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TMI Blog2019 (4) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, net of CENVAT/VAT consistently. Thus, if the inventory of closing stock is enhanced by the amount of CENVAT credit attributable to it, then the amount of corresponding purchases should also be increased by the said amount which will result in tax neutral exercise. Thus, in our considered view, the Assessing Officer erred in enhancing the value of closing stock without giving effect to the purchases. There is no ambiguity that the assessee has been following the exclusive method of accounting. However, the assessee to comply the provisions of section 145A of the Act has given the effect of CENVAT/VAT in the opening stock, purchases, sales and closing stock in the memorandum profit and loss account as placed. Assessee has made its com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 90,61,172/- u/s.145A. 3. The only issue raised by the Revenue is that the Ld. CIT(A) erred in deleting the addition made by the Assessing Officer for ₹ 90,61,172/-u/s 145A of the Act. 4. The facts of the case are that the assessee is a partnership firm and engaged in the business of manufacturing and trading of electronic goods and spares. The assessee during the assessment proceedings claimed that it has been following the exclusive method of accounting. Therefore, the opening stock, purchases, sales and closing stock of the goods were recorded in the books of accounts without including the amount of CENVAT/VAT. 4.1. However, the Assessing Officer observed that it is mandatory to value the closing stock as per the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethod is to be adopted, then uniformly the same method must be adopted while valuing the unconsumed stock at the end of the year. Whichever method one adopts, the result would be same... 5.2.1 It is seen that the AO has only partially followed the provisions of Section 145A of the I.T. Act. I am inclined to agree with the contention of the appellant that it is not appropriate to include the amount of tax etc includible in the value of closing stock only without modifying the figures of purchases, sales and opening stock. Moreover, the appellant has been following this method of accounting for the past many years. The method of accounting regularly followed by the taxpayer which was accepted by the AO in the past cannot be rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer about the correctness/completeness of the books of accounts of the assessee. 10. From the preceding discussion, we note that the assessee has been recording its transactions of purchase, sales, and valuation of inventories, net of CENVAT/VAT consistently. Thus, if the inventory of closing stock is enhanced by the amount of CENVAT credit attributable to it, then the amount of corresponding purchases should also be increased by the said amount which will result in tax neutral exercise. Thus, in our considered view, the Assessing Officer erred in enhancing the value of closing stock without giving effect to the purchases. In this regard, we find support and guidance from the judgment of Hon ble Gujarat High Court in the case of Pr.CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the memorandum profit and loss account as on 31/03/2008. Thus, we can safely conclude that though the assessee is following the exclusive method of accounting which is contrary to the provisions of section 145A of the Act, but the effect of the same has been duly considered by the assessee in its memorandum profit and loss account which was offered to tax. Thus, there cannot be any fault of the assessee merely on the reasoning that the assessee has not valued its closing stock as per the provisions of section 145A of the Act. 12. In view of the above, we concur with the view of the Ld. CIT(A) and accordingly decline to interfere in his order. Hence, the ground of appeal of the Revenue is dismissed. 13. In the result, Revenue s ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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