2018 (1) TMI 1684 - AT - Income Tax

Addition towards unpaid service tax u/s 43B - HELD THAT - As assessee has not claimed the amount as expenditure during the year. When no expenditure has been claimed the question of disallowance u/s 43B of the Act does not arise as held in the case of A.W. Figgis And Co. Ltd. 2002 (4) TMI 40 - CALCUTTA HIGH COURT Thus this addition is deleted. Addition on account of unexplained sundry creditors u/s 68 - HELD THAT - For first amount in dispute is liability payable to Shri Ananta Das which is a carry forward balance from the earlier year. As the credit did not arise during the year no addition u/s 68 of the Act can be made in this year. Hence the same is deleted. The other addition is of an amount being purchases on credit from M/s Calcutta Anodizing Works. Section 68 of the Act cannot be attracted when the fact of purchase is not in dispute and when the trading results have been accepted by the Assessing Officer. In the result this addition is also deleted - Appeal of assessee allowed.

Summary

Issues: Delay in filing appeal, addition of unpaid service tax under section 43B, addition of unexplained sundry creditors under section 68.

Delay in filing appeal: The appeal was filed with a delay of 8 days, but the Tribunal condoned the delay after finding that the assessee had sufficient cause for the delay and admitted the appeal.

Addition of unpaid service tax under section 43B: The Tribunal noted that the assessee did not claim the amount as expenditure during the year, therefore disallowance under section 43B did not apply based on the decision of the Hon’ble Calcutta High Court in A.W. Figgis And Co. Ltd. vs Commissioner Of Income-Tax. Consequently, the addition of Rs.2,01,850 towards unpaid service tax was deleted.

Addition of unexplained sundry creditors under section 68: The Tribunal examined two disputed amounts. Firstly, a liability of Rs.1,06,737 payable to Shri Ananta Das, which was a carry forward balance from the earlier year. Since the credit did not arise during the year, no addition under section 68 could be made, leading to deletion of this amount. Secondly, an amount of Rs.27,090 for purchases on credit from M/s Calcutta Anodizing Works was also disputed. The Tribunal held that section 68 cannot be applied when the fact of purchase is not in dispute and the trading results have been accepted by the Assessing Officer. Consequently, this addition was also deleted.

In conclusion, the appeal of the assessee was allowed, with the Tribunal ruling in favor of the assessee on both the issues of unpaid service tax and unexplained sundry creditors. The judgment was delivered by Sri J. Sudhakar Reddy, Accountant Member, on the 19th day of January, 2018.