TMI Blog2014 (7) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... ry information. In fact, change of accounting policy in A.Y. 2005-06 itself not on record. - even though assessment was reopened after 4 years, on the facts of the case, A.O. is well within the jurisdiction to reopen the assessment - Decided against the assessee. Double deduction of expenses towards excise duty – the amount added to the closing stock by the assessee as well as debited to profit & loss account as expense – Held that:- Under the provisions of section 43B, excise duty paid is allowable as deduction if it is paid on or before the relevant due dates out of the outstanding amounts at the end year - in the computation of income the assessee has to add the amount outstanding at the end of the year and then should claim the amount as deduction - As explained in A.Y. 2005-06, assessee has added amount of ₹ 1,43,47,164/- as amount of addition to the closing stock as the assessee was following the exclusive method earlier - Because of change in method of accounting, the closing stock value has gone up by that amount. In order to neutralise the same, the same amount was also claimed in P & L account as debit to the P & L account under the Head “Manufacturing & Direct E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia claimed expenditure towards excise duty in the years. For the A.Y. 2007-08 Ld. CIT noticed that assessee has claimed excise duty in the P L account and also further claimed in computation of income thereby, there was double deduction. Therefore, he initiated proceedings under section 263 and set aside assessment to the A.O. for proper verification as he was of the opinion that the claims have not been examined in the assessment completed under section 143(3) originally. Consequent to that, A.O. made the assessment in A.Y. 2007-08 and reopened assessments for A.Ys. 2005-06 and 2006-07. Assessee has come in appeal on three quantum appeals and also filed appeal against the order passed under section 263, belatedly by 771 days. In the petition filed for condonation of delay, it was submitted that the appeal could not be filed in time as the papers had been misplaced by one of the office staff and the same could be traced out only on 12.08.2013 with a delay of 771 days. 3. We have heard the Ld. Counsel and the Ld. D.R. on the condonation petition filed for admitting the appeal ITA.No.1201/Hyd/2013. 4. First of all, there is no merit in the condonation petition filed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an and Eastern Newspapers Society vs. CIT 119 ITR 996 (SC), the decision in this case cannot be applied, as there is no indication on record that assessments were reopened consequent to audit objection. Nowhere in the order it was mentioned that cases were reopened on the basis of audit objection and assessee has also not placed the satisfaction recorded, which was communicated to the assessee, so that this aspect can be examined. Just because, it was contended that the reopening is on the basis of audit objection, we cannot rely on the case law alone without examining the facts. Therefore, this contention of the Ld. Counsel cannot be accepted. The major contention raised by the Ld. Counsel is with reference to the fact that the proceedings were initiated after a period of 4 years from the end of relevant A.Y. It was contended that no notice under section 148 of the Act can be issued after a period of 4 years from the end of relevant A.Y. unless there is failure on the part of the assessee to disclose fully and truly all the material facts during the course of original assessment proceedings. Ld. Counsel relied on the following case law. (i) NYK Line (India) Ltd. vs. DCIT (2012) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an incorrect proposition. If the Assessing Officer does not agree to Audit objection, but still issues notice u/s.148, such reopening is invalid. However, if the Assessing Officer believes that the objection raised by the Audit is correct and then issues the notice for reopening the assessment, such notice is perfectly in order. In the instant case, Assessing Officer agreed with audit objection and then issued notice u/s.148. 5.3. The next technical ground taken by the appellant is that the Assessing Officer did not pass any speaking order on objections raised by it against reassessment. This ground again has no merit as the Assessing Officer has clearly answered all the objections raised by the assessee in his re-assessment order itself. Whether he disposes off the objections by a separate order or they are taken care of in the reassessment order itself, is only a matter of procedure and not a matter of merit. 5.4. Regarding the fourth technical ground raised by the appellant, that there was no failure on the part of the assessee to reopen the assessment beyond 4 years, it is to be mentioned that as per Explanation (1) to section 147, mere production of books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings, we have asked the assessee counsel to furnish the treatment of excise duty in the books of accounts of the assessee which was submitted as under : Treatment of Excise Duty for the A.Ys. 2004-05 to 2008-09 : 1. Till AY 2004-05 the following treatment was given by the appellant company in respect of Expenditure towards Excise Duty: The Excise Duty on closing stock is neither included in the closing stock nor is debited to the P L A/c for the year ending 31.03.04. The assessee company has claimed the excise duty expenditure in the profit and loss account for the year ending 31.03.04 as under: Particulars Amount (Rs.) Excise Duty Expenditure XXX Less: CENVAT Input Credit XX Net Expenditure Debited to Profit and Loss Account XXX 2. It is submitted that the appellant company has followed the following accounting system in respect of the Excise Duty for the AYs 2005-06 to 2007-08 as under : a. The appellant company has included the amount of excise duty payable on closing stock in the closing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant company in the AY 2008-09 also . 12. A.O. disallowed the amount which was claimed in the return of income under section 43B, stating that it amounts to double claim. AO s opinion as extracted in para 5.3 of the assessment order in A.Y. 2005-06 is as under : 5.3 Further incorrectness of the claim can be judged from the fact that in the A.Y. 2004-05, there was no such claim. For the first time, the assessee claimed the deduction in the adjusted computation of income in the AY 2005-06. In such case, it amounts to change in method of accounting. Assuming but admitting that there was change in method of accounting of income, such change of method of accounting was not a bonafide one and solely motivated with a desire of reduction of tax liability and hence rejected. In any case, this fact was neither notified in the annual account nor in the. Tax Audit Report thus the argument was not proved. Further more, the deduction as claimed if allowed in the AY 2005-06 would lead anomalous situation of allowing the deduction relatable to the Excise Duty on closing stock twice i.e., in the AY 2004-05 and also in the AY 2005-06. Seen from any angle the it is a double claim and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amount Income Sales Operating Receipts 1,00,95,33,213 Other Income 2,16,81,016 Increase (Decrease) in stock - 1,97,01,449 1,01,15,12,780 Expenses Material Consumed/ Dealt 83,58,29,160 Manufacturing / Direct Expenses 4,61,16,306 Payment to employees and other benefits 22,53,536 Admin Selling Exp 1,18,58,933 Interest Financial Charges 2,85,24,028 Excise Duty 1,35,85,330 Depreciation 2,21,33,386 96,03,00,679 Profit (Loss) for the year 5,12,12,101 Rescheduled P L of Abhishek Transtel Limited 31.03.2006 Particulars Amount Income Sales Operating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Particulars Amount Income Sales Operating Receipts 1,16,18,62,075 Other Income 1,38,73,939 Increase (Decrease) in stock [6,52,70,830 + 1,03,70,019] 7,56,40,849 1,25,13,76,863 Expenses Material Consumedl Dealt 1,11,78,14,172 Manufacturing 1 Direct Expenses 3,47,26,866 Payment to employees and other benefits 25,11,511 Admin Selling Exp 1,02,46,685 Interest Financial Charges 2,00,75,806 Excise Dutv ( 41,72,230+ 1,03,70,019) 1,45,42,249 Depreciation 64,53,891 1,20,63,71,180 Profit (Loss) for the year 4,50,05,683 He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,326 Depreciation 20,50,084 26,76,01,688 Profit (Loss) for the year 1,87,80,234 Here, opening stock is reduced by excise duty of ₹ 1,96,92,048/ - and Actual excise duty of ₹ 3,00,52,326/ - is debited in P L. 15. It was the submission that over a period of 4 years all the amounts are claimed only once and there is no double claim. Ld. Counsel also relied on the judgment of the Hon ble High Court of Bombay in the case of CIT vs. Nagri Mills Co. Ltd., 33 ITR 681 to submit that as to the year in which a deduction is allowable may be material when the rate of tax chargeable on assessee in two different years is different. But in the case of income of a company where tax is at uniform rate, it should be of no consequence to the department if a claim is made in one year or in other year. It was the submission that over a period the amounts are correctly claimed and therefore, no addition need to be made. 16. Learned D.R. however, relied on the orders of the authorities to submit that assessee has claimed double deduction in all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the complete claim of excise duty and its effect in various assessment years so that necessary amounts if any, disallowable can be disallowed under section 43B or can be allowed as claimed by the assessee under section 43B. For this purpose, orders of A.O. and Ld. CIT(A) on this issue are set aside and issue is restored to the file of A.O. for fresh examination on facts. A.O. is directed to keep explanation given by the assessee in mind and seek necessary clarification if required. 18. Assessee-company relied on the judgment of Hon ble Bombay High Court in the case of CIT vs. Nagri Mills Co. Ltd. (1958) 33 ITR 681 (Bom.) (HC) wherein the Hon ble High Court has held as under: We have often wondered why the Income-tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income-tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in resp ..... 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