The Income Tax Appellate Tribunal (ITAT) Mumbai bench directs readjudication related to the action of Assessing Officer for increasing the value of closing stock of the assessee during the assessment proceedings by an amount being unutilised Modvat.
Assessee, Hindustan Unilever Limited is a company engaged in the manufacture, trading and marketing (including export) of fast moving consumer goods (FMC goods). After filing the return assessee’s case was selected for scrutiny. During the assessment proceedings the Assessing Officer increased the value of closing stock of the assessee by the amount Rs.30,98,25,002/- being unutilised Modvat. Thereafter AO concluded the assessment and passed the order.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], who dismissed the appeal. Therefore the assessee filed another appeal before the tribunal.
Before the bench Nishant Thakkar, counsel for the assessee submitted that Assessee accounted for purchase of raw material and packing materials on net of excise duty basis.
The Assessing Officer increased the value of closing stock of raw material and packing materials by the unutilised balance in the Modvat Credit Account of Rs.30,98,25,002/-.
Further counsel argued that the ITAT in assessment year 2000-01 in assessee’s own case has restored the issue back to the file of the AO.
Madhu Malti Ghosh, Counsel for the revenue, supported the decision of lower authorities.
The tribunal observed that the identical issue has been remanded back to the file of the Assessing Officer for the Assessment Year 2006-07 as per the order of the Tribunal.
After considering the facts submitted by both parties, the two member bench of Padmavathy S (Accountant Member) and Chandra Vikas Awasthy (Judicial Member) directed readjudication related to the action of Assessing Officer for increasing the value of closing stock of the assessee during the assessment proceedings by an amount being unutilised Modvat.
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