TaxTMI 
TaxTMI 
2018 (10) TMI 1042
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....g the applicability of section 145A of the Act to the petitioner's method of valuation of closing stock. Assessing Officer had raised queries in this respect. In particular, under a notice dated 22.08.2014, the Assessing Officer called upon the assessee to provide the following details: "17. Please state whether you have followed the method of valuation as prescribed in S 145A of the IT Act in the valuation of raw materials, work in progress, finished products and closing stock. If you have not followed the inclusive method as prescribed u/s 145A, please show how the method adopted by you is neutral with respect to profit and hence, tax. Do this by showing detailed calculations using the exact figures from your financial statement and not by citing examples." 3. In a further letter dated 19.01.2015, the Assessing Officer asked the petitioner to supply the following details: "19. It is observed from AnnexureXIV of Tax Audit Report that the opening balance of Modified VAT Credit Rs. 6,56,96,786/while closing balance Modified VAT Credit is Rs. 9,13,65,897/. Thus, there is a positive balance of Rs. 2,56,69,111/. Please explain as to why this amount is not added following prov....
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....d the impugned notice, for which purpose, he had recorded following reasons: "Reasons for reopening of the assessment in the case of M/s. Adani Enterprise Ltd. 1. Brief details of Assessee: In this case, the assessee company M/s Adani Enterprise Limited engaged in the business of Export and Import/Domestic Trading & Manufacturing in various commodities filed its return of income for A.Y.2011-12 on 26.11.2011 declaring total income of Rs. 44,69,74,307/. The same was processed u/s.143(1) of the Act and subsequently order u/s 143(3) of the Act was passed on 25.05.2015 determining total income at Rs. 69,22,75,577/. 2. Brief details of information collected/received by the AO: On perusal of the assessment records for the year under consideration, it is noticed that the assessee is following exclusive method of accounting and the unutilized Cenvat Credit has not been included in the closing stock in the Profit and Loss account. During the year ended on 31.03.2011, the assessee had unutilized Cenvat Credit of Rs. 9,13,65,897/. During the course of assessment proceedings, proper and necessary enquiry on the issue involved could not be made due to which income was underassessed. In ....
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....sive method for accounting CENVAT as against inclusive method mandated u/s 145A of the Act and the total income was determined without the statutory adjustment of the cost of raw materials and work in progress by unutilized CENVAT credits at the beginning and end of previous year as stipulated in section 145A of the Act. It is well settled position that unutilized Cenvat Credit shall form part of closing stock and therefore the unutilized Cenvat Credit is mandatorily required to be included in Closing Stock. 6. Basis for forming reason to believe and details of escapement of income: On perusal of the assessment records for the year under consideration, it is noticed that the assessee is following exclusive method of accounting instead of inclusive method and the unutilized Cenvat Credit has not been included in the closing stock int eh Profit and Loss account whereas as per section 145A of the Act, unutilized Cenvat credit had to be included in closing stock but the assessee had followed exclusive method which violates the provision of section 145A of the Act. Therefore, I have reasons to believe that income chargeable to tax to th e extent of Rs. 6,56,96,786/has escaped the ass....
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....ial facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s 147 of the Act. It is true that the assessee has filed a copy of annual report and audited P&L A/c and balance sheet along with return of income where various information/material were disclosed. However, the requisite full and true disclosure of all material facts necessary for assessment has not been made as noted above. It is pertinent to mention here that even though the assessee has produced books of accounts, annual report, audited P&L A/c and balance sheet or other evidence as mentioned above, the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the AO and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of section 147 of the Act. It is important to highlight here that material facts relevant for the assessment on the issue under consideration embedded in annual report, audited P&L Account, balance sheet and books of account in such a manner that it would require due diligence by the Assessing Officer to extract the....