MARUTI DYECHEM INDUSTRIES,,AHMEDABAD vs. THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-7(2),, AHMEDABAD

In the solitary substantial ground of appeal, assessee has pleaded that Ld. CIT(A) has erred in confirming the addition of Rs. 33,58,003/-.

The brief facts of the case are that assessee firm at the relevant time was engaged in manufacture export and trading in all types of reactive dyes. It has filed its return of income on 24.09.2012 declaring total income of Rs. 1,66,53,620/-. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. The Ld. Assessing Officer had enquired from the assessee, whether it has included MODVAT credit in the value of closing stock as contemplated under section 145A of the Income tax Act or not. The assessee filed written submissions and contended that it has been maintaining separate accounts for excise and VAT and other levies. These amounts were not debited while making the purchases, in other words the CENVAT and other excise component were not claimed by the assessee in the purchase cost. Accordingly they are not being included in the closing stock. The Assessing Officer was not satisfied with the explanation of the assessee. He estimated the value of excise duty and VAT according to the rates on the items available in the closing stock and made an addition of Rs. 33,58,003/-.

Dissatisfied with the addition assessee carried out the matter in appeal before CIT(A). Ld. CIT(A) has confirmed the addition by following the order of his predecessor in assessment year 2011-12. He has reproduced the order of CIT(A) passed on 2011-12 pages 3 to 8 of the impugned order thereafter Ld. CIT(A) has observed as under:-

Ld. counsel for the assessee submitted that an identical issue cropped up first time in assessment year 2007-08 when dispute travelled up to the Tribunal. The Tribunal has deleted the addition vide ITA No. 278/Ahd/2011. In assessment year 2011-12 when this dispute came up before the Tribunal in ITA No. 1585/Ahd/2015 assessee relied upon the order of the ITAT passed in A.Y. 2007-08 and Tribunal has deleted the addition. He placed on record copies of both the orders.

On the other hand Ld. D.R relied upon the orders of Revenue Authorities.

We have duly considered the rival contentions and gone through the record carefully. We find that Ld. First Appellate Authority has placed her reliance on the finding of her predecessor recorded in A.Y. 2011-12, while confirming the addition. That finding has already been set aside by the ITAT in ITA No. 1589/Ahd/2015. Thus there is no foundation available with the department in support of the CIT(A) order. The Tribunal in assessment year 2007-08 has considered this issue elaborately and recorded following findings:-

We do not see any disparity on facts, therefore respectfully following the orders of the Co-ordinate Bench in earlier years. We allow this ground of appeal and delete the addition.

In the result appeal of the assessee is allowed.