Tribunal directs review of reconciliation statement for CENVAT & VAT credits under Income Tax Act

The Tribunal allowed the appeal of the assessee for statistical purposes, directing the Assessing Officer to review the reconciliation statement provided by the appellant regarding the addition made on CENVAT credit and VAT credit under section 145A of the Income Tax Act for the assessment year 2010-11. The Tribunal emphasized the importance of a thorough examination of the statement to determine the impact on net profit, setting aside the CIT(A)'s decision and providing the appellant with an opportunity to be heard in the reassessment process.

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Issues:
Addition on CENVAT credit and VAT credit u/s. 145A of the Act.

Analysis:
The appeal pertains to the assessment year 2010-11 and focuses on the addition made by the Assessing Officer regarding CENVAT credit and VAT credit under section 145A of the Income Tax Act. The Assessing Officer had increased the value of opening and closing stock by including applicable taxes, resulting in an addition of Rs. 34.04 lakhs. However, in the appellate proceedings, the CIT(A) recalculated the impact using an inclusive method, determining it to be Rs. 5,41,245. The appellant contested this decision, arguing that there would be no impact on profit even under the inclusive method, as demonstrated in a statement provided to the authorities.

The appellant's representative pointed out that a similar issue had been addressed by the CIT(A) in another context, leading to no addition by the Assessing Officer upon reexamination. The Departmental Representative suggested that the reconciliation statement submitted by the appellant should be reexamined by the Assessing Officer. The Tribunal observed that neither the Assessing Officer nor the CIT(A) had thoroughly analyzed the statement provided by the appellant, which showed no impact on net profit regardless of the accounting method used. Consequently, the Tribunal set aside the CIT(A)'s decision and directed the Assessing Officer to review the reconciliation statement and make a decision in accordance with the law after giving the appellant an opportunity to be heard.

Ultimately, the Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the need for a fresh examination of the issue by the Assessing Officer based on the reconciliation statement provided by the appellant. The decision was pronounced in open court on 6.6.2016.

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