आदेश/ORDER

PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-

This assessee’s appeal for A.Y. 2013-14, arises from order of Pr. CIT-2, Ahmedabad dated 28-03-2018, in proceedings under section 263 of the Income Tax Act, 1961; in short “the Act”.

2. The fact in brief is that return of income declaring loss of Rs. -7,75,561/- was filed on 24^th Nov, 2014. The scrutiny assessment u/s. 143(3) of the Act finalized on 22^nd March, 2016 and total income was assessed at Rs. 6,97,550/- . Subsequently, the ld. Pr. CIT-2, Ahmedabad has issued notice u/s. 263 of the Act on 23^rd March , 2018 stating that assessment order u/s. 143(3) of the Act passed on 22^nd March, 2016 was erroneous and prejudicial to the interest of the revenue for the following reasons:-

“2.1 It is perused that you have claimed an expenditure titled Foreign Exchange Premium amounting to Rs. 98S9746/-. The AO has allowed the said claim without application of mind and without making any proper and due enquiries and verification in this regard.

2.2 An assessment order passed without application of mind and/or without making proper enquiries and verification of facts and the law on the subject makes such order erroneous and prejudicial to the interest of Revenue in terms of clause(a) of Explanation II appended to Section 263 of the IT Act.. I therefore intend to revise the same u/s 263 of IT Act. "

In response to the aforesaid notice, the assessee has filed written submissions reproduced as under:-

"1. It has been stated at para 1of the assessment order u/s. 143(3) dated 22.3.2016 determining total income at Rs.697550/- for AY 2013-14 is erroneous and prejudicial to the interest of the revenue. The reason for holding that the order is given at para 2.1 of the letter under reply wherein it has been stated that "the assessee had claimed an expenditure titled foreign exchange premium amounting to Rs.9889746/-, the AO has allowed the said claim without application of mind and without making any proper and due enquiries and verification in this regard. "

1.1 At para 2.2 of the letter under reply it has been further alleged that "an assessment order passed without application of mind and / or without making proper enquiries and verification of facts and the law on the subject make such order erroneous and prejudicial to the interest of the revenue in terms of clause (a) of explanation II appended to section 263 of the IT Act. " On the above premises your Honours intend to revise the assessment order referred to above u/s. 263 of the IT Act. Vide para 3 of the letter under reply the assessee had been given an opportunity to represent the case and hearing is fixed on 27.3.2018 at 11.00 AM. '

In this connection it is submitted that the notice u/s. 263 dated 23.3.2018 requiring compliance on 27.3.2018 has not provided the assessee with sufficient time to make an effective representation on account of the fact that hardly I working day was available. The notice dated 23.3.2018 requiring compliance on 27.3.2018 was in fact served on the assessee only on 24.3.2018 at 3.50 PM i.e. which is Saturday. 25^th being Sunday and Ramnavami was a closed holiday. Thus the assessee had been given hardly one day for complying with the notice u/s. 263. It is therefore submitted that adequate time has not been granted to the assessee company for making a effective representation and we reserve the right for further representation.

The observation made in the notice under reply to the effect that "the A O had allowed the said claim without application of mind and without making any proper and due enquiries and verification in this regard" is not justifiable. The AO had passed the assessment order u/s. 143(3) dated 22.3.2016 after making proper enquiries and due verification of the books of account and relevant records. As mentioned earlier, the assessee had claimed expenditure for a sum of Rs. 98,89,746/- under the head fonvard exchange premium which is included in the major heading of "Other expenses". The AO has issued a de