TaxTMI 
TaxTMI 
2014 (12) TMI 725
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....ht to be re-opened. The petition is also directed against the order dated 14.03.2014 whereby the Assessing Officer has rejected the objections raised by the petitioner pursuant to the issuance of the impugned notice dated 28.03.2013. 2. The original assessment under Section 143(3) of the said Act was made on 24.12.2008. The notice under section 148 has been issued beyond four years from the end of the assessment year 2006-07, therefore, the proviso to section 147 would come into play. 3. The recorded reasons for initiating the re-assessment proceedings are as under:- "M/s Avtec Limited. A.Y. 2006-07 28.03.2013 Reasons for re-opening of assessment by issue of notice u/s 148 I have, reason to believe that by reason of failure o....
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....eged understatement of the closing stock and the same is reproduced herein below:- "4. Alleged understatement of Closing Stock of Rs. 19,90,92,944/- It is wrongly stated that there is understatement of closing stock by abovementioned amount. The figure of 19,90,92,944 is not closing stock rather it is opening stock which was transferred from HML to AVTEC Ltd as per Business Transfer Agreement dated 19 Feb 2005 as per which the transfer was effected on 28 June 2005. This fact is clearly mentioned in schedule 18 of Balance Sheet & also in Note 3 of Schedule 21. The Audit report is annexed as Annexure 4. From above its clear that notice of escapement of income is wrongly issued." 6. The objections, however, were not accepted by ....
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....his connection, the matter was examined and it may be stated that the objections raised by Para 2 (regarding alleged understatement of stock) and Para 10 (regarding alleged omission to incorporate insurance and other claims receivables) are factually incorrect and hence do not require any remedial action. Regarding Para 3 (relating to the depreciation on assets not registered in the name of the assessee) also, the objection is at least partly incorrect in as much as depreciation on building is clearly admissible in light of the supreme court decision in case of Mysore Minerals. However, the issue may be a debatable one as far as vehicles are concerned, although available high court decisions favour the assessee on this issue. Now, consid....
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....p; -Work in Progress 91,782,338 -Finished Goods 107,260,996 -Scrap 49,610 199,092,944 (57,289,884) Differential Excise Duty on Opening and Closing Stocks. (352,935) Increase in Inventories (57,642,819)" It was pointed out that the petitioner did not have any opening stock as of 01.04.2005. The initial stock was received on account of a transfer from Hindustan Motors Ltd. as per the Business Transfer Agreement in the course of the year. That initial stock which comprised of work in progress, finished goods and scrap amounted to Rs. 19,90,92,944/-. At the end of the year, that is, on 31.03.2006, the inventories were valued at Rs. 25,63,82,828/-. The differe....
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....tion 148 was bad in law and was liable to be quashed. 11. The learned counsel for the respondent reiterated the stand taken by the Assessing Officer in the order dated 14.03.2014 and submitted that the stock position has not been accurately indicated. 12. After having heard the learned counsel for the parties, we are of the view that the position taken by the learned counsel for the petitioner is correct. The petitioner did not have any opening stock on 01.04.2005. By virtue of a Business Transfer Agreement dated 19.02.2005, the petitioner received a stock valued at Rs. 19,90,92,944/- from Hindustan Motors Ltd. which became its initial stock in the year in question. There were additions to the said stock and the difference between the....