TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 456
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.... section 148 of the Act was issued on 30/11/2010 and the assessment of the assessee was reopened. The reasons recorded for reopening the assessment was that "information was received from the Directorate General of Central Excise Intelligence Regional Unit Vadodara as per which the assessee has unlawfully availed/claimed wrong CENVAT credit to the tune of Rs. 1,85,49,005/-". In view of this new evidence/information gathered in the case of the assessee, which was not provided by the assessee during the course of original assessment proceedings, the Assessing Officer (AO) formed reason to believe that income chargeable to tax amounting to Rs. 1,85,49,005/- has escaped assessment within the meaning of section 147 of the Act. He accordingly, usurped jurisdiction under section 147 of the Act. The reassessment order was framed under section 143(3) r.w.s.147 of the Act dated 23/12/2011 wherein impugned CENVAT credit was disallowed and total income returned by the assessee was inflated to this extent. 3. The relevant para dealing with the issue in the reassessment order, reads as under:- "[5] CENVAT Credit of Rs.1,85,49,005/-: In the case of the assessee, the Excise Department conducted ....
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....at Credit & credited directly to Excise collection A/c. It is not debited as expenses to Profit & Loss A/c nor debited to purchases A/c. In short it is not charged to P & L A/c. Therefore there is no question of any bogus expenses or any income escaping assessment as claimed in your letter dt. 16/08/2011. Thus we state that the alleged High Seas purchases are in fact came as raw material to our factory/ to our labour job processor who were doing extrusion processes for us. The necessary evidences/papers are submitted herewith for your perusal & record. (Full set of Sr. No. 1 of annexure-III) as ANNEXURE-IX we have sold the finished goods made out of the raw materials including imported/High Seas purchases & collected the Excise Duty on the finished goods. If the High Seas purchases would have been sold in the market around Delhi then how could we sold finished manufactured goods in our factory collecting Excise Duty. For these finished goods sales the Excise Dept. has not objected also. Then these, goods can't come from Air. These finished goods required raw materials. The Excise Dept. has not found for any contra source for raw materials of these manufactured goods........."....
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.... reassessment order before CIT(A) on both counts, i.e. the jurisdiction under section 147 of the Act as well as on merits. The CIT(A) decided the issue in favour of assessee on merits on appraisal of facts and accordingly abstained from deciding the legal issue raised towards lack of jurisdiction under section 147 of the Act. The relevant para of the order of the CIT(A) dealing with the merits of the case reads as under:- "5.6 DECISION : I have considered carefully the observations of the AO in the assessment order as well as the contention raised by the AR of the appellant. The AO made addition on the basis of the SHOW-CAUSE NOTICE issued by the Central Excise Department. The facts of the case is that the Central Excise Deptt. had found that the appellant had apparently misused CENVAT credits although the imported raw materials have not been used for the manufacturing/production. Accordingly, they issue a SCN to the appellant and a copy of the SCN was forwarded to the AO. The AO promptly reopened the assessment and made disallowance of Rs. 1,85,49,005/- and added to the income of the appellant in spite of the opposition by the appellant. The ld.AR contended before me that the AO ....
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....per application of concept of Income with regards to the CENVAT Credit disallowance automatically cannot form part of income of the appellant. On the other hand if the CENVAT Credit disallowance is considered from the Income Tax angle, the profits shown will be reduced thereby resulting to less tax liability, which the appellant might gleefully accept, definitely not a desirable action from the AO. Having considered the above and from the details furnished by the AR it is quite clear that purported CENVAT Credit misutilisation of Rs. 1,85,49,005/- has effected neither Net Profit nor Taxable Income of the appellant. Hence, the AO is directed to delete the addition made in this ground. Therefore, this ground of appeal is allowed." 5. Aggrieved, the Revenue is in appeal before the Tribunal. 6. The Ld.DR for the Revenue relied upon the re-assessment order of the AO and submitted that the assessee has misutilised the CENVAT credit which has been rightly brought to tax by the AO. The Ld.DR submitted that the action of the CIT(A) in bringing down the additions made is thus uncalled for and requires to be reversed. 7. The Ld.AR, on the other hand, reiterated its submissions made before....