TaxTMI 
TaxTMI 
2016 (6) TMI 1167
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....e filed its return of income for AY 2006-07 declaring total income at Rs. 24,96,764/-. The assessment was framed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") and the total income was determined at Rs. 25,40,150/-. Subsequently, the assessment was reopened by issuing notice u/s.148 of the Act dated 14/03/2011 for the reason that assessee had not included the unutilized CENVAT credit at the end of the year of Rs.,65,71,959/- to the closing stock of raw-material which according to the Assessing Officer (AO) was mandatory in view of the provisions of section 145A of the Act and the non-inclusion of CENVAT credit had resulted into escapement of income. Thereafter, the assessment was framed u/s.143(3) r.w.s.147 an....
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....d by the appellant in the previous years as well as in the succeeding years. The Hon'ble Gujarat High Court in the case of Voltamp Transformers Ltd. v/s. CIT (2008) reported on 217 CTR 254 has held that A.O. has got very limited powers to change method of valuation of closing stock which is integral part of accounting policy. The A.O. cannot change method of accounting regularly followed by the assessee without valid reasons. (C) Hon'ble Supreme Court in the case of Chainrup Sampatram (1953) reported on 24 ITR 481 has clearly held that profits does not arise out of valuation of closing stock and situs of its arising or accruing where the valuation is made and valuation of unsold stock is necessary part of the process of determinin....
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.... Aggrieved by the order of the ld.CIT(A), Revenue is now in appeal before us and has raised the following ground:- i) The ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,61,75,959/- u/s.145A of the Act, being CENVAT paid on raw-material. 2.3. Before us, ld.DR submitted that AO noted that as per Form No.3CD filed by the assessee, the unutilized CENVAT credit on the end of previous year 2005-06 was Rs. 1,61,75,959/- which was not included while valuing the closing stock of raw-material. He submitted that section 145A of the Act, which mandate that assessee follow exclusive method of accounting and, accordingly, the AO was justified in holding that the unutilized CENVAT credit should have been included in the closi....