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TMI Blog2022 (2) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... nd evidence produced by the appellant with regard to the impugned additions. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming that the notice of reopening issued u/s. 148 and the proceedings u/s. 147 were valid and justified in law. 2.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought to have held that the notice u/s. 148 and the proceedings u/s. 147 initiated by AO both were illegal and unlawful. 3.1 The Ld. CIT(A) has erred in law and or in facts upholding the additions amounting to Rs. 27,24,159/- made towards excise duty, CST & VAT. 3.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought to have deleted the additions amounting to Rs. 27,24,159/- made towards excise duty, CST & VAT. Both the lower authorities have failed to appreciate the method of accounting followed by the appellant. 4.1 Without prejudice to above and in the alternative the Ld. CIT(A) has failed to appreciate that the addition towards unavailed credits in respect of taxes, Cess were not justified. It is, therefore, prayed that the additions upheld by the CIT(A) may kindly be deleted. 3. Ground No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to those amounts paid on purchases whose credit could not be availed by the assessee and did not pertain at all to the entire purchases made by the assessee. 8. In this regard, we find that the assessee had evidenced his contention by demonstrating the accounting for sales and purchases net of taxes in its books of accounts by placing copies of the following accounts for the year before the lower authorities a) the purchase account, b) the Excise duty account, c) CST account and d) VAT account 9. He also placed copies of bills of purchases along with the journal vouchers reflecting the fact that the purchase bills were accounted for net of duties and taxes. The same were also placed before us in a paper book at pages 75-128. 10. The submission of the assessee before the AO explaining the nature of the amounts of VAT, Excise duty and Cess debited to the profit and loss account filed on 23/08/2016 reproduced at page 9 of the Ld. CIT(A) is as under: 1. In trading account, both sales and purchase have been mentioned without EXCISE, CST and VAT. Copy of sales and purchase account is attached here with. 2. In Trading Account, we have presented the Sales with Excise and V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trovert the contention of the assessee. 14. In view of the uncontroverted factual contention of the assessee evidenced with documents to the effect that sales and purchases were booked net of taxes by it, the finding of the revenue authorities that the assessee had debited duties and taxes paid on purchases while reflecting sales net of taxes thus resulting in claim of excess deduction of the said taxes/duties, stands ousted. 15. The Ld. CIT(A), we find though has appeared to have appreciated the contention of the assessee that the duties and taxes debited to the profit and loss account represented that portion of the duties and taxes which could not be set off against the taxes required paid by the assessee on sales, But at the same time, we find, he has come up with his own logic and reasoning for dismissing the same and which to our mind makes no sense at all. 16. The Ld. CIT(A) has rejected the assessee's contention of the CST debited to the profit and loss account of Rs. 20,70,811/- as pertaining to Pune Branch in respect of purchases made from outside the State which was not eligible for set off against VAT of the State, by stating that the assessee had also made inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales in Pune which were not there. The fact that assessee had made total CST sales of 10.59 crores does not help the case of the Revenue in meeting and controverting the specific contention of the assessee as aforestated. The same therefore cannot form the basis for rejecting the assesses explanation, we hold. 18. Similarly, we find that in the case of VAT while the assessee's explanation of VAT debited to the profit and loss account was that it represented the excess of amount of VAT receivable on purchases as against amount payable on sales and which was not available for set off, the Ld. CIT(A) has rejected the same by stating that the assessee has shown the same amount of VAT as debited in the profit and loss account as receivable in his balance sheet. The relevant findings of the Ld. CIT(A) to this effect at Para 4.1.3 of his order is as under: 4.1.3. In respect of VAT of Rs. 5,77,764/-, it is claimed that the same pertained to difference amount of VAT, Additional VAT, Additional Cess etc. receivable. This argument of appellant is also found to be incorrect because in the Balance Sheet under the head loan and advances (Schedule-9), VAT receivable has been shown at Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der is as under: 10. During the assessment proceeding of the A.Y. 2014-15, same issue has been raised by the Ld. AO and we have replied on the same line, which was accepted by the Ld. AO and no addition has been made by the Ld. AO. Copy of our reply as well as Assessment Order has been attached here with for your kind reference. 21. The aforestated contention has also remained uncontroverted by the Revenue. Therefore even by the principle of consistency the impugned addition was not warranted. 22. In view of the above, we hold that the revenue authorities have proceeded on totally incorrect interpretation of facts of the case while making the impugned addition of Rs. 27,24,159/- on account of Excise duty, VAT and CST debited to the profit and loss account which we find the assessee had duly explained for doing so and it is clearly not a case of any extra claim made on account of the same of the assessee. 23. In view of our finding as above, the addition made of Rs. 27,24,159/- is directed to be deleted. Grounds of appeal of ground No. 3.1 and 3.2 are accordingly allowed. 24. In effect, appeal of the Assessee is partly allowed. Order pronounced in the open court on 24-01-2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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