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TMI Blog2017 (1) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... AT credit is devoid of merit. The CIT(A) in our view has rightly reversed the action of AO. Accordingly, we are not inclined to interfere with the order of the CIT(A). - Decided against revenue. - I.T.A. No.1449/Ahd/2012 - - - Dated:- 5-1-2017 - SHRI RAJPAL YADAV, JUDICIAL MEMBER And SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For The Appellant : Shri James Kurian, Sr.DR For The Respondent : Shri Monil Shah, AR ORDER PER PRADIP KUMAR KEDIA, AM: This appeal by the Revenue is directed against the order of the Commissioner of Income Tax(Appeals)-1, Valsad dated 29/03/2012 for the Assessment Year (AY) 2005-06. 2. The ground of appeal raised by the Revenue reads as under:- 1. On the facts and circumstances of the case and in law, the ld.CIT(A) has erred in deleting the addition made of ₹ 1,85,49,005/- by allowing CENVAT Credit. 2. Briefly stated, the assessee filed return of income for the Ay 2005- 06 declaring a total income of ₹ 13,61,993/- on 20/10/2005. The case was selected under scrutiny and the assessment was completed under section 143(3)of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide order dated 22/02/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransporting during the day and it is voluminous task to point out whether our trucks are recorded in the nakas or not. We further state that the Excise Dept. has issued us the show cause notice on 04/10/2007 alleging of wrong Cenvat Credit taken. However they have not passed any order till today casting any liability on us. Since 2007 we are asking the various details cross examinations from the Excise Deptt. On the basis of which they have issued show cause notice. We regret to state that the Excise Dept. has not given till today Full details. We hereby like to point out your attention to the fact that Excise Dept. has not objected to our High Seas Purchases. The purchases are genuine even as per Excise Dept. We further state that the CVD on High Seas purchases are paid directly by us by pay orders to Central Govt. The Xerox copies of the pay orders/Bank statements bill of entries evidencing the payment of CVD are enclosed herewith as ANNEXUREVII. We are also enclosing the copies of RG-23A - part II in which we have taken Cenvat Credit of CVD paid as ANNBXURE-VIIL Thus we vehemently state the Countervailing Customs duty i.e. CVD of ₹ 1,85,49,005/- is actually paid by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter Delhi, which proves that the said LR NO.DLI-101-6541 issued by M/s Time Space Haulers is a fake LR and no goods have been transported from Delhi as mentioned therein. [5.3] In view of the facts and circumstances narrated in SCN dated 04- 10-2007, it is found that the assessee company has wrongly availed the CENVAT credit amounting to ₹ 1,85,49,005/ on imported remelted copper ingots/wire bars cleared from ICD Tughlaquabad as detailed in Annexure-A to the show cause notice issued by the Excise Department. It has been concluded that the material imported has not been utilized for the purpose of production and sold in and around Delhi. The assessee has availed/claimed wrong CENVAT credit to the tune of ₹ 1,85,49,005/-which is in fact, bogus expenses claimed for the year under consideration. This is a new evidences/information gathered in the case of the assessee. Such information was not provided by the assessee during the course of original assessment proceedings. This act of the assessee, in not disclosing true and correct affairs of its business, is deliberate and with a view to avoid the payment of legitimate tax dues. Therefore, bad claim of CENVAT Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw materials and sells directly without manufacturing, in the cost of the imported raw material is ₹ 100/-, the appellant gets a CENVAT Credit of ₹ 10/-. When the goods are manufactured and sold this ₹ 10/- is adjusted against the payment of Duty. In the instant case, the appellant follows the Exclusive method of accounting i.e. a separate a/c. is maintained for excise duty. Hence, the CENVAT Credit has not been routed through P L a/c. which is allowed by the principles of AS. Then, how can the AO disallow an item which was not claimed by the appellant. The next question is to be answered is whether disallowance of CENVAT Credit will result in income of the appellant? In my humble opinion, CENVAT Credit disallowance cannot form income because if the purchases on which CENVAT Credit has been availed and claimed alleged to be bogus, then corresponding sale figures will also get disturbed as far as Income Tax angle is concerned. The AO has not given his findings that there is deficiency in the books of a/c of the appellant. In my view the AO has not applied his mind into the concept of Income vis- -vis the CENVAT Credit. There is also nothing on record to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Custom Duty (CVD) actually paid on the high seas purchase has not been disputed. The corresponding manufacture of goods and sale thereof owing to such high seas purchase has not been disturbed. The Ld.AR submitted that in the absence of purchase, the corresponding production and sale cannot happen. Thus, the action of the AO is vitiated on this score also. The Ld.AR relied upon the decision of Hon ble Gujarat High Court in the case of Futura Ceramics (P.) Ltd. vs. State of Gujarat reported in [2013] 40 taxmann.com 404 (Gujarat) and pointed out that merely because Excise Department issued a SCN cannot be a ground to presume and conclude that there was evasion of Excise Duty. 8. We have carefully considered the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the case-law cited by the Ld.AR. We find ourselves in complete agreement with the conclusion arrived at by the CIT(A) on merits. The CIT(A) has observed as noted supra that there is nothing on record to show that Central Excise Department has finally charged the assessee of misutilisation of CENVAT credit as alleged in the SCN. We find that the AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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