2013 (7) TMI 385 - HC - Income Tax

Unpaid Excise Duty - deduction u/s 43B - valuation of stock u/s 145A - Whether the ITAT erred in deleting the addition made by the AO u/s 43B r.w. Section 145A on account of Excise Duty - the sum was undoubtedly unpaid and the assessee s contention is not merited - the goods were actually removed thus the duty was payable - The assessee cannot profit or take advantage from that default or omission. Having regard to the object and the wording of Section 145-A it is held that the AO s opinion could not have been faulted - Section 145 of the Act obliges every assessee to maintain, subject to accounting standards which may be notified by the Central Government, books of accounts on cash or mercantile basis. Section 145-A begins with a non-obstante clause, and prescribes that the value of goods shall be further adjusted to include the amount of any tax, duty, cess or fee by whatever name called actually paid - section 145 was introduced in 1999 and overrides other provisions The decision of the Supreme Court in Orient Paper Mills Ltd. Vs. Union of India (1967 (3) TMI 47 - SUPREME COURT OF INDIA) holds authority on the issue that removal of goods from the factory premises, or other specified place implies that it is leviable, and not postponed appeal decided in favour of revenue.

Issues:
1. Appeal by revenue against ITAT order disallowing appeal.
2. Assessment of claimed expenses by Assessee.
3. Addition of Excise Duty by Assessing Officer.
4. CIT(A) and ITAT decisions on the above issues.
5. Question of law raised by the Revenue.
6. Arguments by the Revenue against ITAT order.
7. Arguments by the Assessee in defense.
8. Interpretation of Sections 43B and 145A.
9. Applicability of Section 145A on valuation of stock.
10. Judicial precedents cited by both parties.
11. Explanation of Section 145A.
12. Impact of Section 145A on valuation of goods.
13. Supreme Court decision on removal of goods and excise duty.
14. Assessment of unpaid excise duty.
15. Conclusion and judgment in favor of the Revenue.

Analysis:

The case involves an appeal by the revenue against the ITAT order disallowing the appeal for the assessment year 2005-06. The Assessee, a limited company, declared a loss and claimed expenses related to 'Molasses Storage Fund' without providing specific details. The Assessing Officer added the suppressed amount to the assessment. Additionally, Excise Duty additions were made, but CIT(A) and ITAT deleted these based on previous findings. The main question raised was the deletion of Rs. 69,91,983/- of Excise Duty by the ITAT.

The Revenue argued that the ITAT failed to consider the Assessee's suppression of amounts and the provisions of Section 43B and 145A. They contended that the ITAT erred in deleting the Excise Duty addition without proper analysis. The Assessee, on the other hand, argued that no entry was booked for excise duty and Sections 43B and 145A should not be read together. They relied on judicial precedents to support their position.

The interpretation of Sections 43B and 145A was crucial in this case. The Revenue insisted on the inclusion of unpaid excise duty in the valuation, citing the provisions of Section 145A. The Assessee argued against such inclusion, relying on Supreme Court judgments and the purpose of Section 145A. The impact of Section 145A on the valuation of goods and the requirement to include actual paid amounts were key points of contention.

The judgment favored the Revenue, emphasizing the importance of actual payment of excise duty for valuation purposes. The Supreme Court's decision on the removal of goods and excise duty liability was cited to support the conclusion that the duty was payable upon removal. Ultimately, the appeal was allowed in favor of the Revenue, highlighting the significance of Section 145A in valuing goods for tax purposes.

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