Gujarat State Fertilizers and Chemicals Ltd., Baroda V. The DCIT Circle1(1), Baroda

CO 127/AHD/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9789 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Principle of natural justice; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 37(1); 147; 145; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO: 480 / AHD/ 20 1 3 & C.O. NO: 127/AHD/2013 (A SSESSMENT YEAR: 2008 - 09) GUJARAT STATE FERTILIZERS AND CHEMICALS LTD., P.O. FERTILIZER NAGAR, VADODARA - 391750 V/S DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), BARODA (APP ELLANT) (RESPONDENT) ITA NO. 631/AHD/2013 (ASSESSMENT YEAR: 2008 - 09) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), BARODA V/S GUJARAT STATE FERTILIZERS AND CHEMICALS LTD., P.O. FERTILIZER NAGAR, VADODARA - 391750 (APPELLANT) (RESPONDEN T) PAN: AAACG 7996 C APPELLANT BY : SHRI SANJAY R. SHAH, A.R. RESPONDENT BY : SHRI SUBHASH BAINS, CIT/DR ( )/ ORDER DATE OF HEARING : 26 - 08 - 2014 DATE OF PRONOUNCEMENT : 25 - 09 - 2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THE APPEAL AND THE C.O BY THE ASSESSEE AND THE APPEAL BY THE REVENUE A RE AGAINST THE ORDER OF CIT(A) - I, BARO DA DATED 5.1 2.2012 FOR A.Y. 2008 - 09. ITA NOS. 480 & 631/AHD/2013 & C.O.NO. 127/AHD/2013 . A.Y. 2008 - 09 2 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY STATED TO BE IN TH E BUSINESS OF MANUFACTURING OF F ERTILIZERS AND C HEMICALS. IN THIS CASE ORIGINALLY ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 30.03.2010 AND THE TOTAL INCOME WAS DETERMINED AT RS. 446,00,97,836/ - . SUBSEQUENTLY, AFTER RECORDING REASONS U/S. 147 , NOTICE UNDER SECTION 148 WAS ISSUED ON 28.03.2011 AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 147 VI DE ORDER DATED 05.12.2011 AND THE TOTAL INCOME WAS DETERMINED AT RS. 448,45,05,523/ - . AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 05.12.2012 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFOR ESAID ORDER OF CIT(A), REV ENUE AS WELL AS ASSESSEE ARE NOW IN APPEAL BEFORE US. THE GROUNDS RAISED BY THE REVENUE IN ITA NO. 631/AHD/2013 READS AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT (APPEALS) ERRED IN ALLOWING DEDUCTION OF RS. 1,44,63,411/ - ON ACCOUNT OF UNUTILIZED CENVAT CREDIT WITHOUT APPRECIATING THAT THE UNUTILIZED CENVAT CREDIT AT THE END OF THE YEAR WAS NOT INCLUDED IN THE PROFIT & LOSS ACCOUNT IN VIEW OF PROVISIONS OF SECTION 145A OF THE ACT EVEN THOUGH THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 4. ON THE OTHER HAND, THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO. 480/AHD/2013 READS AS UNDER: - 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFIC ER UNDER SECTION 147 OF THE ACT. IT IS SUBMITTED THAT IT BE SO HELD NOW AND ORDER PASSED UNDER SECTION 147 OF THE ACT BE QUASHED. THE ORDER PASSED UNDER SECTION 147 OF THE ACT AS CONFIRMED BY CIT(A) BE QUASHED IT BEING ALSO ON THE CHANGE OF OPINION. 1.1 TH E LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE VALIDITY OF REASSESSMENT UNDER SECTION 147 OF THE ACT ON THE BASIS OF ISSUE REGARDING INCLUSION OF INCREASE IN CENVAT CREDIT TO CLOSING STOCK OF RAW MATERIALS. IN THE FACTS AND CIRCUMSTANCES OF TH E CASE, AS REGARD THE ISSUE OF INCLUSION OF INCREASE IN CENVAT CREDIT TO CLOSING STOCK OF RAW MATERIALS, THERE IS NO 'ESCAPEMENT OF INCOME' AS ENVISAGED BY SECTION 147 OF THE ACT WHICH THE CIT(A) HIMSELF ACCEPTS ON THE MERITS OF THE CASE AND THEREFORE ON T HE SAID ISSUE ALSO REOPENING CANNOT BE HELD TO BE VALID. IT IS SUBMITTED THAT IT BE SO HELD NOW. 1.2 THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT THERE WAS TANGIBLE MATERIAL IN POSSESSION OF THE ASSESSING OFFICER BASED ON WHICH THE ASSESSIN G OFFICER HAD REOPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT IS SUBMITTED THAT THE MATERIAL BASED ON WHICH THE ASSESSING OFFICER HAS FORMED HIS OPINION WERE ALREADY ON RECORD AT THE ITA NOS. 480 & 631/AHD/2013 & C.O.NO. 127/AHD/2013 . A.Y. 2008 - 09 3 TIME OF ORIGINAL ASS ESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT AND ACCORDINGLY THERE WAS NO NEW TANGIBLE MATERIAL FOR FORMING AN OPINION AS ENVISAGED BY SECTION 147 OF THE ACT AND THEREFORE, THE REOPENING IS INVALID. IT IS SUBMITTED THAT IT BE SO HELD NOW. 1.3 THE LE ARNED CIT(A) ERRED IN LAW AND ON FACTS IN RELYING UPON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF RAJESH JHAVERI STOCK BROKERS PVT. LTD. (2007) 291 ITR 500 AND INDUCTOTHERM (INDIA) PVT. LTD. IN SPECIAL CIVIL APPLICATION NO.858 OF 2006, SINCE IN B OTH THE ABOVE JUDGMENTS, ASSESSMENT WAS NOT COMPLETED U/S 143(3) OF THE ACT BUT INSTEAD THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT WHICH IS NOT THE APPELLANT'S CASE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2. THE LEARNED CIT(A) ERRED ON FACTS AND IN L AW IN HOLDING THAT THE SUBMISSION MADE BY THE APPELLANT VIDE ITS LETTER DATED 14/12/2011 DURING THE COURSE OF REASSESSMENT PROCEEDINGS COULD NOT HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER AS THE SAME WAS SUBMITTED AFTER THE DATE ON WHICH THE ORDER WAS P ASSED U/S 143(3) R.W.S. 147 OF THE ACT. IT IS SUBMITTED THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSING OFFICER OUGHT TO HAVE PASSED ORDER ONLY AFTER SUBMISSION ON MERITS OF THE CASE WAS MADE BY THE APPELLANT IN VIEW OF PRINCIPLES OF NATURAL JUSTICE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DISALLOWING PRIOR PERIOD EXPENDITURE OF RS.18,44,276/ - ON THE GROUND THAT IT HAD NOT BEEN ESTABLISHED THAT SUCH EXPENDITURE ACCRUED DURING THE CURRENT YEAR IN SPITE OF THE APPELLANT FURNISHING EVIDENCES TO ESTABLISH THAT THEY HAVE CRYSTALLIZED DURING THE YEAR. IT IS SUBMITTED THAT IT BE SO HELD NOW. 3.1 WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT DIRECTING THE ASSE SSING OFFICER TO ALLOW THE PRIOR PERIOD EXPENDITURE AS DEDUCTION IN THE YEAR TO WHICH THE SAME RELATES. IT IS SUBMITTED THAT THE LEARNED ASSESSING OFFICER BE DIRECTED TO ALLOW THE EXPENDITURE AS DEDUCTION IN COMPUTING THE INCOME FOR THE ASSESSMENT YEAR TO WHICH IT RELATES. 3.2 THE LEARNED CIT(A) ERRED IN FACTS AND IN LAW IN TREATING PRIOR PERIOD INCOME ON A DIFFERENT FOOTING COMPARED TO PRIOR PERIOD EXPENDITURE AND HOLDING THAT NO EVIDENCE WAS PROVIDED IN RESPECT OF PRIOR PERIOD INCOME. IT IS SUBMITTED THAT SINCE THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE PRIOR PERIOD INCOME ALSO WAS NOT LIABLE TO BE TAXED DURING THE YEAR UNDER CONSIDERATION AKIN TO PRIOR PERIOD EXPENDITURE. IT IS SUBMITTED THAT IT BE SO HELD NOW. 5. ASSESSEE HAS ALSO FILE D A C.O VIDE C.O NO. 127/AHD/2013 AND THE GROUNDS RAISED IN THE C.O READS AS UNDER: - 1. IN THE EVENT THAT UNUTILIZED CENVAT CREDIT ON RAW MATERIAL OF RS. 1,44,63,411 IS INCLUDED IN THE INCOME OF THE APPELLANT RELYING ON THE PROVISIONS OF SECTION 145 A OF T HE ACT WHICH ESSENTIALLY MEANS FOLLOWING INCLUSIVE METHOD OF ACCOUNTING CENVAT CREDIT, CORRESPONDING DEDUCTION OF THE SAID AMOUNT BE ALLOWED UNDER SECTION 37(1) OF THE ACT, SINCE AS PER INCLUSIVE METHOD CENVAT HAS TO BE CONSIDERED AS PART AND PARCEL OF PUR CHASE COST OF RAW MATERIALS. IT IS SUBMITTED THAT IT BE SO HELD NOW. 1.1WITHOUT PREJUDICE TO THE ABOVE, IF IT IS HELD THAT UNUTILIZED CENVAT CREDIT OF RS. 1,44,63,411 IS TO BE INCLUDED IN VALUE OF CLOSING STOCK OF RAW MATERIAL, DIRECTION BE GIVEN TO INCLUD E THE SAME IN OPENING STOCK OF RAW MATERIAL FOR AY 2009 - 10 AND INCOME FOR THAT YEAR BE REDUCED TO THAT EXTENT. IT IS SUBMITTED THAT IT BE SO HELD NOW. WE FIRST TAK E UP ASSESSEE S APPEAL IN ITA NO . 480/AHD/2013. ITA NOS. 480 & 631/AHD/2013 & C.O.NO. 127/AHD/2013 . A.Y. 2008 - 09 4 GROUND NO. 1 & 2 ARE WITH RESPECT TO CHALL ENGING THE REOPENING AND THE VALIDITY OF RE - ASSESSMENT U/S. 147 OF THE ACT. 6. BEFORE US, LD. A.R . SUBMITTED THAT FOR A.Y. 08 - 09, INITIALLY ASSESSMENT WAS FRAMED U/S. 143(3) VID E ORDER DATED 30.03.2010. SUBSEQUENTLY NOTICE U/S 148 R.W.S. 147 WAS ISSUED ON 2 8.03.2011 (I.E. WITH I N A PERIOD OF 4 YEARS) AND THE RE - OPENING OF THE ASSESSMENTS WERE BASICALLY RESORTED FOR TWO REASONS NAMELY DISALLOWANCE OF PRIOR PERIO D EXPENSES OF RS. 99,44,276/ - WHICH ACCORDING TO A.O DID NOT RELATE TO A.Y. 08 - 09 AND SECONDLY FOR NON INCLUSION OF UNUTILIZED CENVAT CREDIT WHILE VALUING THE CLOSING STOCK OF RAW MATERIA L S . BEFORE US, LD. A.R. SUBMITTED THAT NOTICE DATED 28.03.2011 U/S 148 OF THE ACT HAS BEEN ISSUED WITHIN A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEA R AND THE JURISDICTION TO REOPEN AN ASSESSMENT CANNOT BE EXERCISED MERELY ON ACCOUNT OF CHANGE OF OPINION . HE FURTHER SUBMITTED THAT ALL MATERIAL FACTS WITH REGARD TO A.Y. 08 - 09 WERE DISCLOSED BY THE ASSESSEE TO THE A.O DURING THE COURSE OF ORIGINAL ASSES SMENT PROCEEDINGS WHICH LE A D TO ASSESSMENT ORDER U/S 143(3) DATED 30.03.2010. FURTHER, THERE WAS NO NEW MATERIAL FACT WHICH HAD COME TO THE NOTICE OF THE A.O THAT COULD LEAD TO HIS REASONABLE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. HE FURTHER SUBMITTE D THAT THE REASONS PROVIDED ONLY INDICATE A DIFFERENT OPINION ON THE SAME FACTS DULY CONSIDERED BY THE A.O IN THE ASSESSMENT ORDER DATED 30.03.2010 PASSED U/S 143(3) OF THE ACT. WITH RESPECT TO VALUATION OF STOCK LD. A.R. SUBMITTED THAT THE ASSESSEE WAS F OLLOWING THE SYSTEM OF ACCOUNTING OF SALES NET OF EXCISE DUTY AND SIMILARLY PURCHASES WERE ALSO ACCOUNTED FOR NET OF EXCISE DUTY. EXCISE DUTY PAID ON PURCHASES ITA NOS. 480 & 631/AHD/2013 & C.O.NO. 127/AHD/2013 . A.Y. 2008 - 09 5 FOR WHICH CENVAT CREDIT WAS AVAILABLE WAS ACCOUNTED FOR AS LOANS AND ADVANCE AND REFLECTED IN THE BALANCE SHEET. HE FURTHER SUBMITTE D THAT THE INVENTORIES WERE VALUED AT LOWER OF COST OR NET REALIZABLE VALUE BY FOLLOWING E XCLUSIVE METHOD OF ACCOUNTING OF EXCISE DUTY. IT WAS FURTHER SUBMITTED THAT THE SAME METHOD OF ACCOUNTING SY STEM HAS BEEN CONSIS TENTLY FOLLOWED BY THE ASSESSEE OVER THE YEARS AND HAS ALSO BEEN ACCEPTED BY THE REVENUE AND FURTHER BY FOLLOWING THE E XCLUSIVE METHOD OF ACCOUNTING THER E WAS NO IMPACT ON THE PROFITS BECAUSE IF THE AMOUNT OF OUTSTANDING CENVAT CREDIT RECEIVABLE AT THE YE AR END IS TREATED TO BE THE INCOME OF THE ASSESSEE , THAN A CORRESPONDING DEDUCTION THEREOF HAS TO THE ALLOWED ON ACCOUNT OF PURCHASES & COST OF GOODS SOLD. THE LD. A.R. FURTHER SUBMITTED THAT THE WORKING OF THE INVENTORY BY FOLLOWING THE INCLUSIVE AND E XC LUSIVE METHOD OF ACCOUNTING FORMED PART OF THE TAX AUDIT REPORT AND THE SAME WAS PERUSED BY THE A.O AT THE TIME OF FRAMING OF ORIGINAL ASSESSMENT AND WAS ALSO ACCEPTED BY HIM. HE THEREFORE SUBMITTED THAT THE REASON GIVEN BY THE A.O WITH RESPECT TO THE NON INCLUSION OF CENVAT CREDIT WAS NOT A NEW MATERIAL FOR THE PURPOSE OF REOPENING OF ASSESSMENT AND THEREFORE THERE WAS NO NEW MATERIAL AVAILABLE WITH THE A.O TO RESORT TO RE - OPENING ON THIS COUNT. WITH RESPECT TO THE PRIOR PERIOD EXPENSES , IT WAS SUBMITTED THAT ASSESSEE DUR ING THE YEAR HAD CREDITED PROFIT AND LOSS ACCOUNT WITH NET PRIOR PERIOD INCOME OF RS. 198.55 LACS. THE DETAILS OF THE SAME WERE SUBMITTED TO THE A.O AT THE TIME OF S CRUTINY PROCEEDINGS AND THE SAME WERE FULLY VERIFIED AND AFTER ITS VERIF ICATION , THE SUBMISSIONS OF ASSESSEE WERE ACCEPTED AND NO DISALLOWANCE WAS MADE. HE ALSO POINTED TO THE REPLIES GIVEN TO THE A.O AT THE TIME OF SCRUTINY PROCEEDINGS AND POINTED TO THE RELEVANT PARAS AT PAGE ITA NOS. 480 & 631/AHD/2013 & C.O.NO. 127/AHD/2013 . A.Y. 2008 - 09 6 54 AND 55 OF THE PAPER BOOK. HE SUBMITTED THAT T HE REASONS STATED BY THE A.O FOR REOPENING THE COMPLETED ASSESSMENT AMOUNTS T O CHANGE OF OPINION AND IT IS NOR PERMISSIBLE AS PER LAW AND THEREFORE IS BAD IN LAW AND FOR WHICH HE ALSO PLACED RELIANCE ON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CAS E OF HEAVY METAL AND TUBE LTD. VS. DCIT ( SPECIAL CIVIL APPLICATION NO. 2463/A/2013 ORDER DATED 22.04.2013 ) AND ALSO PLACED AT PAGE 189 TO 211 OF THE PAPER BOOK , THE COPY OF THE AFORESAID ORDER. HE FURTHER SUBMITTED THAT THE RELIANCE PLACED BY LD. CIT(A) ON THE DECISION OF SUPREME COURT IN THE CASE OF RAJESH JAVERI WAS MISPLACED AND ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE F OR THE REASON THAT IN THE CASE OF RAJESH JAVERI (SUPRA) , THE ASSESSMENT WAS FRAMED U /S. 143(1) AND NOT U/S. 143(3). HE T HEREFORE SUBMITTED THAT THE RE - OPENING BE QUASHED. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ORIGINAL ASSESSMENT WAS FR AMED U/S. 143(3) VIDE ORDER DATED 30.03.2010 AND THE NOTICE U/S 148 WAS ISSUED ON 28.03.2011 AND THUS RE - OPENING HAS BEEN INITIATED WITHIN A PERIOD OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR . IN SUCH CIRCUMSTANCES THE PROVISO TO SECTION 147 OF THE ACT IS CLEARLY NOT APPLICABLE. THEREFORE IT IS NOT NECESSARY FOR THE REVENUE TO PRIMA FACIE ESTABLISH THAT THERE HAS BEEN A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT WHILE ISSUING A NOT ICE FOR REOPENING A COMPLETED ASSESSMENT. HOWEVER IT IS A SETTLED LAW THAT EVEN IN CASE OF REOPENING OF ASSESSMENT WITHIN A PERIOD OF 4 YEARS FROM THE ITA NOS. 480 & 631/AHD/2013 & C.O.NO. 127/AHD/2013 . A.Y. 2008 - 09 7 END OF RELEVANT ASSESSMENT YEARS, THE A.O HAS TO HAVE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HA S ESCAPED ASSESSMENT ON THE BASIS OF TANGIBLE MATERIAL. WHEN ALL MATERIAL FACTS NECESSARY FOR DETERMINATION OF THE INCOME HAS BEEN DISCLOSED BY THE ASSESSEE AND THE A.O HAS TAKEN A PARTICULAR VIEW ON THOSE VIEW ON THOSE DISCLOSED FACTS WHILE PASSING THE AS SESSMENT ORDER IN REGULAR PROCEEDINGS , THEN WITHOUT ANYTHING MORE, IT WOULD NOT BE OPEN TO REOPEN THOSE ASSESSMENT PROCEEDINGS FOR IT WOULD BE A CASE OF CHANGE OF OPINION . IN THE PRESENT CASE, T HE REASONS FOR RE - OPENING INDICATE THAT THE RE - OPENING HAS B EEN INITIATED ON ACCOUNT OF 2 GROUNDS NAMELY THE NON INCLUSION OF CENVAT DUTY WHILE VALUING THE CLOSING STOCK AND ON ACCOUNT OF PRIOR PERIOD EXPENSES. FROM THE COPY OF THE REPLY DATED 28 TH JANUARY, 2010 IN RESPONSE TO THE NOTICE U/S. 142(1) OF THE ACT SUBM ITTED BEFORE THE A.O. D URING THE COURSE OF ORIGINAL PROCEEDINGS, IT IS SEEN THAT THE ASSESSEE HAD REPLIED AS UNDER: - 15(22) WE HAVE SHOWN CLOSING STOCK OF FINISHED GOODS AFTER INCLUDING EXCISE DUTY COMPONENT. THE DETAILS REGARDING VALUATION OF OPENING ST OCK, PURCHASE AND CLOSING STOCK OF INVENTORY IN TERMS OF SECTION 145A AND THE DETAILED WORKING OF DEVIATION, IF ANY, ON THE MATTER OF VALUATION DESCRIBED U/S.145A ARE GIVEN IN ANNEXURE 4 OF THE TAX AUDIT REPORT WHICH SHOWS THAT THERE IS NO IMPACT ON THE PR OFIT & LOSS ACCOUNT EVEN AFTER APPLYING PROVISIONS OF SECTION 145A OF THE ACT. CONSIDERING ABOVE FACT, WE STATE THAT EXCISE DUTY COMPONENT IS INCLUDED IN THE CLOSING STOCK OF FINISHED GOODS. 8. WITH RESPECT TO PRIOR PERIOD EXPENSES , THE ASSESSEE SUBMISSION W AS AS UNDER: - 20.(37) PRIOR PERIOD EXPENSES WE INVITE YOUR KIND ATTENTION TO SCHEDULE 19 OF THE 46 TH ANNUAL REPORT 2007 - 08 IN WHICH UNDER THE HEAD 'PRIOR PERIOD ADJUSTMENT' THERE IS NET INCOME OF RS. 198.55 LACS. WHILE COMPUTING THE INCOME WE HAVE DISALLO WED RS.81L ACS OF DEPRECIATION AND ADDED IN INCOME, THUS THE COMPANY HAS CREDITED TO ITS PROFIT & LOSS ACCOUNT THE SUMS OF RS.279.56 LAKHS (NET) AND OFFERED FOR TAX. THE COMPANY CONTENDS THAT THOUGH THE CREDIT / DEBIT TRANSACTION IS PERTAINING TO EARLIER PE RIOD THE SAME HAVE BEEN ASCERTAINED / CRYSTALLIZED / QUANTIFIED AND SETTLED DURING THE YEAR UNDER CONSIDERATION AND ACCORDINGLY DEBITED / ITA NOS. 480 & 631/AHD/2013 & C.O.NO. 127/AHD/2013 . A.Y. 2008 - 09 8 CREDITED TO PROFIT & LOSS ACCOUNT AND CLAIMED AS SUCH. THESE BEING OF REVENUE ITEMS, WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF BUSINESS, THE SAME HAVE BEEN CLAIMED AS DEDUCTION WHILE COMPUTING THE INCOME. 9. ON THE BASIS OF THE REPLY OF THE ASSESSEE FILED BEFORE A.O IT IS THUS SEEN THAT THE A.O WAS AWARE OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE FOR VALUATION OF CLOSING STOCK AND AFTER HAVING EXAMINED THE ISSUE AND ON BEING SATISFIED WITH THE MATERIAL PRODUCED AND THE EXPLANATION OF THE ASSESSEE, T HE A.O DID NOT MAKE ANY ADDITION ON ACCOUNT OF UNUTILIZED CENVAT CREDIT. SIMILARLY THE SUBMISSION OF THE ASSESSEE WIT H RESPECT TO PRIOR PERIOD EXPENSES WAS ALSO ACCEPTED BY THE A.O WITHOUT MAKING ANY ADDITION DURING THE COURSE OF OR IGINAL ASSESSMENT PROCEEDINGS AND I T CAN TH US BE SAID THAT A.O HAD FORMED AN OPINION DURING THE SCRUTINY ASSESSMENT. THUS IN THE PRESENT CASE AND ON CONSIDERING THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE IMPUGNED NOTICE FOR REASSESSING THE ASSESSMENT YEAR 2008 - 09 IS ISSUED MERELY ON CHANGE OF OPINION AND SEEKS TO REVIEW THE ASSESSMENT WHICH IS ALREADY COMPLETED AND THE SAME IN NOT PERMISS IBLE AS PER LAW. WE THUS SET ASIDE THE NOTICE OF REOPENING THE ASSESSME NT DATED 28.03.2011 AND ALSO ALL CONSEQUENTIAL ORDERS. THUS THE GROUND OF ASSESSEE IS ALLOWED. 10. SINCE THE GROUND OF ASSESSEE HAS BEEN ALLOWED AND THE RE - ASSESSMENT IS HELD TO BE NOT V ALID , T HE GROUNDS RAISED BY THE REVENUE DOES NOT SURVIVE, THUS THE GROUNDS RAISED BY REVENUE ARE DISMISSED AND THE C.O OF THE ASSESSEE IS ALSO DISMISSED. ITA NOS. 480 & 631/AHD/2013 & C.O.NO. 127/AHD/2013 . A.Y. 2008 - 09 9 11. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED AND THE APPEAL OF REVENUE AND C.O OF ASSESSEE ARE D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON - 0 9 - 201 4 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD