TaxTMI 
TaxTMI 
2013 (7) TMI 227
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....e impugned notice has been issued. At the request of the petitioner, the Assessing Officer supplied the reasons recorded by him for issuing such notice. Such reasons read as under: "In this connection, the reasons for initiating proceedings u/s.148 in your case for A.Y. 2005-06 are as under: (1) Under section 10B of the I.T. Act, 1961, profit and gains of business derived by a hundred per cent export oriented undertaking (EOU) from the export of articles or things were allowable as deduction from the total income, proportionate to the export turnover to the total turnover of the business carried on by the undertaking. A company was a manufacturer of pesticides and intermediates. In the return of income filed for the assessment year 2005-06, it had claimed deduction of Rs.63,62,37,879 under section 10B of the Act. In the order passed under section 143(3) of the Act, it was restricted to Rs.58,37,74,050 (i.e. 100% of the profit and gains of (EOU) after common expenses like personnel expense, interest expense etc. was allocated to EOU unit from DTA unit @ 20 per cent of such expenses. From the records it was seen that assessee had claimed depreciation of Rs.31,98,153 on....
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....iew of the provisions of section 145A of the Act which mandate inclusive method of accounting, this portion of un utilized CENVAT credit was to be considered for computing tax. Incidentally, in Annexure-I to clause 12(b) of the Form 3CD wherein the details of deviation from the method of valuation prescribed under section 145A was furnished, it was observed that the deviation was determined to be 'nil' by increasing cost or purchases by Excise duty of Rs.249775277 incurred on it. Thus, the Excise Duty element on the entire purchase of inputs made during the year was considered for increasing the cost of purchases. However, the fact was that the entire purchases were not consumed during the year. Hence, in Annexure 1, the purchase was to be increased only by the Excise Duty element on the portion or purchases that were actually consumed. The Excise Duty element on the un-consumed purchases that formed part of inventories was not to be considered for determining the deviation in the method of valuation under section 145A of the Act. Thus, the deviation from the method prescribed was not correctly worked out. The I.T. Involved on unutilized CENVAT credit of Rs.31,11,150,519 u....
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....y, that of treatment of unutilized Cenvat credit for valuing of closing stock was dropped in following manner: "In this regard I have verified the factual aspects of the case including the arithmetical calculation submitted in Annexure 1 to clause 12(b) of Form No.3CD. It is seen that the net effect on profit of the assessee company is Rs.Nil even though it has followed the exclusive method of accounting as prescribed in AS-2 of the Accounting Standards issued by the Institute of Chartered Accountants of India. In view of this and the decision of SC in the case of CIT v/s. Indo Nippon Chemicals Co. Ltd. reported in 261 ITR 275 the submission of the assessee company on this ground is accepted." We therefore have to focus our attention only on two of the grounds mentioned in the reasons recorded. With respect to the first ground of deduction under section 10B of the Act, as pointed by the counsel for the petitioner in the original assessment, the entire claim was scrutinized at length. On 31st October 2007, the Assessing Officer raised several queries in writing calling upon the petitioner to satisfy him on various aspects of the claims arising from the return. In particular, w....
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....med as refund of excise duty paid on export sales made under rebate". This claim was also scrutinized when under the earlier noted communication dated 31.10.07, the Assessing Officer raised the following query: "37. Please explain the effect of excise duty refund of Rs.1,77,66,235/- claimed during the year." In response to such a query, the assessee replied as under: "Out of the excise duty refund receivable of Rs.1,77,66,235/- the company has received Rs.1,36,25,687/- and the balance of Rs.41,40,549/- has been written off during the next year." In the ultimate order of assessment, no addition was made. From the above it can be seen that quite apart from the reasons recorded, even from the record, nothing emerges to permit the Assessing Officer to form a belief that income chargeable to tax had escaped assessment for the reason of the assessee's failure to disclose truly and fully all material facts. On the contrary, in addition to there being necessary declaration in the return filed, both the claims were scrutinized by the Assessing Officer. It may be that a certain angle may not be directly addressed by the Assessing Officer while examining the assessee's claim fo....