The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) confirmed the addition of unutilized Central Value added Tax (CENVAT) credit, mandating its inclusion in the closing stock value as per Section 145 of the Income Tax Act.
The assessment proceedings found that as per tax audit report the assessee has unutilized CENVAT credit available to the tune of ₹5, 60,686/-. The learned Assessing Officer issued a show cause notice that it should not be allowed.
Assessee submitted that above CENVAT credit is pertaining to capital assets, which could be utilized for the purpose of fixed assets only. The assessee submitted that the assessee is entitled for this refund from custom officers. It is also claimed that it is the current assets of the assessee.
The Assessing Officer noted that the amount of ₹5,60,000/- is on account of balance of unutilized MODVAT credit for which assessee has not produced any evidence to show that same is on account of additional duty paid to the custom authorities.
Further held that unutilized CENVAT credit is also required to be included in the value of the closing stock. Accordingly, he made an addition to the value of the closing stock and such addition resulted into increase in the income of ₹5, 60,668/-
The assessee stated that this amount was pertaining to the capital asset and unrealized revenue credit is only ₹17,247/-. As the assessee could not substantiate the same, the learned Assessing Officer included the same in the closing stock and made the addition.
Accordingly, The two member bench if the tribunal comprising Pavan Kumar Gadale ( Judicial member) and Prashanth Maharishi ( Accountant member) find any infirmity in the order of the lower authorities in including the above sum in the closing stock of the assessee and thereby increasing the total income. Accordingly, the appeal was dismissed.
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