Mouldcraft (Hindustan) Pvt. Ltd., Aurangabad v. IT Recovery Officer Range-1, Aurangabad

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER I.T.A. NO. 1166/PN/2009 : A.Y. 2005-06 MOULDCRAFT (HINDUSTAN) PVT. LTD. GUT NO. 99 VILLAGE PHAROLA PAITHAN ROAD AURANGABAD PAN AABCM 2508 F APPELLANT VS. I.T.O. RANGE 1 AURANGABAD RESPONDENT APPELLANT BY: SHRI KISHORE PHADKE RESPONDENT BY: SHRI HEMANT KUMAR LEUVA ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT-(A) AURANGABAD DATED 18-6-2009 FOR A.Y. 2005-06 ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LEARNED A.O I.E. THE INCOME TAX RECOVERY OFFICER (T RO) RANGE 1 AURANGABAD ERRED IN LAW AND CIT(A) AURANGABAD H AS ERRED IN CONFIRMING THE SAME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED ASSESSING OFFICER HAS ERRED IN HOLDING THAT THE UNUTILIZED CLOSING BALANCE OF RG - 23A - II IS AN I TEM OF TAX RELATED TO CLOSING STOCK OF THE COMPANY AND COMMISS IONER OF INCOME TAX (APPEALS) AURANGABAD ERRED IN CONFIRMIN G THE SAME. 3. THE LEARNED ASSESSING OFFICER FURTHER ERRED ON F ACTS IN IGNORING THE SPECIFIC MENTION OF THE RG - 23 - II B ALANCES 145A WORKING BY THE GROSS METHOD ETC. IN THE TAX AU DIT PAGE 2 OF 4 ITA NO. 1166/PN/2009 MOULDCRAFT (HINDUSTAN) A.Y. 2005-06 REPORT OF THE ASSESSEE COMPANY AS WELL AS SPECIFIC SUBMISSIONS BEFORE HIM DURING THE COURSE OF ASSESSM ENT PROCEEDINGS AND COMMISSIONER OF INCOME TAX (APPEALS ) AURANGABAD ERRED IN CONFIRMING THE SAME. 4. THE LEARNED ASSESSING OFFICER ERRED IN LAW IN NO T APPRECIATING THAT AN ITEM TO BE INCLUDED IN CLOSING STOCK MUST HAVE BEEN CONSTRUCTIVELY DEBITED TO THE PROFIT AND LOSS A/C. HE THUS ERRED IN LAW AND ON FACTS IN IGNORING CARDI NAL PRINCIPALS OF ACCOUNTANCY AND FUNDAMENTAL JAW FAILE D IN APPRECIATING THE MATCHING PRINCIPAL/CONCEPT OF THE MATTER WHILE THE COMMISSIONER OF INCOME TAX (APPEALS) AUR ANGABAD ERRED IN CONFIRMING THE SAME. 5. THE LEARNED ASSESSING OFFICER HAS ERRED IN CONSI DERING THE PROVISIONS OF LAW AND HAS FAILED IN APPRECIATIN G THE DECISIONS OF HONORABLE APEX COURT AND OTHER COURT W HICH HAVE HELD REPEATEDLY THAT EITHER GROSS OR NET METHOD OIL VALUATION OF STOCKS PURCHASES ETC. DO NOT LEAD TO DIFFERENT PROFIT I INCOME AND COMMISSIONER OF INCOME TAX (APPEALS) AURANGABAD ERRED IN NOT CONSIDERING THE SAME. 6. THE ORDER UNDER SECTION 143(3) DATED 19.12.2007 OF INCOME TAX RECOVERY OFFICER RANGE-1 AURANGABAD IS BAD IN LAW AND THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AURANGABAD CONFIRMING THE AFORESAID ORDE R ALSO NEEDS TO BE CANCELLED. 2. THE ASSESSEE IS ENGAGED IN MANUFACTURING OF EXCI SABLE PRODUCTS. FOR THE ASSESSMENT YEAR UNDER CONSIDERAT ION THE ASSESSEE FILED ITS RETURN DECLARING TOTAL INCOME AT RS. 14 20 680/-. AS PER SECTION 145A THE ASSESSEE IS REQUIRED TO VAL UE PURCHASE AND SALE OF GOODS AND INVENTORY INCLUDING THE AMOUNT OF ANY TAX DUTY CESS OR FEE ACTUALLY PAID OR INCURRED BY THE ASSESS EE TO BRING THE GOODS. THE ASSESSING OFFICER FOUND THAT THE ASSESSE E HAD NOT INCLUDED THE UNAVAILED MODVAT CREDIT WHILE RECORDIN G CLOSING STOCK OF MATERIAL. ACCORDINGLY THE ASSESSING OFFICER WO RKED OUT AN AMOUNT OF RS. 8 04 428/- AS DIFFERENCE OF CLOSING B ALANCE OF MODVAT PAGE 3 OF 4 ITA NO. 1166/PN/2009 MOULDCRAFT (HINDUSTAN) A.Y. 2005-06 CREDIT AND THE OPENING BALANCE OF CENVAT CREDIT AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY WHO HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 3. DURING THE PROCEEDINGS BEFORE US THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR ISSUE HAS COME UP F OR CONSIDERATION BEFORE CO-ORDINATE BENCH OF THIS TRIB UNAL IN THE ASSESSEES OWN CASE FOR A.Y. 2003-04 WHEREIN FOLLOW ING THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. MAHAVIR ALUMINUM LTD. (2008) 297 ITR 77 (DEL) THE I TAT HAS REVERSED THE VIEW TAKEN BY THE CIT(A) AND DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE. THE LEARNED DR HAS NOT DISP UTED THIS FACTUAL POSITION. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD WE FIND THAT SIMILAR ISSUE RAISED IN THIS A PPEAL WAS THE SUBJECT MATTER OF APPEAL BEFORE CO-ORDINATE BENCH O F THIS TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER IN ITA NO. 712/PN/2 006 FOR A.Y. 2003-04 DATED 29-5-2009 HAS DECIDED THE ISSUE IN FA VOUR OF THE ASSESSEE FOLLOWING THE JUDGMENT OF HONBLE DELHI HI GH COURT IN THE CASE OF MAHAVIR ALUMINUM LTD. (SUPRA). IT HAS BEEN HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF MAHAVIR ALU MINUM LTD. (SUPRA) THAT TO GIVE EFFECT TO SECTION 145A IF THER E IS A CHANGE IN THE PAGE 4 OF 4 ITA NO. 1166/PN/2009 MOULDCRAFT (HINDUSTAN) A.Y. 2005-06 CLOSING STOCK AS ON THE CLOSING OF THE ACCOUNTING P ERIOD HERE MUST NECESSARILY BE A CORRESPONDING ADJUSTMENT IN THE OP ENING STOCK. SO FOLLOWING THE AFORESAID DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL WE REVERSE THE VIEW TAKEN BY THE AUTHORIT IES BELOW AND DIRECT TO ALLOW THE CLAIM OF THE ASSESSEE. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. DECISION PRONOUNCED IN THE OPEN COURT ON 23 RD FEBRUARY 2011. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER PUNE DATED THE 23 RD FEBRUARY 2011 ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (A) AURANGABAD 4. THE CIT AURANGABAD 4. THE D.R B BENCH PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE