Representative (“learned AR”) reiterated the submissions made by the assessee before the lower authorities, that the details of the quantum of import and export, as relied upon by the Revenue, claimed to have been provided by the DGFT, were not provided to the assessee despite multiple requests. Therefore, it was submitted that no addition can be made in the hands of the assessee on account of un-reconciliation.
7. On the other hand, the learned Department Representative (“learned DR”), pursuant to the directions in the previous hearing, placed on record data/details of export for the year under consideration and the detailed breakup for the month of April, 2019. The learned DR further submitted that similar data is available for all the months of the year under consideration and due to the voluminous nature of the data, only on a sample basis, the details for the month of April, 2019 have been placed on record. It was further submitted that the AO has complete data/details of exports as well as imports for the entire year, as provided by the DGFT, and that this issue may be restored to the AO’s file for de novo adjudication after necessary verification. During the hearing, a copy of the details placed on record was also provided to the learned AR, and the learned DR also undertook that the complete data/details of imports as well as the exports, as forwarded by the DGFT, shall be furnished to the assessee.
8. Having considered the submissions of both sides and perused the material available on record, in the present case, it is evident that the impugned addition is only on account of un-reconciliation of the details of imports and exports as per the information received from the DGFT and as declared by the assessee in its return of income. We find that during the assessment proceedings, it was noticed that as per the details provided by the DGFT, the assessee has made an import to an extent of Rs. 31,67,05,414/-. However, as per its return of income, the assessee has disclosed purchases of Rs.9,64,24,137/-. We further find that pursuant to the opportunity being granted to the assessee, the assessee filed a final reconciliation of the total import figure of Rs.31,69,17,677/- as against figure of Rs.31,67,05,414/- reported by the DGFT. Therefore, an addition of Rs. 2,12,263/- was made on the basis of unreconciled imports. Thus, it is evident that the assessee, to a large extent, was able to reconcile with the information as provided by the DGFT. Similarly, in respect of exports, the addition was only restricted to Rs.63,41,446/-.
9. In the present case, it is the submission of the assessee that the details as received by the AO from the DGFT were not provided to the assessee despite multiple requests, and the Revenue has claimed that no further details are available with the Department other than those provided to the assessee. During the hearing, the learned DR submitted that the complete data/details of exports as well as imports for the entire year are available with the AO, and the same shall be provided to the assessee for necessary reconciliation. In respect of its submission, the learned DR on a sample basis provided the detailed break-up for the month of April, 2019. Therefore, we deem it appropriate to restore this issue to the file of the Jurisdictional AO for de novo adjudication with a direction to provide the complete data/details of exports as well as imports as received from the DGFT to the assessee on the basis of which the impugned addition was made in the hands of the assessee. Upon receipt of the aforesaid information/details, we also direct the assessee to reconcile the data pertaining to imports and exports made during the year. Needless to mention, no order shall be passed without affording reasonable and adequate opportunity of hearing to the assessee. As the issue is restored to the file of the Jurisdictional AO for consideration afresh, all the contentions of the assessee are kept open. With the above directions, the impugned order is set aside, and the grounds raised by the assessee are allowed for statistical purposes.
10. In the result, the appeal by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 06/05/2026.
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