The ACIT, Circle-1, Bhavnagar V. M/s. Gautam Ship Breaking Inds.Ltd., Bhavnagar

ITA 1178/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80249 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-07-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 21-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV SRDR
• Keywords: Reassessment proceedings
• Section: 145; 148

Judgement Text

, , , , B, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, B BENCH . .. . . .. . , !' !' !' !', , , , #$ %&'( #$ %&'( #$ %&'( #$ %&'(, , , , )* + ) ' )* + ) ' )* + ) ' )* + ) ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO.1178/AHD/2011 WITH CO NO.157/AHD/2011 [ASSTT.YEAR : 2005-2006] ACIT, CIR.1 BHAVNAGAR. /VS. GAUTAM SHIP BREAKING IND. P. LTD. JIVAN MANSION, LATI FUVARA BHAVNAGAR. PAN : AAECS 01198 B ( (( (-. -. -. -. / APPELLANT) ( (( (/0-. /0-. /0-. /0-. / RESPONDENT) 1& 2 3 )/ ASSESSEE BY : SHRI TUSHAR HEMANI + 2 3 )/ REVENUE BY : SHRI B.L. YADAV, SR.DR 5 2 &(*/ DATE OF HEARING : 10 TH JULY, 2014 678 2 &(*/ DATE OF PRONOUNCEMENT : 08/08/2014 )9 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE REVENUE AND CO BY THE ASSESSEE FOR THE ASSTT.YEAR 2005-2006 ARE DIRECTED AGAINST THE ORDER OF THE CIT(A). THESE ARE BEING DISPOSED OF WITH THIS CONSOLIDATED ORDER. ITA NO.1178/AHD/2011 (REVENUES APPEAL) ITA NO.1178 /AHD/2011 WITH CO -2- 2. THE GROUNDS OF THE APPEAL OF THE REVENUE ARE AS UNDER: 1. THE LD.CIT(A) HAS ERRED ON LAW AND ON FACTS IN DELETING ADDITION OF RS.1,24,69,484/- MADE ON ACCOUNT OF UNUTILIZED CENV AT CREDIT. 2.1 THE LD.CIT(A) HAS FURTHER ERRED ON LAW AND ON FACTS IN ACCEPTING THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE WH ICH WAS IN CONTRAVENTION OF SEC. 145 A OF THE ACT WHICH MANDAT ES INCLUSIVE METHOD OF ACCOUNTING IN RESPECT OF DUTIES AND TAXES PAYABL E TOWARDS THE PURCHASE FOR THE PURPOSE OF THE ACT. 2.2 THE LD.CIT(A) HAS ERRED ON LAW AND ON FACTS, W HEN IT IS HELD BY HIM THAT AS PER SEC 145A THE OPENING STOCK AND PURCHASE S MADE ARE ALSO TO BE VALUED INCLUDING THE PAYMENT TO CUSTOM AND EXCISE D UTY DEPARTMENT DUTY (CALLED AS CVD) AND EXCISE PAID ON SUCH PURCHASE AN D THEREFORE IN THE CIRCUMSTANCES THE DUTIES SO OUTSTANDING IS CONSIDER ED AS PART OF THE VALUE OF CLOSING STOCK, CORRESPONDING DEBIT ON ACCOUNT PU RCHASE HAS TO BE CONSIDERED. IF THE DEBIT IS SO CONSIDERED, THERE W ILL BE NO EFFECT TO THE TOTAL INCOME IN THE CASE BECAUSE IN THIS CASE THERE WILL BE NO OPENING BALANCE OF UNUTILIZED CENVAT CREDIT AND ALL THE CRE DIT TO THE CENVAT ACCOUNT HAVE BEEN GENERATED FROM THE PURCHASES MADE DURING THE YEAR. 3. THE LEARNED DR SUBMITTED THAT THE CIT(A) WAS WRO NG IN ACCEPTING THE METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE, WHICH WAS IN CONTRAVENTION OF SECTION 145A OF THE ACT, WHICH REQUIRES INCLUSIVE M ETHOD OF ACCOUNTING IN RESPECT OF DUTIES AND TAXES PAYABLE TOWARDS PURCHAS E, FOR THE PURPOSE OF THE INCOME TAX ACT. HE REFERRED TO PARA 2 AND 3 OF TH E ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. HE RELIED ON THE ORDER OF THE AO. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THERE WAS NO OPENING BALANCE OF CENVAT CREDIT, AND THEREFORE, THE ASSESS EE HAS NOT CLAIMED ANY ADJUSTMENT IN THE VALUE OF CLOSING STOCK ON THIS AC COUNT. HE SUBMITTED THAT THE ASSESSEE HAS NOT DEBITED EXCISE DUTY SO PAID ON PUR CHASES MADE IN THE PROFIT & LOSS ACCOUNT, SINCE THE ASSESSEE WAS FOLLOWING EXCL USIVE METHOD OF ACCOUNTING. HE REFERRED TO RELEVANT PORTIONS OF THE CIT(A)S OR DER IN SUPPORT OF THE CASE OF THE ASSESSEE. HE RELIED ON THE ORDER OF THE CIT(A) . 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT THE THERE WAS NO OPEN ING BALANCE OF CENVAT ITA NO.1178 /AHD/2011 WITH CO -3- CREDIT AND THE ASSESSEE HAS NOT CLAIMED ANY ADJUSTM ENT IN THE VALUE OF OPENING STOCK ON THIS ACCOUNT. THE ASSESSEE HAS ALSO NOT D EBITED EXCISE DUTY SO PAID ON PURCHASE OF SHIP TO ITS PROFIT & LOSS ACCOUNT SINCE THE ASSESSEE WAS FOLLOWING EXCLUSIVE METHOD OF ACCOUNTING. THE AO HAS CONSIDE RED THE SAME AS PART OF THE VALUE OF CLOSING STOCK. WE FIND THAT IF THE STAND OF THE AO IS UPHELD, EVEN THEN, THERE WILL BE NO EFFECT TO THE INCOME OF THE ASSESS EE IN THIS CASE, AS IN THAT CASE DUTIES SO OUTSTANDING, CONSIDERED AS PART OF THE VA LUE OF CLOSING STOCK, CORRESPONDING DEBIT ON ACCOUNT OF PURCHASE HAS TO B E CONSIDERED. ALL THE CREDITS IN THE CENVAT ACCOUNT WERE GENERATED FROM T HE PURCHASES MADE DURING THE RELEVANT PERIOD. IN THESE FACTS OF THE CASE, WE HOLD THAT THERE WAS NO MISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE IN HOLDING THAT EVEN AS PER THE PROVISION OF SECTION 145A, THERE SHALL BE NO EFFECT TO THE TOTAL INCOME IN THIS CASE, BECAUSE, IN THIS CASE, THERE IS NO OPENING ST OCK OF UNTILISED CENVAT CREDIT AND ALL THE CREDITS TO THE CENVAT HAVE BEEN GENERATED FROM THE PURCHASES MADE DURING THE YEAR. ACCORDINGLY, THE O RDER OF THE CIT(A) ON THIS ISSUE IS CONFIRMED AND THE GROUNDS OF THE APPEAL OF THE REVENUE ARE DISMISSED. CO NO.157/AHD/2011 (ASSESSEES CO) 6. THE ONLY GROUND OF CO OF THE ASSESSEE IS AS UNDE R: 1. ON FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (A) ERRED IN DISMISSING THE FOLLOWING GROUND THAT WAS RAISED BY THE APPELLANT BEFORE HIM. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE REASSESSMENT PROCEEDINGS INITIATED U/S.147 WERE BAD IN LAW AND CONSEQUENTLY, THE IMPUGNED REASSESSMENT ORDER PASSE D BY THE AO IS ALSO BAD IN LAW. THE SAME MAY BE QUASHED. HE SHOULD HAVE SPECIFICALLY HELD THAT THE ENTIRE RE ASSESSMENT PROCEEDINGS INITIATED U/S.147 WAS BAD IN LAW AND THE SAME WAS R EQUIRED TO BE QUASHED. 7. WE HAVE HEARD PARTIES. IN VIEW OF THE FACT THAT THE ASSESSEE SUCCEEDED ON MERITS IN THIS CASE, AND THE REVENUES APPEAL FOR T HE RELEVANT ASSTT.YEAR 2005- ITA NO.1178 /AHD/2011 WITH CO -4- 06 HAS BEEN DISMISSED IN THE FOREGOING PARAS OF THI S ORDER, WE HOLD THAT THE ISSUE RAISED, WITH REGARD TO THE LEGALITY OF NOTICE ISSUE D UNDER SECTION 148 FOR REOPENING OF THE ASSESSMENT OF THE ASSESSEE, IS MER ELY ACADEMIC, AND ACCORDINGLY, NOT ADJUDICATED UPON. 8. IN THE RESULT, APPEAL OF THE REVENUE AND CO OF T HE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( %&'( %&'( %&'( %&'( / ANIL CHATURVEDI) )* + )* + )* + )* + /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD