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TMI Blog2012 (11) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... eason that the A.O. had examined the same. The order of assessment dated 4-12-2009, no doubt does not contain a detailed discussion on this aspect, but that however would not render the order as erroneous as decided in Commissioner Of Income-Tax Versus Gabriel India Limited [1993 (4) TMI 55 - BOMBAY HIGH COURT]. Thus as the A.O. had made necessary inquiries and the assessee had provided an explanation in that regard.Thus, it can be said the A.O. on being satisfied did not make any addition and disallowance relying on CIT vs. Indo Nippon Chemicals Co.[2003 (1) TMI 8 - SUPREME COURT] wherein held that hat no addition on account of modvat credit can be made - Therefore the order of the A.O. cannot be considered either to be erroneous or prejudicial to the interest of the Revenue - in favour of assessee. - I.T.A. No.690/AHD/2012. - - - Dated:- 12-10-2012 - SHRI MUKUL KR.SHRAWAT SHRI ANIL CHATURVEDI JJ. Appellant by: Mr. Kedar Laddha. Respondent by: Mr.B.K.S.Pandya, CIT (DR) ORDER PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. This appeal is filed by the assessee against the order of CIT-III, Ahmedabad dated 21-2-2012 passed u/s. 263 of the Act, for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2011 it has been argued before CIT-III that if MODVAT and VAT are added to the closing stock the same would have to be accounted for in the debit side of the P L account and the same would have to be allowed u/s. 43B of the Act. In the present case the assessee had paid VAT and Excise duty of Rs.33,98,009/- before filing the return of income. In support of his contentions, A.R. has placed reliance o the following case-laws:- a. CIT vs. Indo Nippon Chemicals Co. Ltd. (2003) 182 CTR (SC) 291 b. CIT vs. Mahavir Aluminium Ltd., ITA 348/2007 dated 28-11-2007 c. West Coast Paper Mills Ltd. 102 ITD 19 d. CIT vs. Ahmedabad New Cotton Mills Co. Ltd., AIR 1930 Privy Council 56. e. Mehra Electric Company (Calcutta). 5. The assessee further submitted that the assessment u/s.143(3) was completed by A.O. after detailed inquiry, verification of the details, books of accounts and other records called for from time to time. Thus the order of the A.O., cannot be said to be without application of mind and therefore the order of the A.O. was not erroneous and prejudicial to the interest of Revenue. The assessee submitted before the Ld. CIT that the requirements of invoking the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials in the opening stock and closing stock are different then, the effect of inclusion of the Excise Duty in the opening stock addition the closing stock would not be zero. This is important since, the A.R. has claimed that even if the provisions of section 145A were to be applied it would be revenue neutral. The claim of the A.R. is therefore proved to be incorrect as established by the ITAT itself. The addition of the Excise Duty competent to the closing stock in accordance with the provisions of section 145A has been upheld also by the Hon ble Delhi High Court in the case of Commissioner of Income Tax vs. Mahavir Aluminium Ltd. (2008) 297 ITR 77. Reliance is also placed on the case of West Coast Paper Mills Ltd. 102 ITD 19 (Mum.) 6.2. Moreover, the section clearly provides that the valuation of purchases, sales and inventories shall be in accordance with the method of accounting regularly employed by the assessee but it has to be further adjusted to include assessment year tax, duty, cess or fee which has been incurred to bring the goods to the place of its location and condition, as on the date of valuation. The assessee has furnished a reconciliation statement wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on record the copy of the letter addressed to Addl. CIT wherein the assessee had submitted the various details from time to time. The Ld. A.R. submitted that the assessee was following exclusive method of accounting for the purpose of accounting of sales, purchase and valuation of stock. Accordingly, the excise duty was not included. Even if the assessee followed inclusive method of accounting, the same would be tax neutral and which was demonstrated by the working given in the tax audit report. He placed on record the copy of tax audit report along with the annexures. It was thus submitted, that the A.O. after satisfying himself had allowed the deduction/allowance to the assessee. In these circumstances, the order of the A.O. cannot be termed as passed without application of mind. The assessee relied on various decisions in its support. 9. The Ld. A.R. further submitted that for the purpose of invoking the provisions of section 263 two conditions are required to be satisfied namely, the order is prejudicial to the interest of Revenue and the order is erroneous. Both the conditions have to be simultaneously fulfilled. If only one condition is fulfilled, then also provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in law. Similarly, in a situation where an assessment has been framed after making necessary inquiries such order cannot be held to be erroneous simply because in the order the A.O. did not make an elaborate discussion in that regard. 13. The Bombay High Court in the case of CIT vs. Gaberial India Ltd. (1993) 203 ITR 108 (Bom.) has discussed the exercise of power of CIT to make revision suo moto. The Hon ble High Court has held as under:- The power of suo motu revision under sub-section (1) of section 263 of the Income tax Act, 1961, is in the nature of supervisory jurisdiction and can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise the power of revision under this sub-section viz. (i) the order should be erroneous; and (ii) by virtue of the order being erroneous prejudice must have been caused to the interests of the Revenue. An order cannot be termed as erroneous unless it is not in accordance with law. If an Income tax Officer acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because,. According to him, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. Therefore, one has to see from the record as to whether there was application of mind before allowing the expenditure in question as revenue expenditure. If there was any inquiry, even inadequate, that would not be itself give occasion to the CIT to pass order u/s.263 of the Act merely because he has a different opinion in the mater. It is only in cases of lack of inquiry that such a course of action would be open. Seen in the background of the above proposition of law, it appears that the assessee had made written submissions and submitted the details before A.O. whereby it was contended that the assessee has been consistently following exclusive method of accounting for sales, purchase and closing stock. It also demonstrated through the annexure of tax audit report certified by Chartered Accountant that whichever method of accounting is adopted (inclusive or exclusive method) by the assessee, there is no impact on the profit of the year. Similarly assessee also submitted before A.O. CIT the method of accounting employed consistently followed by it for accounting of Excise duty and CENVAT and by following either of the method there is no impact on profit and loss accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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