Delhi High Court: In a petition filed by Bausch and Lomb India Pvt. Ltd. impugning an assessment order dated 26-03-2024 passed under Section 143(3) read with Section 144B of the Income Tax Act, 1961 (‘Act’), a Division Bench comprising of Vibhu Bakhru* and Tara Vitasta Ganju, JJ. set aside the impugned order while stating that the same was unsustainable and against the principles of natural justice.
Background
The Assessing Officer (‘AO’) added Rs. 70,10,37,475/- to the total income declared by Bausch and Lomb as unexplained expenditure under Section 69C of the Act. Additionally, the AO initiated penalty proceedings under Section 271AAC (1) of the Act for concealment of income. This essentially relates to the declaration of purchases made by Bausch and Lomb during the previous year 2021-22.
Bausch and Lomb contended that the entire purchases were imports and details of the same were also provided. However, the AO found that the said declaration was incorrect, and Bausch and Lomb had not disclosed the purchases made in entirety.
As per the AO, Bausch and Lomb had made purchases of Rs. 2,21,51,93,180/- but had disclosed purchases only worth Rs. 1,51,41,55,705/-. This conclusion was based on the information received from the Central Board of Indirect Taxes & Customs (‘CBIC’). Bausch and Lomb contested this by demanding details of the imports which were allegedly concealed, and their grievance was that the AO had proceeded to frame the assessment, without affording an opportunity to effectively contest the ground on which the addition was made.
Analysis and Decision
The Court stated that it was apparent from the impugned order that the AO had relied solely on the assumption that the information provided by CBIC was correct even though it had not disclosed details of any import bills. Further, it was also mentioned that the AO had faulted as he had not reconciled the information regarding the quantum of purchases to Bausch and Lomb.
The Court noted that the AO had no knowledge as to which purchases were not disclosed by Bausch and Lomb since he did not have any information regarding the same. It was accepted by the Court that apart from stating that it had not imported goods of the value mentioned by the AO, Bausch and Lomb couldn’t dispute the alleged additional purchases.
Further, the Court mentioned that Bausch and Lomb could not be put at fault for not reconciling the data since the information available with the AO was wholly insufficient for carrying out any reconciliation exercise and that it was obvious that such an exercise could only be carried out if the details of the invoices were available.
The Court said that merely proceeding because CBIC is an apex body and therefore information provided by it cannot be doubted, without even identifying or meaningfully analyzing such information, is wholly insufficient.. Further, it was stated that if the AO could not identify the expenditure made by Bausch and Lomb, it could not add on account of unexplained expenditure.
The Court held that the impugned order was unsustainable and had been passed in violation of the principles of natural justice. Further, it was stated that the decision of the AO to fault Bausch and Lomb by not discharging its onus was erroneous.
The impugned order was set aside, and the matter was remanded to the AO for making a fresh assessment in accordance with law.
[Bausch and Lomb India Pvt. Ltd. v. Assessment Unit, National Faceless Assessment Centre, Delhi, 2024 SCC OnLine Del 3631, Decided on 08-05-2024]
Advocates who appeared in this case:
For Petitioner — Advocate Salil Kapoor, Advocate Sumit Kalchandani, Advocate Ananya Kapoor, Advocate Tarun Chanana, Advocate Utkarsa K. Gupta
For Respondent — Advocate I. Singh, Advocate Sanjeev Menon, Advocate Rahul Singh, Advocate Nishant Shokeen, Advocate Sumita Singh
