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TMI Blog2020 (4) TMI 782X X X X Extracts X X X X X X X X Extracts X X X X ..... oposed action to disallow by applying the provisions of Section 43B is erroneous and the same is therefore directed to be deleted. - Decided against revenue. - ITA Nos.400 & 401/NAG/2016 - - - Dated:- 20-2-2020 - Shri D. Karunakara Rao, AM And Shri Partha Sarthi Chaudhury, JM For the Assessee : Shri K. P. Dewani For the Revenue : Smt. Agnes Thomas ORDER PER D. KARUNAKARA RAO, AM: There are two appeals under consideration filed by the Revenue involving two different assessment years i.e. A.Y. 2009-10 and 2012-13. The appeal-wise adjudication is as follows. ITA No.400/NAG/2016 A.Y. 2009-10 2. This appeal is directed against the order of the CIT(A)-II, Nagpur dated 07.04.2016 for the assessment year 2009-10. 3. In this appeal, the grounds raised by the Revenue are as under :- 1. On the facts and in the circumstances of the case the learned CIT(A) erred in holding that reopening of the case is not in accordance with the provisions of section 147 of the Act. 2. On the facts and in the circumstances of the case the learned CIT(A) erred in holding that reopening assessment cannot be based on material and information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of appellate proceedings. 4. Briefly stated the relevant facts include that the assessee is a company and is engaged in the business of manufacture and erection of Transmission Lines and other Galvanized Steel Towers. The assessee filed the return of income declaring loss of ₹ 5,94,72,322/-. The assessment was finalized u/s 143(3) of the Act. Subsequently, the case was reopened by issue of notice u/s 148 of the Act. During the reassessment proceedings, the Assessing Officer noted that the assessee was following an exclusive method of accounting for valuation of purchase and sale of goods and inventory i.e. purchase, sales and the inventory were being accounted on the basis of net of taxes. The Assessing Officer also noted that in Annexure XI of Form No.3CD, the assessee shown Excise Duty (ED) amounting to ₹ 1,45,78,655/- vide utilization of CENVAT credit by debiting to ED Receivable Account. Further, the Assessing Officer noted that there is no requirement of actual payment or actual debit of excise duty. However, invoking the provisions of section 43B of the Act, the Assessing Officer made the addition of ₹ 1,45,78,655/- on account of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 013) 355 ITR 0400 (Guj.) Jagat Jayantilal Parikh vs. DCIT (P- 134 to 143) (134, 135) iv) Hon'ble High Court of New Delhi order in ITA No. 1444/2018 in the case of Lalit Bagai vide order dated 21/08/2019 (P-144 to 153) (151, 153) D) A.O. in the reasons recorded has observed that ₹ 1,45,78,655/- is not allowable expenditure u/s 43B of I.T. Act 1961. The aforesaid amount is not payable and thus there is no case for any disallowance u/s 43B of I.T. Act 1961. The reasons recorded for escapement of income are factually incorrect and thus consequent belief of escapement of income is erroneous. Thus notice u/s 148 is bad in law. E) The CIT(A) has correctly appreciated facts on record and followed the decision of jurisdictional High Court to hold that the notice u/s 148 is bad in law. 8. On hearing both the sides on this legal issue, we find that the CIT(A) correctly relied on the Hon ble Bombay High Court s judgement in the case of Cartini India Ltd. vs. Addl. CIT Anr., 314 ITR 275 (Bom.-HC) where it is held that the audit note/observation cannot constitute the opinion of the Assessing Officer when it comes to the applicability of the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it objection by RAP. As per the audit objection, the assessee maintained the Excise Duty receivable from DGFT amounting to ₹ 1,45,78,655/- and the said amount attracts the provisions of section 43B of the Act. It is argued vehemently by the ld. Counsel for the assessee that such amounts are outside the scope of the said section 43B of the Act and, therefore, the relief granted by the CIT(A) is reasonable. In fact, bringing our attention to para 7.7 to 9 of the order of the CIT(A), ld. Counsel for the assessee submitted that similar issue came up for adjudication because of similar audit objection in the earlier assessment year i.e. A.Y. 2008-09 in own case and the Assessing Officer chose not to make any disallowance u/s 43B of the Act. In fact, the Assessing Officer accepted the fact that such amounts are outside the scope of section 43B of the Act. In this regard ld. Counsel for the assessee brought our attention to the contents of page 121 to 123 of the Paper Book to ascertain the position. 11. On the other hand, ld. DR for the Revenue relied on the order of the Assessing Officer. 12. On hearing both the sides and considering the order of the CIT(A) on this issue, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter considering the provisions of section 145A of I.T. Act 1961. At Annexure-VI of tax audit report (Page-48) auditor has certified the various figures of excise duty which have bearing on profitability and has certified that as to how it has no effect on assessable income at the hands of assessee. The sum of ₹ 1,45,78,655/- is explained at Sr. No. 3 4 as same has neither been shown as receipt nor has it been claimed as expenditure. It is also certified that excise duty is paid on sale of finished goods. In view of above there is no case for making any addition at the hands of assessee by A.O. C) The A.O. at para 4 has accepted that the sum of ₹ 1,45,78,655/- has been paid by utilizing the CENVET credit a/c. It is thus evident that the receivable amount shown in balance sheet is already paid by assessee on making CENVAT (Central Value Added Tax) payment at the time of making of purchases. In view of above there remains nothing which requires any consideration u/s 43B of I.T. Act 1961. D) A.O. has observed that the amount receivable on account of excise duty from DGFT for excise duty is taxable at the hands of assessee. A.O. having concluded that it is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. The ld. Counsel for the assessee submitted that the Revenue in appeal raised grounds assailing the findings of CIT(A) in deleting the additions. Thus, the tax effect on the said additions is less than ₹ 50 lakhs. 18. The ld. DR for the Revenue fairly admitted that in the present appeal by the Revenue the tax effect is less than ₹ 50 lakhs. 19. Both sides heard. The Revenue is in appeal against the order of CIT(A) in deleting the additions. Undisputedly, the tax effect involved in appeal is less than the monetary limit prescribed by the recent CBDT Circular No.17/2019 [F.No.279/Misc.142/2007-ITJ (Pt)] dated 08th August, 2019 read with Circular No.3 of 2018 dated 11.07.2018 for filing of appeals before the Tribunal by the Department. The CBDT vide circular dated 08-08-2019 (supra) has amended Para 3 of Circular No.3 of 2018 dated 11-07-2018 thereby enhancing monetary limit of tax effect from ₹ 20 Lakhs to ₹ 50 Lakhs for filing of appeals by the Department before the Tribunal. Thus, without going into merit of the issues raised in the appeal, in view of the CBDT Circular (supra) the present appeal of the Revenue is dismissed on account of low ..... X X X X Extracts X X X X X X X X Extracts X X X X
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