2016 (6) TMI 1363 - AT - Income Tax

Addition on CENVAT credit and VAT credit u/s 145A - HELD THAT - The assessee has demonstrated in the statement prepared by him that there is no impact on the net profit, if taxes are accounted either under exclusive or under inclusive method Tax authorities have not examined the statement furnished by the assessee though learned CIT(A) has made certain computations and granted partial relief to the assessee. We have noticed that he has not found fault with the statement furnished by the assessee. This issue requires fresh examination at the end of the Assessing Officer by duly considering reconciliation statement furnished by the assessee. Accordingly, we set aside the order passed by learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine the reconciliation statement furnished by the assessee and take appropriate decision in accordance with law after affording necessary opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes

Summary

Issues:
Addition on CENVAT credit and VAT credit u/s. 145A of the Act.

Analysis:
The appeal pertains to the assessment year 2010-11 and focuses on the addition made by the Assessing Officer regarding CENVAT credit and VAT credit under section 145A of the Income Tax Act. The Assessing Officer had increased the value of opening and closing stock by including applicable taxes, resulting in an addition of ?34.04 lakhs. However, in the appellate proceedings, the CIT(A) recalculated the impact using an inclusive method, determining it to be ?5,41,245. The appellant contested this decision, arguing that there would be no impact on profit even under the inclusive method, as demonstrated in a statement provided to the authorities.

The appellant's representative pointed out that a similar issue had been addressed by the CIT(A) in another context, leading to no addition by the Assessing Officer upon reexamination. The Departmental Representative suggested that the reconciliation statement submitted by the appellant should be reexamined by the Assessing Officer. The Tribunal observed that neither the Assessing Officer nor the CIT(A) had thoroughly analyzed the statement provided by the appellant, which showed no impact on net profit regardless of the accounting method used. Consequently, the Tribunal set aside the CIT(A)'s decision and directed the Assessing Officer to review the reconciliation statement and make a decision in accordance with the law after giving the appellant an opportunity to be heard.

Ultimately, the Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the need for a fresh examination of the issue by the Assessing Officer based on the reconciliation statement provided by the appellant. The decision was pronounced in open court on 6.6.2016.