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TMI Blog2016 (12) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... to past two years. In light of above, we see no reason to interfere with the N.P rate declared by the assessee. Hence, the trading addition made on this account is deleted. Addition on account of service tax - AO made the addition invoked the provisions of section 43B given that the service tax has not been deposited before the due date of filing of return of income - Held that:- Undisputedly, the service tax has been collected by the assessee from its customers during the year and the same has not been paid before the due date of filing of return of income. The ratio of the Hon’ble Supreme Court decision in the case of Chowringhee Sales Bureau [1972 (10) TMI 4 - SUPREME Court] that the Sales tax collected and not deposited with the treasury would form part of the assessee’s trading receipt is clearly applicable to the facts of the case. In the instant case, the assessee has contended that it has followed the exclusive method of accounting where the service tax has not been routed through the profit/loss account. In our view, in light of decision in case of Chowringhee Sales Bureau, such contention will not hold good and irrespective of method of accounting followed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne bill each raised by the appellant to these companies in relation to the claim or service tax as discussed earlier in this order. From these details, it has been observed that: The Appellant raised invoice No. 20110330 on 23.05.2011 for ₹ 17,50,481/- in the name of Bharti Hexacon Ltd. whereas the same is appearing in the account of Bharti Hexacon Ltd. on 20.04.2011. Similarly, the appellant raised invoice No. 20111059 on 02.11.2011 in the name of M/s Aircel Ltd. on 15.07.2011 nd een ther invoice No. shown as 20110460. (IV) During the appellate proceedings, the AR was required to explain the same but no reply was furnished by him. It is difficult to understand how it is possible to make entries in advance in the books of accounts before raising the invoice. The above instances revealed that the books of accounts of the appellant are manipulated one and they do not reflect the true state of affairs of the appellant. (V) In view of these facts coupled with the discrepancies observed by the AO as stated earlier, it is held that the books of accounts of assessee are liable to be rejected u/s 145(3) of the Act. (VI) It was the contention of the appellant that its net profit r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenses claimed by the appellant are excessive or bogus. Thus, rejecting books only on the ground that the vouchers were unsigned, or the bills were hand written is unwarranted and bad in law, especially when the books are audited and no discrepancies have been pointed. Results declared are better than earlier years The Assessing Officer on flimsy defects pointed by him, proceeded to make addition on adhoc basis at ₹ 12 lacs, which was further re-calculated by the Learned CIT(A), by estimating the NP Rate at 7.5% as against 6.6% declared by the appellant. The Appellant humbly submits that, it is a settled position of law, that, wherein a case the provisions of sec 145(3) are invoked the Assessing Officer has to first consider the past history of the assessee, as it the best guide for estimating the profits. In case of the appellant results of the earlier three years is as under:- PARTICULARS Assessment Year 2010-11 Assessment Year 2011-12 Assessment Year 2012-13 Turnover 29327924 73564911 86084239 Net Profit as per P/L a/c 1144109 4503085 5678009 NP (%) 3.9% 6.12% 6.6% Depreciation 793519 19670627 2779306 NP before depreciation 1937628 6473712 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2012. The appellant submitted before the AO that its claim of input Cenvat Credit of ₹ 78,84,332/- for the service tax charged by vendors from the assessee stands rejected by the service tax Department and thus the appellant paid service tax of ₹ 88,79,713/- for the year under consideration on 18.12.2013 and 20.12.2013 whereas due date of filing of return of income for the assessment year under consideration was 30.09.2012. After deliberating the issue in detail, it was held by the AO that the assessee made false claim of ₹ 78, 84,332/- on account of Cenvat Credit and this expenditure was never incurred by the assessee. It was also observed by the AO that though the assessee claims that no deduction was claimed on account of service tax and hence no disallowance is warranted but the assessee deliberately failed to point out that the service tax receipts have also not been credited to the P&L account at the same time. It was further noted by the AO that the assessee has already declared ₹ 9,95,381/- as service tax payable in its balance sheet as its statutory liability. The AO concluded that the claim of the assessee that no amount has been claimed as de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owringhee Sales Bureau is clearly applicable to the facts of the instant case under consideration. It may be mentioned that the Hon'ble ITAT, Bangalore Bench in the case of Jain Christopher (2013) 36 CCH 0011 held that "the assssee's plea that sales tax was different from service tax cannot be accepted in the present circumstances as what the assessee was a firm or Chartered Accountants is selling is services and not goods, so the tax applicable is service tax which stands on the same bracket as sales tax in terms of services rendered as sales tax holds for goods sold. We have also observed that the AO had pointed out that the said amount has been included as business receipts in its TDS certificate and as such the same should have been included in its receipts. This has not been precisely done by the assessee. In the instant case, it is an admitted that that during the course of asessee's profession a sum of ₹ 29,60,000/- was realised/ collected as service tax payable and the same is not capital receipt. The moment the service tax is realised, it becomes payable to the Govt. account and if it is not paid, it partakes the character of income of the assessee, since the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hellip;………." It is submitted that sec 43B starts with a non-obstante clause, and specifies that a deduction "otherwise allowable" under the Act, shall not be allowed unless it is actually paid. This means that the claim has to be firstly preferred by the assessee, and the same could be disallowed only for the reason of failure to make the actual payment, before the filing of return. In the case of the appellant, as there was no claim of service tax, in the P/L a/c or the computation of income, there was no question of disallowing the same u/s 43B. The Appellant places reliance on the following decision: • Srikaollu Subarao & Co Vs. Union of India [ 173 ITR 708] • CIT vs. Noble And Hewitt (I) P. Ltd. [2008] 305 ITR 324 (Delhi) • Shri Ravi Kant Chadda Vs. Deputy Commissioner of Income Tax [ITA No. 516/Lkw/2011 dated 25.04.2013 • Real Image Media Technologies (P) Ltd. ( 114 ITD 573 Chennai) • Nafe Singh Gahlawat vs. ACIT, I.T.A. No.1028/Del/2011 dated 29/04/2011. • Raj Pal Katyal, New Delhi vs Department Of Income Tax [I.T.A. No. 2665/Del/2012] • Indian Carbon Ltd Vs. Inspecting Assisstant Commissioner & A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant in its character as an auctioneer, the amount, in our view, should be held to form part of its trading or business receipt. The appellant would, of course, be entitled to claim deduction of the amount as and when it pays it to the State Government. 9. The fact that the appellant credited the amount received as sales tax under the head " sales tax collection amount", would not, in our opinion, make any material difference. It is the true nature and the quality of the receipt and not the head under which it is entered in the account books as would prove decisive. If a receipt is a trading receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt. Therefore, the ratio of the Hon'ble Supreme Court decision in the case of Chowringhee Sales Bureau that the Sales tax collected and not deposited with the treasury would form part of the assessee's trading receipt is clearly applicable to the facts of the case. In the instant case, the assessee has contended that it has followed the exclusive method of accounting where the service tax has not been routed through the profit/loss ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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