MAHINDRA SONA LTD,MUMBAI vs. DCIT CIR 2(2), MUMBAI

The solitary issue urged in this appeal relates to addition on CENVAT credit and VAT credit u/s. 145A of the Act.

We have heard the parties and perused the record. The assessee has been following exclusive method of accounting for accounting the taxes in the books of account. During the course of assessment proceedings, the Assessing Officer grossed up the value of opening stock and closing stock with applicable taxes and the same resulted in addition of ` 34.04 lakhs. In the appellate proceedings, the learned CIT(A) determined the impact in following inclusive method, on the profit at ` 5,41,245/- and accordingly directed the Assessing Officer to sustain the same in place of ` 34.04 lakhs made by him. Still aggrieved, the assessee has filed this appeal before us.

Learned AR invited our attention to page No. 47 of the paper book and submitted that there is no impact on the profit even if inclusive method of accounting tax is followed. He submitted that the assessee, in page No. 47 of the paper book has demonstrated the same. He further submitted that the identical issue was considered in other issues by learned CIT(A) and he has restored the matter to the file of the Assessing Officer for examining identical types of reconciliation statement filed by the assessee and in the set aside proceedings the Assessing Officer did not make any addition.

Learned Departmental Representative submitted that the reconciliation statement furnished by the assessee may be restored to the file of the Assessing Officer for reexamination.

We have heard the rival contentions and perused the record. The assessee has demonstrated in the statement prepared by him that there is no impact on the net profit, if taxes are accounted either under exclusive or under inclusive method. We have noticed that the tax authorities have not examined the statement furnished by the assessee though learned CIT(A) has made certain computations and granted partial relief to the assessee. We have noticed that he has not found fault with the statement furnished by the assessee. Under these set of facts, we are of the view that this issue requires fresh examination at the end of the Assessing Officer by duly considering reconciliation statement furnished by the assessee. Accordingly, we set aside the order passed by learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine the reconciliation statement furnished by the assessee and take appropriate decision in accordance with law after affording necessary opportunity of being heard to the assessee.

In the result, appeal of the assessee is treated as allowed for statistical purposes.