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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 ..... ining, the AO took a decision that it has been collected and same was confirmed by the CIT(A) in the ex-parte order. In our opinion, it has to be verified in the light of judgement of Hon ble Bombay High Court in the case of CIT Vs. Ovira Logistics P. Ltd [ 2015 (4) TMI 684 - BOMBAY HIGH COURT] Accordingly, we remit this issue to the file of AO to examine whether the assessee actually collected and received the amount and kept with him without depositing to Government exchequer. If the assessee actually received from its customers and kept it without depositing the same within due date of filing of return of income u/s.139(1) of the Act, then only the AO has to invoke the provisions of Section 43B and bring that amount to tax.- Appeal of assessee is treated as partly allowed for statistical purposes. - ITA No. 680/Bang/2020 - - - Dated:- 11-4-2022 - Shri Chandra Poojari, AM And Smt. Beena Pillai, JM For the Assessee : Sri Sreehari Kutsa, Advocate For the Revenue : Sri Priyadarshini Mishra, Addl. CIT ORDER PER CHANDRA POOJARI, A.M. : This appeal filed by the assessee is directed against the ex-parte order of the CIT(A)-3, Bengaluru dated 22-01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, the assessee is in appeal before. 3. At the outset, it is noticed that there was delay of 951 days in filing of appeal before this Tribunal. The Ld.AR submitted that assessee has not well educated and passed only 10th class and entrusted work of filing of appeal to an auditor, who in turn given the work to one Mr.Satyanarayana, who failed to appear before the CIT(A) on various occasions that the assessee was not aware of the proceedings before the CIT(A). Either the auditor not taken up the issue before the CIT(A) or communicate the order of the CIT(A) to the assessee. The assessee further submitted that the assessee came to know about the passing of order by CIT(A) when the assessee went to the new consultant for filing the return of income, he noticed the pendency of outstanding demand in income tax login portal. He sought advice from the present counsel, who advised for filing the present appeal before this Tribunal, which caused delay of 951 days. Out of this, 678 days is upto the date of pre Covid-19 Pandemic and balance 273 days days were due to post Covid-19 Pandemic. He requested that the delay may be condoned in the interest of justice, otherwise it cause un-bearabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause , the principle of advancing substantial justice is of prime importance. 7. That being so, the case-law relied before us by the learned counsel for the assessee has no application to the facts of the present case. Further I make it clear that there is no hard and fast rule which can be laid down in the matter of condonation of delay and Courts should adopt a pragmatic approach and discretion on the facts of each case keeping in mind that in considering the expression sufficient cause the principles of advancing substantial justice is of prime importance and the expression sufficient cause should receive a liberal construction. A liberal view ought to be taken in terms of delay of few days. However, when there is inordinate delay, one should be very cautious while condoning the delay. The delay of 744cannot be condoned simply because the assessee s case is hard and calls for sympathy or merely out of benevolence to the party seeking relief. In granting the indulgence and condoning the delay, it must be proved beyond the shadow of doubt that the assessee was diligent and was not guilty of negligence whatsoever. The sufficient cause within the contemplation of the lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income tax brief, but not able to deliver and there was a delay from his end. 7. However, the assessee has not produced any evidence of his CA, Mr. Sharanagouda Patil who advised assessee to contact Mr. Badiger, Advocate. Further, there is no evidence to suggest about the date of handing over the documents to Advocate and it is not mentioned what are the papers given to Mr. Badiger for preparation of filing of appeal and what is the advise given to the assessee during this 310 days. There is no material to suggest to suggest the professional charges so as take up filing of appeal before the Tribunal. The assessee has failed to bring any material on record to prove his bonafide attempt in filing the appeal. The assessee merely furnished one letter from Mr. Badiger, Advocate for seeking condonation of delay in filing the appeal along with affidavit. Except these, the assessee has not brought out any other material to prove his bonafide attempts to file the appeal. In our opinion, the assessee has not acted with due diligence in prosecuting the appeal. On the other hand, the assessee was negligent in his attitude in taking steps to file the appeal. In the absence of any evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the parties and perused the material on record. In this case, there was an actual delay of 951 days, out of which 273 days relates to post-covid delay, which need not to be considered at this stage. We have to consider only the delay of 678 days in filing of appeal before this Tribunal. The assessee explained delay on account of ex-parte order passed by the CIT(A) in view of the nonparticipation of assessee s assigned counsel before the CIT(A) and the assessee is not well educated, wholly depends upon the assessee s consultant for disposal of the appeal before the CIT(A). The assessee was not aware of the proceedings before the CIT(A) and also ex-parte dismissal of the appeal by the CIT(A) only came to know about CIT(A) when the assessee approached new consultant for filing of return of income and the same was explained by the assessee by way of affidavit before us. No counter affidavit is filed by the department stating the above averments made by the assessee is not banafide. At this point it is appropriate to go the judgment of Hon ble Supreme Court in the case of Collector, Land Acquisition Vs. Mst.Katiji Ors [167 ITR 471] (SC) wherein held that : (1) Ordinarily, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) of the Act. In our opinion, the CIT(A) already deleted the addition made on this count in para 4.2 of this order being so this ground of appeal is infructuous accordingly the same is dismissed. 7. Next ground is with regard to the addition of ₹ 46,24,823/- in respect of the service tax collected and not remitted to the Government account. The facts of the issue are that the assessee collected a sum of ₹ 46,24,823/- towards service tax payment, which was not deposited to the Government exchequer and the same was made as an addition by the lower authorities, invoking the provisions of Section 43B of the Act. The contention of the Ld.AR is that service tax liability was never claimed as expenditure in the P L A/c to determine the net profit chargeable to tax. Further it was submitted that service tax actually collected but not remitted by the assessee. Further, he submitted that addition u/s.43B is sustainable in view of the following: a. It is submitted that the language of Section 43B is expressly clear in confining itself to only a deduction otherwise allowable under this Act shall be allowed in computing the income referred to in Section 28 of that previous ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch, the issue whether the provisions of section 43B of the I.T.Act applies to service tax, which is not paid before the due date of filing of the return. It was considered by the co-ordinate Bench of the ITAT, Hyderabad Benches in the case of M/s.Bartronics India Ltd. v. ACIT [ITA No.2188 and 2189/Hyd/2011 order dated 31.05.2012] that when the assessee has not paid the service tax as required under the provisions of section 43B, which is also very much covered u/s 43B of the I.T.Act. The provisions of section 43B of the Act is very clear and it states that any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force . Therefore, even the service tax is liability which covers u/s 43B of the Act and non-payment of the same within the ITA No.3417/Bang/2018 M/s.Wyzmindz Solutions Pvt.Ltd. 7 stipulated time as specified u/s 43B of the Act attracts disallowance. Now the question is that when the assessee has not claimed it as expenditure in the profit and loss account, could it be disallowed u/s 43B of the Act. This was considered by the Hon ble Apex Court in the case of Chowringhee Sales Bureau P. Ltd. v. CIT [( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly on receipt of service tax from the client. Therefore, the amount of service tax included in bills but not received could not be disallowed under s. 43B . After analysing the relevant provisions of Income tax Act as well as Service Tax Act, the Tribunal had, further, recorded its findings as under: 12 From a plain reading of the above provision it becomes clear that the rigour of this provision would be attracted only in a case where an item is allowable as deduction but because of the failure to make payment such deduction will not be allowed. It can be argued that in the case of ST also the assessee does not claim deduction since it has been held that non-payment of Sales-tax would attract provisions of section 43B, but that is being done on the basis of the principles laid down by the Hon ble Supreme Court in the case of Chowranghee Sales Bureau Ltd. V CIT 110 ITR 385 that Sales-tax is part of the trading receipt. Further, section 145A clearly provides that for the purpose of determining income under the head profits and gains of business or profession, the amount of purchase and sales i.e. turnover would include any tax, duty cess or fee. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e total income, the same is to be allowed as a deduction in the year it is paid to the Government account. In the instant case, this is what has been done by the learned CIT(A). The CIT(A) had allowed the alternative plea of the assessee and had directed the Assessing Officer to deduct the service tax when the payment is made to the Govt. account in the subsequent year. Therefore, we find there is no merit in the contention raised on behalf of the assessee and this issue is decided against the assessee. It is ordered accordingly. 6.1 Further, in the case of M/s.Hemkunt Infratech (P) Ltd. v. DCIT [ITA No.6683/Del/2017 order dated 23.03.2018], the Delhi Benches of the Tribunal held as under:- 6. After hearing both the sides and perusing the entire material available on record, we observe that there is a credit balance of ₹ 1,16,09,924/- at the end of the year towards expenses payable. The assessee submitted that it is service tax liability, which arose due to crediting the service tax received from the service recipients. The assessee has challenged before us, the disallowance of ₹ 85,26,467/- disallowed u/s. 43B of the Act. We observe that the assessee has recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n provided that the said valuation would be in accordance with the method of accounting regularly employed by the assessee i.e. either mercantile or cash. Further, adjustment is to be made 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 valuation date. In other words, where any expenditure is actually paid or incurred by the assessee by way of any tax, duties, cess or fees, by whatever name called, then adjustment is to be made both in the valuation of purchase and sale of goods and also in the valuation of inventory to include the aforesaid amounts while determining the income chargeable under head profits and gains of business or profession. The assessee has separately accounted for the service tax collected is also the indirect part of turnover because it is received along with turnover. The assessee has not shown any invoice raised by him before us as per service tax Rules, which is mandatory for the service provider to issue invoice to the service recipient. He has also not produced any evidence regarding payment received from serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer. Provided also that where an assessee is eligible to avail of the exemption under a notification based on the value of clearances in a financial year, the CENVAT credit in respect of capital goods received by such assessee shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year. Explanation.- For the removal of doubts, it is hereby clarified that an assessee shall be eligible if his aggregate value of clearances of all excisable goods for home consumption in the preceding financial year computed in the manner specified in the said notification did not exceed rupees four hundred lakhs. (b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, or in the premises of the provider of output service, if the capital goods, other than components, spares and accessories, refractories and refractory materials, moulds and dies and goods falling under heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act, are in the possession o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the case may be, having jurisdiction over the factory of the manufacturer of the final products who has sent the input or partially processed inputs outside his factory to a job-worker may, by an order, which shall be valid for a financial year, in respect of removal of such input or partially processed input, and subject to such conditions as he may impose in the interest of revenue including the manner in which duty, if leviable, is to be paid, allow final products to be cleared from the premises of the job-worker. (7) The CENVAT credit in respect of input service shall be allowed, on or after the day which payment is made of the value of input service and the service tax paid or payable as is indicated in invoice, bill or, as the case may be, challan referred to in rule 9. 9. As per Rule 6(1) of the Service Tax Rules, 1994, in case of company, service tax is to be paid on a monthly basis by 5th of the following month (in case of e-payment, by 6th of the month immediately following the respective month). However, the payment for the month of March is required to be made by 31st of March itself. As per Rule 6(4) of the Service Tax Rules, 1994, the assessee can pay for prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable service referred to in sub-section (1). (6) Where any surplus amount is left after the adjustment under subsection (5), such amount shall either be credited to the Consumer Welfare Fund referred to in section 12C of the Central Excise Act, 1944 or, as the case may be, refunded to the person who has borne the incidence of such amount, in accordance with the provisions of section 11B of the said Act and such person may make an application under that section in such cases within six months from the date of the public notice to be issued by the Central Excise Officer for the refund of such surplus amount.] 12. We further observe that the point of taxation as per Rule 3 of Point of Taxation Rules, 2011 is as under : RULE 3. Determination of point of taxation. - (Notification No. 18/2011- ST dt. 01.03.2011 as amended). For the purposes of these rules, unless otherwise provided, point of taxation shall be,- (a) the time when the invoice for the service provided or agreed to be provided is issued : Provided that where the invoice is not issued within the time period specified in rule 4A of the Service Tax Rules, 1994, the point of taxation shall be the date of completion of provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he service tax received separately. Since the assessee did not pay service tax as contemplated u/s. 43B(a) and as per above provisions of Service Tax Act within the stipulated time, therefore, the ld. CIT(A) has rightly disallowed the same u/s. 43B of the IT Act. The case laws relied by the assessee are based on different footings as in all the decisions it was held that Service Tax was not at all payable because the service Tax was not received from the customer. The law prevailing at that particular time was that Service Tax was to be paid to the Government only when Service Tax is received from the service receiver to the service provider. Subsequently, there is change in the law which provides that Service Tax is to be deposited by the service provider even if service tax is not paid by the service receiver to the service provider. Therefore, in all those decisions it was held that service tax outstanding is hit by the provisions of Section 43B of the Income Tax Act. 1961. Due to the change in the law now those decisions does not help to the assessee. Moreover, the assessee has filed the service tax returns belatedly, i.e., for April to June on 16.04.2015, for July to September ..... X X X X Extracts X X X X X X X X Extracts X X X X
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