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TMI Blog2022 (4) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... e by invoking Section 36(1)(va) of the Act is unsustainable in view of the binding precedents from jurisdictional Tribunal and High Court on the facts and circumstances of the case. 4. The learned CIT(Appeals), ought to have held that the addition of Rs. 46,24,823/- in respect of the Service Tax collected and remitted does not constitute income and addition is unsustainable in law on the facts and circumstances of the case. 5. Without prejudice to the right to prefer application before the CCIT or DGIT for waiver of interest, the levy of said interest u/s.234A and 234B of the Act is unsustainable in law and on the facts and circumstances of the case. 6. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above". 2. The facts of the case are that, AO framed the assessment in this case u/s.143(3) of the Income Tax Act (Act) on 23-12-2016. While framing the assessment, the AO made addition on account of non-payment of employees' contribution to ESI/PF beyond the due date. Accordingly, he invoked the provisions of Section 36(1)(va) of the Act on the reason that it was paid beyond due date prescribed in relevant Act. On this count, he made an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reasonable cause for inordinate delay, which shall not be condoned. In this regard, Ld.DR relied on the decision of the Co-ordinate Bench of the Tribunal in the case of Smt. Rajalakshmi Vettrivel Vs. ACIT in ITA Nos.1106, 1107, 1108, 1109, 1110 & 1111/Mds/2017, dt.31-08-2017, wherein it was held as under: "6. I have considered the rival submissions and perused the orders of the lower authorities impugned in these appeals. As far as the delay in filing these appeals by 744 days against the common appellate order of the CIT(A), viz. ITA No. 76 to 81/09- 10 dated 19.02.2015 is concerned, one has to admit that the delay involved is inordinate and not marginal. 6.1 It is settled position of law that it is only marginal delays that can be condoned, and not inordinate delays running into several years. We may at this juncture, refer to the Third Member decision of Tribunal (Chennai) in the case of Jt. CIT v/s. Tractors & Farms Ltd. (104 ITD 149)-TM, wherein drawing out a distinction between normal delay and inordinate delay, it has been observed, vide head-note on page 150 of the Reports (104 ITD) as follows- "A distinction must be made between a case where the delay is inordinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one the delays. The delays are not properly explained by the assessee. There is no reason for condoning such delay in this case. The delay is nothing but negligence and inaction of the assessee which could have been very well avoided by the exercise of due care and attention. Though the assessee has said that the divorce proceedings initiated by her spouse were the reason for delay in filing these appeals, there is no iota of evidence of such proceedings before any Court. Hence, there exists no sufficient or good reason for condoning inordinate delays of more than 744 days in filing appeal before us. Accordingly, these appeals are dismissed as barred by limitation. 8. I accordingly decline to condone the delay of 744 days, and dismiss these six appeals of the assessee as barred by limitation". 4.1. Further, he relied on the order of the Co-ordinate Bench of the Tribunal in the case of Dr.Raveendra M.Madraki Vs. ITO in ITA No.670/Bang/2019 (AY.2014-15), dt.10-02-2022, wherein it was held as under: "6. We have heard both the parties and gone through the petition filed by the assessee, his affidavit and also the confirmation letter filed by Advocate, Mr. Prakash R. Badiger. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents were made in 1949. The writ petition was filed in 1956. The explanation given by the petitioner for this long delay is that he did not know the correct legal position and he came to know about the same after the decision of the Allahabad High Court in the Commissioner of Sales Tax, U.P. Vs. Modi Food Products Ltd. Every individual is deemed to know the law of the land. He courts merely interpret the law and do not make law. Ignorance of law is not an excuse for not taking appropriate steps within limitation. Therefore the argument that the appellant did not know the true legal position is not one that can be accepted in law. ...." 8. Further, in the present case, there is no denial on the part of the assessee about the service of the order on the assessee and after receipt of the order of the CIT(Appeals), to whom the assessee wants to entrust the work of filing appeal before the Tribunal is his own concern and this explanation does not constitute sufficient ground to condone the delay. Therefore we find no merit in the application for condonation of delay. Accordingly, we are of the considered view that the assessee has failed to make out a sufficient and reasonable cause f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have vested right in injustice being done because of a non-deliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so". 5.1. In our opinion, where substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. In the case on our hand, the issue on merit, regarding payment of service tax beyond due date said to be covered in favour of the assessee. Further, the assessee in this case, less educated and he has only dependent upon the consultant, went before the CIT(A). He was not aware of any prejudice before the CIT(A) and he went to new consultant for filing new return of income for subsequent assessment year. Bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onger res integra, as the following Coordinate Bench decisions have held that addition u/s.43B can only be made if it is claimed as deduction in the P&L A/c: i. N R Kumaraswamy Vs. ITO in ITA No.1778/Bang/2017, dated 31-05-2018; ii. Ken Consulting Pvt. Ltd. Vs. DCIT in ITA No.301/Bang/2019, dated 15-06-2019; Therefore, in view of the decisions of the Co-ordinate Bench, it is humbly submitted that the addition deserves to be deleted in the facts and circumstances of the case. 7.1. On the other hand, Ld.DR relied on the orders of the lower authorities. 8. We have heard the main argument of Ld.AR that assessee has not collected above service tax and only on collection, it should be payable to the Government exchequer. For this purpose, he relied on various judgments, specifically Hon'ble Bombay High Court in the case of CIT Vs. Ovira Logistics P. Ltd [377 ITR 129] (Bom) and also submitted that the service tax has not been shown as expenditure in the P&L A/c while computing income of the assessee. In our opinion, when the assessee collected the amount, it should not kept it with them and same should be deposited to the Government exchequer within the specified date and time. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in its P & L account as an expenditure and, therefore, section 43B has no application. However, he was of the view that the fact remains that service tax collected by the assessee but not paid to the Government account up-to the end of the financial year or even up-to the date of filing of the return of income and, thus, by not including this amount in its service, it had clearly made a claim indirectly. As rightly highlighted by the CIT(A), the assessee's plea that sales-tax was different from service tax cannot be accepted in the present circumstance as what the assessee was a firm of 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 Certificates and as such, the same should have been included in its receipts. This has not been precisely done by the assessee. The case laws relied on by the assessee is dealt with as under: (i) ACIT v. Real Image Media Technologies (P) Ltd. (ITAT Chennai): 7.2.1 The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or even up-to the date of filing of the return of income. Thus, the case law relied on by the assessee is distinguishable and cannot come to the rescue of the assessee. (ii) CIT v. Noble and Hewitt India (P) Ltd (Del) 7.2.2 The Hon'ble Delhi High Court was predominantly concerned with the disallowance of deduction by invoking the provisions of section 43B of the Act. The Hon'ble Delhi High Court was not considering the issue whether the service tax collected and the remaining unpaid till the due date of furnishing of the return forms the part of the total income for the current year. (iii) DCIT v Manish M Chheda 29SOT 138 - Mumbai ITAT 7.2.3 In the above case, the Hon'ble Mumbai Tribunal was considering the applicability of section 28(iv) of the I T Act. In the instant case, it is an admitted fact that during the course of assessee's profession, a sum of Rs. 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 assessee could utilise this amount in any manner whatsoever, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with method of accounting regularly employed by the assessee; and (ii) further adjusted to include the amount of any tax, duties, cess or fees, by whatever name called, actually paid or incurred by the assessee, to bring the goods to the place of its location and condition, as on the date of valuation. As per the explanation under the said clause, it is pointed out that for the purpose of this section, any tax, duties, cess or fees, by whatever name called, under any law for the time being in force, shall include all such payments, notwithstanding any right arising as a consequence to such payments. Sub-clause (b) talks of interest received by the assessee on compensation or enhanced compensation, which is not relatable to the issue before us. The aforesaid provisions of section 145A of the Act have been substituted by the Finance (No.2) Act, 2009 w.e.f. 01.04.2010. Prior to its substitution, which was inserted by the Finance (No.2) Act, 1998 w.e.f. 01.04.1999, the section provided the provision relatable to the valuation of purchase and sale of goods and inventory, for the purpose of determining the income chargeable under the head profits and gains of business or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever name called, under any law for the time being in force, or 8. Rule 4 of the CENVAT Credit Rules, 2004 reads as under : Rule 4. Conditions for allowing CENVAT credit.- (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service: Provided that in respect of final products, namely, articles of jewellery falling under heading 7113 of the First Schedule to the Excise Tariff Act, the CENVAT credit of duty paid on inputs may be taken immediately on receipt of such inputs in the registered premises of the person who get such final products manufactured on his behalf, on job work basis, subject to the condition that the inputs are used in the manufacture of such final product by the job worker. (2) (a) The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year: Provided that the CENVAT credit in respect of capital goods shall be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the manufacturer or provider of output service claims as depreciation under section 32 of the Income-tax Act, 1961( 43 of 1961). (5) (a) The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re-conditioning, or for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer or provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer or provider of output service can take the CENVAT credit again when the inputs or capital goods are received back in his factory or in the premises of the provider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollected any amount in excess of the service tax assessed or determined and paid on any taxable service under the provisions of this Chapter or the rules made there under from the recipient of taxable service in any manner as representing service tax, shall forthwith pay the amount so collected to the credit of the Central Government. (2) Where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government. (3) Where any amount is required to be paid to the credit of the Central Government under sub-section (1) or sub-section (2) and the same has not been so paid, the Central Excise Officer shall serve, on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government. (4) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom the notice is served under subsection (3), determine the amount due from such person, not being in excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint of taxation to the extent of such excess amount, at the option of the provider of taxable service, shall be determined in accordance with the provisions of clause (a). Explanation - For the purpose of this rule, wherever any advance by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance." 13. After considering the above provisions, it is clear that the assessee has to pay service tax within due date as set out under the above provisions either by way of cash/cheque or by way of availing CENVAT credit as per Rules as stated above, but the assessee did not do so. The liability of service tax had also arisen as per the point of Taxation Rules, as stated above. 14. Now, we have to examine the case of the assessee in the light of the above provisions. During the impugned year, the assessee has credit balance of service tax payable as on 31.03.2013 of Rs. 1,16,09,924/- which was to be paid upto 31.03.2013 by the assessee, but he did not pay. Further, the assessee had paid a sum of Rs. 30,83,457/- before filing of IT return. As per section 43B(a), the above outst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act". 8.1. Contrary to this, the Tribunal in the case of ITO Vs. Speed Trans Cargo Pvt. Ltd. in ITA No.1969/Bang/2019, dt.31-03-2021, held as under: "7. We have heard rival submissions and perused the material on record. The learned DR contended that the amount of unpaid service tax amounting to Rs. 4,35,91,191 whether it has claimed as deduction in the profit and loss account was never examined by the A.O. and the CIT(A) without giving an opportunity to the A.O. by placing reliance on the additional evidence allowed the appeal of the assessee. The learned AR does not have any grievance for remitting the issue to the A.O. to examine whether the unpaid service tax has been claimed as a deduction in the profit and loss account. Therefore, this issue is restored to the files of the A.O. The A.O. is directed to examine whether the assessee had claimed the unpaid service tax as an expenditure / deduction in the profit and loss account. In the event the same is not claimed as a deduction / expenditure, the A.O. shall not invoke the provisions of section 43B of the I.T.Act in view of the judgment of the Hon'ble Bombay High Court in the case of CIT v. Knight Frank (India) Pvt. Ltd. (su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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