Tribunal rules in favor of appellant on excise duty reversal, directs AO to delete addition

The Tribunal allowed the appellant's appeal in part, ruling in favor of the appellant regarding the disallowance of excise duty reversal under section 43B of the Income Tax Act. The Tribunal directed the AO to delete the addition made, noting the appellant's consistent practice and evidence presented. The appeal was partly allowed, with the Tribunal pronouncing the order in Ahmedabad on 20/01/2020.

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Issues:
1. Disallowance of excise duty reversal under section 43B of the Income Tax Act.
2. Disallowance of miscellaneous expenses as prior year expenses.

Issue 1: Disallowance of excise duty reversal under section 43B of the Income Tax Act:

The appellant contested the addition made by the AO regarding the reversal of excise duty amounting to Rs. 11,47,325 under section 43B of the Act. The AO disallowed the excise duty claiming it was not paid and hence not allowable under section 43B. The appellant argued that the excise duty provision was reversed in the current year after being offered to tax in the previous year. The CIT-A upheld the AO's decision, stating the appellant failed to provide evidence of payment against the provision made in the previous year. The appellant, however, presented evidence showing the provision was reversed in the current year, having been taxed in the immediate preceding assessment year. The Tribunal noted the consistent practice of the appellant and allowed the deduction, directing the AO to delete the addition made. The ground of appeal was allowed, and the appeal was partly allowed.

Issue 2: Disallowance of miscellaneous expenses as prior year expenses:

At the outset, the appellant withdrew ground no. 3 raised in the appeal memo related to the disallowance of Rs. 23,123 in respect of miscellaneous expenses as prior year expenses. The Tribunal dismissed this ground as not pressed.

In conclusion, the Tribunal ruled in favor of the appellant regarding the disallowance of excise duty reversal under section 43B of the Income Tax Act, allowing the deduction and directing the AO to delete the addition. The appeal was partly allowed, and the order was pronounced in the Court on 20/01/2020 at Ahmedabad.

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