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TMI Blog2017 (5) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided partly in favour of assessee Addition on account of Service Tax Liability u/s 43B - Held that:- Respectfully following the jurisdictional High Court in CIT Vs. Ovira Logistics Private Limited [2015 (4) TMI 684 - BOMBAY HIGH COURT ] Rigor of Section 43B do not apply in case the liability to pay service tax did not arise as per the relevant Service Tax Rules notwithstanding the fact that the same was shown as outstanding in the books of accounts and remained unpaid. Therefore, in principle, we agree with the contentions of the Ld. AR and therefore, deem it fit to restore the matter back to the file of Ld. AO for limited purpose of verification of the fact that the service tax liability shown as outstanding at year end and remaining unpaid was actually not payable as per service tax rules. If so, the impugned additions shall stand deleted. - I.T.A. Nos. 6577 & 6578/Mum/2014 - - - Dated:- 2-5-2017 - SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM For the Appellant : Dr. K.Shivram Shri Rahul Hakani, Ld. ARs For the Respondent : Dr. A.K.Nayak, Ld. DR ORDER Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeals by assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 93,69,074/- 7. Subhlabh Metal and Alloys Pvt Ltd. 27940590646V 3,28,97,322/- Total 6,72,98,528/- During Survey operations, a statement u/s 133A was recorded from the MD of the assessee company which was retracted later on. The assessee denied having indulged in any such bogus purchases and contested the addition made with respect to bogus purchases. However, upon perusal of survey report and contentions raised by the assessee, AO noted that the assessee failed to establish the actual delivery of goods as no delivery challans, stock register, transportation bills etc. were available / produced either at the time of survey operations as well as during scrutiny assessment proceedings and hence the assessee failed to discharge the onus of proving the purchases made by him. Further, the assessee could not furnish any evidence to controvert the declaration and disclosure made during the course of survey proceedings which led the AO to make impugned additions. 3. Aggrieved, the assessee contested the same befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inous purchases from the bogus suppliers. 5. We have heard the rival contentions and perused the relevant material on record. A perusal of various documents placed in the paper-book reveals that although the assessee was in possession of purchase invoices but these invoices were incomplete with respect to details of transportation etc. The assessee had purchased bulky item like steel from these suppliers, the delivery of which required elaborate transportation and the assessee was expected to prove the actual delivery of material with transportation details, transport/GR receipts, Stock inward register etc. On the other hand, no concrete efforts has been made by revenue to establish the purchases as non-genuine beyond doubt by obtaining confirmatory letters etc. from the alleged bogus suppliers. Prima facie, it appears that the addition has been made solely on the basis of information received from the Sales Tax department and statement made u/s 133A by the MD of assessee company during survey operations. Therefore, we find lapses on both the sides. The Tribunal, invariably, in all such cases, have taken a stand that even if presuming that all purchases were bogus, entire additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice Tax Rules. Further, the assesse never debited /routed the same though Profit Loss account and therefore never claimed deduction thereof and hence, no such disallowance could be made. However, upon perusal of sub contract agreement entered into by the assessee with its customers, it was noticed that the payment of Service Tax was the liability of the assessee and as the same was not deposited before the due date of filing the return of income, the addition thereof was made in the assessment invoking the provisions of Section 43B. The same was contested before Ld. CIT(A) where the assessee relied upon certain judicial pronouncements and contended that the liability to pay service tax arose only upon receipt of payment from the clients. After appreciating the various contentions and case laws, the Ld. CIT(A) partly allowed the claim of the assessee by directing the AO to verify the amount of Service Tax collected by the assessee and disallow that portion which was collected but not paid. Aggrieved, the assessee is in appeal before us. 10. The Ld. AR has raised similar contentions before us and contended that the assessee maintained separate account of Service Tax wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute that the assessee followed exclusive method of accounting and credited the Profit Loss account only with net amount of services rendered excluding service tax. Further, as per the service tax rules, as they stood at relevant time, the assessee was liable to pay service tax only upon actual realization of services rendered against that liability and not on accrual basis. Therefore, we find although the service tax liability may have been shown as outstanding at year end, yet the same may not have become actually payable as per Service Tax Rules. At this juncture, the view taken by Mumbai Tribunal in Pharma Search Vs. ACIT [supra] becomes relevant where the Tribunal after considering the judgment of Hon ble Delhi High Court in CIT Vs. Noble Hewitt (I)(P) Ltd. [2008 305 ITR 324] Chennai Tribunal in ACIT Vs. Real Image Media Technologies P. Ltd. [2008 114 ITD 573] coupled with apex court judgment in Chowringhee Sales Bureau P. Ltd. [1977 110 ITR 385] held that the rigor of Section 43B could not be applied in case no service tax was payable by the assessee as per relevant service tax rules. Further, Hon ble Jurisdictional Bombay High court in CIT Vs. Ovira Logistics Privat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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