TaxTMI 
TaxTMI 
1989 (5) TMI 122
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.... as such, was presently existing which could be revised by the Commissioner under section 263 of the Income-tax Act. The assessee relied upon the Allahabad High Court's decision in J.K. Synthetics Ltd. v. Addl. CIT [1976] 105 ITR 344. The learned Commissioner negatived the objection raised for exercise of the jurisdiction vested in him under section 263 by following the Supreme Court's decision in State of Madras v. Madurai Mills Co. Ltd. [1967] 19 STC 144 where the Hon'ble S.C. held as follows :-- "But the doctrine of merger is not a doctrine or rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior Tribunal and the other by a superior Tribunal, passed in appeal or revision, there is a fusion or merger of two orders irrespective of the subject matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. In our opinion, the application of the doctrine depends on the nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction." The learned CIT(A) also relied upon the Gujarat ....
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....ght to revise the order of the Income-tax Officer dt. 23-8-83 allowing deduction of excise duty of Rs. 3,95,064 debited to the profit and loss account of the assessee-company. Out of the said amount allowed as a deduction, the learned CIT was of the opinion that the provision of Rs. 1,59,505 should not have been allowed as a deduction on the ground that there was no demand from the Excise authorities with regard to the said amount allowed as a provision. It is an admitted case, that no part of the deduction of excise duty, of Rs. 3,95,064 formed the subject matter of appeal either before the CIT(A) or before the Income-tax Appellate Tribunal either at the instance of the assessee or at the instance of the department. In those circumstances, we fully agree with the learned CIT when he followed the ratio of the Hon'ble Supreme Court in Madurai Mills Co. Ltd.'s case already quoted above. In an unreported decision of Andhra Pradesh High Court in CIT v. Vegi Veeri Naidu & Sons [Case Referred No. 2 of 1982] the same question was considered by the A.P. High Court and the A.P. High Court, following the Supreme Court's decision cited supra and the other decisions cited in the preceding para....
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....acts necessary for disposal of this main issue are as follows :-- The assessee is a private limited company and it manufactures rota metres which is admittedly an excisable commodity, provided certain conditions are fulfilled. A total amount of Rs. 3,95,064 was debited to the profit and loss account of the assessee-company for assessment year 80-81 for which the previous year ended by 30-9-79. Out of the above total debit an amount of Rs. 1,59,505 was the provision made towards Central Excise duty based on 2 show-cause notices issued by the Central Excise authorities--dt. 7-9-79 and 10-8-80. Copy of the first show-cause notice was provided at pages 19 to 26 of the paper compilation filed before us. So also copy of the show-cause notice dt. 10-8-80 was provided at pages 27 & 28 of the paper compilation filed before us. As per the show-cause notice dt. 7-9-79 it was alleged by the department that there was a short payment of excise duty to an extent of Rs. 6,356.45 relating to the period from 18-6-77 to 31-3-78 and also a short payment of excise duty amounting to Rs. 1,49,912.51 for the period relating to 1-4-78 to 29-12-78. Therefore the total amount for which show-muse notice dt. ....
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....d to pay the duty at 2 per cent, whereas the department claimed it as 5 per cent. On the basis of the first show-cause notice dt. 7-9-79 an assessment order dt. 9-12-81 was passed by the Assistant Collector, Central Excise I Division, Hyderabad whereby he had determined that the assessee had to pay a further excise duty amounting to Rs. 2,50,030.34. The said order was confirmed by the Appellate Controller of Central Excise, Madras in Appeal No. 117/82(H) dt. 24-4-82. As against the said order W.P. 3757/82 was filed in the High Court of Andhra Pradesh. Copy of the judgment rendered in the W.P. was furnished at pages 21 to 28 of the 2nd paper book filed before us. By virtue of their judgment the AP High Court set aside the orders of the Asst. Collector and Appellate Collector and directed them to make a fresh assessment order, determining the excise duty payable after taking into account, the deductions that are permissible under the judgment of the Supreme Court in Union of India v. Bombay Tyre International Ltd. 1983 E.L.T. 1896. One of the directions in the judgment delivered in the W.P. was that the assessing authority will give reasons for disallowing any one or more of the item....
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....bility. The question in this case is whether the show-cause notice issued by the excise department calling upon the assessee-company to pay some additional excise duty can itself be regarded as a demand for which a provision can be made and a deduction can be claimed. Admittedly, the assessee-company is maintaining its account on mercantile system. The mere circumstance that the assessee was denying its liability to pay the additional excise duty it does not cease to be a liability. Even if the assessee failed to provide for the liability in its books of account, it can still claim it as a deduction in income-tax proceedings. The liability to pay excise duty arises as and when the manufacture of a rota metre took place in the factory of the assessee. Further, we have gone through the show-cause notices dt. 7-9-79 and 17-8-80, calling upon the assessee to show cause as to why the additional duty mentioned in those notices should not be recovered from them under Rule 10(1) of the Central Excise Rules, 1944. An extract of Rule 10(1) of Central Excise Rules, 1944 was provided at page 29 of the 2nd paper book filed before us, which is as under :-- "When duties or charges have been shor....