2023 (3) TMI 1423 - AT - Income Tax

Addition u/s. 43B on VAT payable - addition towards VAT tax liability not paid on or before due date for furnishing of his return of income for the year under consideration u/s. 139(1) - assessee who was accounting for his sales/turnover by following an exclusive method had not claimed deduction of the said amount in the profit and loss account for the year under consideration - HELD THAT - Hon ble High Court of Chhattisgarh in the case of Assistant Commissioner of Income Tax-1 Bhilai Dist. Durg (C.G.) Vs. M/s. Ganapati Motors Tax Case 2017 (4) TMI 1613 - CHHATTISGARH HIGH COURT had held that in a case where the assessee had not charged VAT to its profit and loss account then despite the fact that the liability may still be unpaid it could not have been added u/s. 43B of the Act as the same was not claimed as a deduction in the books of accounts. No addition can be made of an assessee s unpaid VAT tax liability that was not charged to the profit and loss account there is substance in the claim of the Ld. AR that there was no justification for the A.O to have made an addition u/s. 43B of the amount of VAT payable as the same was not charged to the latters profit and loss account. Thus for the reason that as the aforesaid claim of the assessee was in conformity with the aforesaid judgment of M/s. Ganapati Motors (supra) therefore the same by no means could have been dubbed as an incorrect claim and brought within the realm of the adjustments contemplated in clause (a) of Section 143(1) of the Act. Accordingly the order of the CIT(Appeals) is set-aside and the addition made by the A.O of VAT payable is vacated. Addition towards GST not paid on or before due date for furnishing of his return of income for the year under consideration u/s. 139(1) - As argued assessee was accounting for his sales/turnover by following an exclusive method had not claimed deduction of the said amount in the profit and loss account for the year under consideration - HELD THAT - As relying on own case A.Y.2017- 18 order of the CIT(Appeals) is set-aside and the addition made by the A.O on account of GST payable is vacated. Thus the Ground of appeal No. 1 raised by the assessee is allowed in terms of my aforesaid observations.

Summary

Issues Involved:
1. Condonation of Delay in Filing Appeals
2. Disallowance of VAT Liability under Section 43B
3. Disallowance of Employees' Contribution to ESIC & Other Welfare Funds under Section 36(1)(va)

Summary:

1. Condonation of Delay in Filing Appeals:
The assessee's appeals involved a delay of 11 days. The delay was attributed to the time taken to appoint a new counsel due to disputes with the previous counsel. The Tribunal condoned the delay, considering the reasons as bona fide and beyond the control of the assessee, and noting no objection from the Revenue.

2. Disallowance of VAT Liability under Section 43B:
The main issue was whether the VAT liability, which was not paid before the due date for filing the return, could be disallowed under Section 43B. The Tribunal referred to the judgment of the Hon'ble High Court of Chhattisgarh in the case of M/s. Ganapati Motors, which held that if VAT was not charged to the profit and loss account, it could not be added under Section 43B. The Tribunal found that the assessee had not claimed the VAT liability as a deduction in the profit and loss account. Therefore, the addition made by the AO under Section 43B was vacated for all the assessment years (2017-18, 2018-19, and 2019-20).

3. Disallowance of Employees' Contribution to ESIC & Other Welfare Funds under Section 36(1)(va):
The assessee did not press this ground of appeal. Consequently, the Tribunal dismissed this ground as not pressed for all the assessment years.

Conclusion:
The appeals of the assessee for the assessment years 2017-18, 2018-19, and 2019-20 were allowed. The Tribunal set aside the orders of the CIT(A) and vacated the additions made by the AO under Section 43B for VAT liabilities. The other grounds of appeal were dismissed as not pressed.