ALEXANDER FRANCIS LOBO, MUMBAI V. ACIT CIR 19(2), MUMBAI

ITA 6372/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4015 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 10-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN KUMAR
• Assessee Lawyers: HEMANT JUDIA
• Keywords: Difference of opinion; Change of opinion
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER. AND SMT ASHA VIJAY RAGHAVAN, JUDICIAL MEMBER ITA NO.6372/MUM./2009 (ASSESSMENT YEAR : 200304 ) DATE OF HEARING: 10.8.2010 ALEXENDER FRANCIS LOBO 3 RD FLOOR, DIAMOND QUEEN WEST AVENUE, SANTACRUZ (WEST) MUMBAI 400 054 PAN AAWPL5582C .. APPELLANT VERSUS ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 19(2), MUMBAI .... RESPONDENT ASSESSEE BY : SHRI HEMANT JUDIA REVENUE BY : SHRI SHRAVAN KUMAR O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL BY THE ASSESSEE, IS DIRECTED AGAINST OR DER DATED 27 TH OCTOBER 2009, PASSED BY THE LEARNED CIT(A)XXX, MUM BAI, FOR ASSESSMENT YEAR 200304. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS E NGAGED IN THE BUSINESS OF MANUFACTURE OF MACHINES, TOOLS, PARTICU LARLY SURFACE GRINDER. THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) ON 9 TH MARCH 2006, DETERMINING THE TOTAL INCOME AT ` 2,14,24,090. SUBSEQUENTLY, NOTICE U/S 148 WAS ISSUED ON 31 ST MARCH 2008, AND THE ASSESSMENT WAS RE-OPENED U/S 14 7 FOR THE REASON THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT ON ACCOUNT OF UNDER ITA NO. 6372/MUM./2009 ALEXANDER FRANCIS LOBO 2 UTILIZED MODVAT CREDIT OF ` 7,35,853 AS ON 31 ST MARCH 2003. THE ASSESSING OFFICER, AFTER REJECTING THE ASSESSEES EXPLANATION ON THE GROUND THAT RE- OPENING WAS DONE WITHIN FOUR YEARS OF COMPLETION OF EARLIER ASSESSMENT, PROCEEDED TO MAKE THE ASSESSMENT. 3. THE ASSESSEE, IN ITS REPLY, SUBMITTED THAT THE MODV AT CREDIT SHOWN IN THE BALANCE SHEET WAS IN THE NATURE OF ADVANCE LYIN G WITH THE GOVERNMENT AND THE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING TH E SAME. THE ASSESSING OFFICER NOTICED THAT OPENING BALANCE OF UNUTILIZED MODVAT WAS ADJUSTED DURING THE YEAR AND CLOSING BALANCE OF ` 7,35,853 R EMAINED UNUTILIZED OUT OF CURRENT MODVAT VALUE OF ` 24,73,823. IN VIEW OF THE PROVISIONS OF SECTION 145A, HE MADE THE ADDITION TO THE CLOSING STOCK OF ` 7,35,853. 4. THE ASSESSEE HAD NOT RAISED THIS GROUND OF APPEAL B EFORE THE LEARNED CIT(A). HOWEVER, BEFORE US, THE ASSESSEE HAS FILED A PETITION DATED 20 TH NOVEMBER 2009, RAISING ADDITIONAL GROUND OF APPEAL IN THIS REGARD. THIS BEING PURELY A LEGAL ISSUE, WE ADMIT THE SAME AND PROCEED TO ADJUDICATE THIS ISSUE ON MERIT. 5. APROPOS GROUND NO.1, WHICH IS RELATING TO RE-OPENIN G, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT (A), PARTICULARLY IN VIEW OF THE FACT THAT THE RE-OPENING WAS DONE IN ORDER TO C OMPLY WITH THE PROVISIONS OF SECTION 145A. THE ESCAPEMENT OF INCOME WAS CLEAR LY IN VIEW OF THE EXPLANATION 2, CLAUSE (C), SUB-CLAUSE (I), VIZ. INC OME CHARGEABLE TO TAX HAD BEEN UNDER ASSESSED. IT IS NOT THE CASE OF ASSESSEE THAT THE RE-OPENING HAS BEEN DONE ON ACCOUNT OF CHANGE OF OPINION. ACCORDIN GLY, THIS GROUND OF APPEAL IS DISMISSED. 6. APROPOS GROUND NO.2, WHICH RELATES TO ADDITION CONF IRMED BY THE LEARNED CIT(A) OF ` 7,35,853 ON ACCOUNT OF MODVAT CREDIT, LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED THAT IF THE ASSESSING OF FICER HAD INCREASED THE CLOSING STOCK, THEN, CORRESPONDINGLY, OPENING STOCK WAS REQUIRED TO BE INCREASED. HE SUBMITTED THAT THE ASSESSEE HAS CONSI STENTLY ACCOUNTED PURCHASES AT GROSS VALUE I.E., BASIC PRICE PLUS CEN TRAL EXCISE PLUS SALES TAX AND, ACCORDINGLY, THE CLOSING STOCK HAD BEEN VALUED AT GROSS VALUE. NO SEPARATE MODVAT ON PURCHASE ACCOUNT WAS MAINTAINED BY THE ASSESSEE. ITA NO. 6372/MUM./2009 ALEXANDER FRANCIS LOBO 3 CENTRAL EXCISE DUTY WAS PAID AFTER ADJUSTING THE MO DVAT CREDIT AVAILABLE AS PER RG-I REGISTER, THE MODVAT BALANCE WHICH WAS LEF T UNADJUSTED WAS TREATED BY THE ASSESSEE AS PRE-PAID EXPENSES AND CA RRIED FORWARD TO NEXT YEAR. FURTHER, THOUGH THE ENTIRE CLOSING BALANCE OF MODVAT WAS INCLUDED IN THE VALUE OF CLOSING STOCK, THE OPENING BALANCE OF MODVAT TO THE EXTENT OF ` 6,02,439 HAD NOT BEEN TAKEN INTO CONSIDERATION. HE SUBMITTED THAT SINCE INVENTORY IS ALREADY INCLUSIVE OF ALL THE TAX, THER EFORE, ADDITION OF UNADJUSTED MODVAT BALANCE WOULD AMOUNT TO DOUBLE TAXATION. 7. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER H AND, SUBMITTED THAT SINCE THE ASSESSEE WAS FOLLOWING INCLUSIVE MET HOD OF ACCOUNTING, THERE WAS NO QUESTION OF DOUBLE TAXATION. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE OR DERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. ACCORDING TO ASSESSEES OWN SUBMISSIONS, NO SEPARATE MODVAT ON PURCHASE ACC OUNT WAS MAINTAINED BY THE ASSESSEE AND THE CENTRAL EXCISE DUTY WAS PAI D AFTER ADJUSTING THE MODVAT CREDIT AVAILABLE AS PER RG-I REGISTER. THERE FORE, IN VIEW OF THE PROVISIONS OF SECTION 145A, THE CLOSING STOCK WAS R EQUIRED TO BE ENHANCED BY UNADJUSTED MODVAT CREDIT. HOWEVER, IN VIEW OF THE D ECISION OF THE HONBLE DELHI HIGH COURT, IN MAHAVIR ALUMINUM, THE OPENING STOCK WAS REQUIRED TO BE ADJUSTED. HOWEVER, THE ASSESSING OFFICER OBSERVED T HAT THE OPENING STOCK HAS ALREADY BEEN ADJUSTED. THIS ASPECT NEEDS TO BE VERI FIED BY THE ASSESSING OFFICER WHILE GIVING EFFECT TO THIS ORDER. INSOFAR AS ASSESSEES PLEA REGARDING DOUBLE TAXATION IS CONCERNED, WE DO NOT FIND ANY ME RIT IN THE SAME BECAUSE THE OPENING STOCK HAS ALSO BEEN ADJUSTED ACCORDINGL Y. KEEPING IN VIEW THE FORGOING DISCUSSION, THIS GROUND OF APPEAL IS ALSO DISMISSED. 9. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.10.2010. SD/- ASHA VIJAY RAGHAVAN JUDICIAL MEMBER SD/- S.V. MEHROTRA ACCOUNTANT MEMBER MUMBAI, DATED: 27 TH OCTOBER 2010 ITA NO. 6372/MUM./2009 ALEXANDER FRANCIS LOBO 4 COPY TO : (1) THE ASSESSEE (2) THE RESPONDENT (3) THE CIT(A), MUMBAI, CONCERNED (4) THE CIT, MUMBAI CITY CONCERNED (5) THE DR, A BENCH, ITAT, MUMBAI TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY DATE INITIAL 1. DRAFT DICTATED ON 22.10.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 25.10.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 25.10.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 25.10.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 25.10.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 27.10.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK 28.10.2010 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER