Excise Duty Calculation Rejected: Tax Authorities Fail to Substantiate Additions on Closing Stock Under Section 145A

ITAT Chandigarh dismissed Revenue's appeal against CIT-2's order regarding excise duty on closing stock under section 145A. The Tribunal upheld the Commissioner's deletion of additions, referencing prior precedents from Delhi and Allahabad HCs. The ruling determined no basis for estimating excise duty on work-in-progress stock, as no actual duty was paid, resulting in no net financial impact.

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In the case before the ITAT Chandigarh, the Revenue appealed against the Commissioner of Income Tax-2, Chandigarh's orders, which deleted additions made by the Assessing Officer under section 145A of the Income-tax Act, 1961. The issue concerned the inclusion of excise duty on the closing stock of work in progress. The Tribunal referenced its prior decision dated 14.5.2018, which concluded that since the assessee did not pay excise duty on the closing work in progress, there was no basis for estimating and adding excise duty. It was noted that if excise duty were to be included in the closing stock, it should also be included in the opening stock, resulting in no net difference. The Tribunal upheld the CIT (A)'s decision to delete the additions, citing precedents from the Delhi High Court in 'Purolator India Ltd.' and the Allahabad High Court in 'CIT Vs. Sangam Structurals Ltd.' Consequently, the appeals by the Revenue were dismissed as without merit.

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