TMI Blog2015 (9) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned notice for reassessing the assessment year 200809 is issued merely on change of opinion and seeks to review the assessment which is already completed and the same in not permissible as per law. We thus set aside the notice of reopening the assessment dated 28.03.2011 and also all consequential orders. - Decided in favour of assessee - Tax Appeal No. 167 of 2015 - - - Dated:- 31-3-2015 - M. R. Shah And S. H. Vora, JJ. For the Petitioner : Mr K Parikh, Adv. For the Respondent : Mr MAnish J Shah, Adv. JUDGEMENT ( Per : Honourable Mr. Justice M. R. Shah ) 1.0. Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal A Bench, Ahmedabad dated 25.09.2014 passed in ITA No.480/AHD/2013 for AY 2008-09, by which, the learned Tribunal has allowed the said appeal preferred by the assessee and has held the re-assessment for AY 2008-09 as invalid, the Revenue has preferred present Tax Appeal with the following proposed substantial question of law: Whether, on the facts and in the circumstances of the case, the ITAT was right in quashing the reassessment on the ground that the A.O has reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for reopening of assessment. That the AO disposed of the objection filed by the assessee vide order dated 3.11.2011. That thereafter, the AO finalized the reassessment proceedings and recomputed the income and disallowed the expenses of ₹ 99,44,276/- on the ground that the assessee had fallen under Mercantile System of accounting and therefore, the assessee was not entitled to prior period expenditure during the year under consideration. That the AO also made the addition of ₹ 1,44,63,411/- to the assessed income on account of increase unutilized CENVAT Credit considering the same to be the income of the assessee. 2.2. That feeling aggrieved and dissatisfied with the assessment order passed under Section 143(3) of the Act for AY 200809, the assessee preferred appeal before the learned CIT(A) against the disallowance of ₹ 99,44,276/- as well as additional addition of ₹ 1,44,63,411/-. The assessee also challenged the validity of the reassessment proceedings also before the learned CIT(A). That the learned CIT(A) partly allowed the said appeal in allowing the deduction of ₹ 1,44,63,411/- on account of unutilized CENVAT Credit at the end of the year. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the AO, it cannot be said that AO had formed an opinion. It is therefore, submitted that the learned Tribunal has materially erred in holding the reassessment invalid and consequently not considering the appeal preferred by the revenue on merits. He has also relied upon para 27 of the decision of the Division Bench of this Court in the case of Gujarat Power Corporation Limited vs. Assistant Commissioner of Income Tax reported in 2013 (350) ITR 266(Guj) in support of his prayer to allow the present appeal and quash and set aside the impugned judgment and order passed by the learned Tribunal in holding reassessment invalid. 4.0. Present appeal is opposed by Shri Manish Shah, learned advocate for the assessee. It is vehemently submitted that in the facts and circumstances of the case, the learned Tribunal has rightly held the reassessment invalid and has rightly quashed and set aside the reassessment for AY 2008-09. 4.1. It is submitted by Shri Shah, learned advocate for the assessee that AO reopened the assessment for AY 2008-09 on the ground that expenses of ₹ 99,44,276/- was not related to previous year 2007-08 relevant to year 2008-09 for the purpose of computing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct was completed on 30.3.2010 at total income of ₹ 446,00,97,836/-. The P/L a/c of the assessee was charged with an amount of ₹ 1,98,55,423/- being the net of prior period expenses as per detail in the table below. Particulars Rs. Prior period income 2,97,99,699/- Prior period expense 99,44,276/- Net prior period expense charged to P/L A/c. 1,98,55,423/- The expenses of ₹ 99,44,276/- was not related to previous year 2007-08 relevant to AY 2008-09 for the purpose of computing chargeable under the head Profits and gains of business or profession , the entire prior period expenses of ₹ 99,44,276/- was disallowable. Further, it was observed that finished goods of the assessee were shown inclusive of Excise Duty but the raw materials were exclusive of CENVAT as derived from statement No.8 to clause 22(a) of form no.3CD wherein it was mentioned that MODVAT utilized is not shown in P L Account. The unutilized CENVAT was shown under the 'Loans and Advances of the balance s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company has credited to its Profit and Loss Account the sums of ₹ 279.56 lakhs (net) and offered for tax. The Company contends that though the credit / debit transaction is pertaining to earlier period the same have been ascertained / crystallized / quantified and settled during the year under consideration and accordingly debited / credited to Profit and Loss account and claimed as such. These being of revenue items, wholly and exclusively for the purpose of business, the same have been claimed as deduction while computing the income. 9.0. That thereafter, AO accepted the submissions on behalf of the assessee and AO examined the issue with regard to the inclusion of excise duty in the inventory of raw materials and completed the assessment and did not disallowed the prior period expenditure of ₹ 99,44,276/- as well as did not make any addition of unutilized CENVAT Credit of ₹ 1,44,63,411/- in the income of the assessee. Now, on the very issue which came to be considered by the AO, the assessment has been reopened. Considering the facts and circumstances, the learned Tribunal has rightly held the reassessment invalid by observing that reassessment is sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 145 A of the Act. Considering above fact, we state that excise duty component is included in the closing stock of finished goods. 8. With respect to prior period expenses, the Assessee submission was as under: 20.37). Prior period expenses. We invite your kind attention to Schedule 19 of the 46th Annual Report 2007-08 in which under the head Prior Period Adjustment there is net income of ₹ 198.55 lacs. While computing the income we have disallowed ₹ 81 lacs of depreciation and added in income, thus the company has credited to its Profit and Loss Account the sums of ₹ 279.56 lakhs (net) and offered for tax. The Company contends that though the credit / debit transaction is pertaining to earlier period the same have been ascertained / crystallized / quantified and settled during the year under consideration and accordingly debited / credited to Profit and Loss account and claimed as such. These being of revenue items, wholly and exclusively for the purpose of business, the same have been claimed as deduction while computing the income. 20.38). 9. On the basis of the reply of the Assessee filed before A.O it is thus seen that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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