In a recent case, ACIT Vapi v. M/s Sunmet Industries, the division bench of the ITAT, Ahmedabad quashed the reassessment proceedings which were made on the basis of mere information regarding a wrong claim. Quashing the same, the bench observed that the allegation were not supported by necessary evidences and therefore, is liable to be nullified.
In the instant case, re-assessment proceedings were initiated against the assessee on the basis of the information from the Directorate General of Central Excise Intelligence Regional Unit Vadodara that the assessee has unlawfully availed wrong CENVAT credit to the tune of Rs.1,85,49,005/-. Accordingly, assessment was completed by disallowing the above amount. The first appellate authority deleted the addition on ground that there is no evidence to show that Central Excise Department has finally charged the assessee of misutilisation of CENVAT credit as alleged in the notice.
Confirming the order of the CIT(A), “We find that the AO has not supported the allegation made in the SCN by any independent material in corroboration thereto. We also find force in the argument of the assessee that manufacture and sale of the finished goods would naturally involve corresponding purchase of raw-material. It was for the AO to establish that the imported/high seas purchase on which custom duty was paid has not been utilized for manufacture/sale of finished goods. The AO has failed on this count too. The allegation of misutilisation of CENVAT credit is thus bereft of any credible credence. Thus, in the totality of the facts and circumstances of the case, the action of the AO in making additions towards misutilisation of CENVAT credit is devoid of merit. The CIT(A) in our view has rightly reversed the action of AO. Accordingly, we are not inclined to interfere with the order of the CIT(A).”
Read the full text of the order below.
