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TMI Blog2014 (7) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... ting, CIT(A) confirmed the addition to the extent of ₹ 24,709 - the Revenue could not controvert the findings of CIT(A) – thus, there was no reason to interfere with the order of CIT(A) – Decided against Revenue. - I.T.A. No. 1180/AHD/2011 - - - Dated:- 13-6-2014 - Shri D. K. Tyagi, J. M. And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri A. K. Pandey, Sr. D.R. For the Respondent : Shri Tushar Hemani ORDER Per Shri Anil Chaturvedi,A.M. 1. This appeal is filed by the Revenue against the order CIT(A)-XX, Ahmedabad dated 25.01.2011 for A.Y. 2005-06. 2. The facts as culled out from the material on record are as under. 3. Assessee is a partnership firm stated to be engaged in the business of man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of closing stock, corresponding debit on account of purchase has to be considered, If the debit is so considered, there will 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 credit to the CENVAT account have been generated from the purchases made during the year. 4. Though the Assessee has raised several grounds, the only issue is with respect to deletion of addition made on account of unutilized CENVAT credit. 5. A.O noticed that Assessee was following mercantile system of accounting and the purchases were debited to the Profit and Loss account by following exclusive method of accounting. A.O was of the view that since the Assessee followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e extra excise duty paid in that year. Similarly in the year in which the assessee wants to inflate its profits, in that case no excise duty is paid and the unutilized CENVAT credit is used to pay the duty otherwise payable, this has the effect of unutilized CENVAT credit going down in the balance sheet but the profit in the profit and loss account increases because of reduced debit on account of less excise duty paid. Thus, the exclusive method results in shifting of profit from one year to another year and does not give the correct income of the year. 3.3(i) Moreover after 1/4/1999 after the amendment to section 145A of the IT Act such exclusive method of accounting is not permitted. Thus the appellant was required to include the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g earlier. Hence the value of the opening stock while following the exclusive method of accounting had been reduced this year. The AR of the appellant filed detailed working of the change in profits due to exclusive method of accounting and has worked out the same to be ₹ 24,709/-The addition of ₹ 13,24,090/- as made by the AO is not justified in this case because the appellant was following inclusive method of accounting in the earlier accounting year hence the value of the opening stock, cost of goods sold and the raw materials and finished products lying in the closing stock would have to be changed accordingly. The AR of the appellant has done a detailed working of the difference in profit arising out of the change in method ..... X X X X Extracts X X X X X X X X Extracts X X X X
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