9911796707
TMI Blog2024 (7) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue against the revenue - the contention of assessee that the issue in the present case is totally covered by the order of Hon ble Jurisdictional High Court is found to be devoid and bereft of substance, as the facts of the present case are distinguishable from the facts in the case of Ganapati Motors (supra). Herein, it is pertinent to mention that the decision of Hon ble Jurisdictional High Court is binding on the tribunal, the tribunal is under abundant duty to adopt the same by ritually following each and every word emanating from the said judgment, therefore, going by the Judicial discipline, respectfully adhering to the ratio of law laid down wherein the question of law was answered in favour of the assessee, conditionally, directing the revenue not to invoke the provisions of section 43B de hors any adverse inference regarding accounting modalities of the assessee, however, in the present case the very condition / inferences / doubt on accounting system is discernible in the order of Ld. CIT(A), moreover specifying the reasons for such adverse inference, absence of which was the foundation of the judgment in favour of the assessee in the case of Ganapati Motors (supra). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid cross appeals are instituted at the instance of the assessee as well as the department against the order of Commissioner of Income Tax (Appeals), ADDL/ JCIT(A-3), Chennai (in short Ld. CIT(A) ), dated 15.03.2024, passed u/s 250 of the Income Tax Act, 1961 (in short The Act ), for the Assessment Year 2018-19, which was resulted in consideration of appeal of the assessee before the Ld. CIT(A), against the intimation u/s 143(1) of the Act, issued on 09.02.2020 by Centralized Processing Centre (CPC), Income Tax Department, Bangaluru (in short Ld. AO ). 2. First, we shall be taking up the appeal of the assessee in ITA No. 195/RPR/2024, wherein grounds of appeal raised, reads as under: 1. The learned CIT (Appeal) erred in not appreciating the facts of the appellant's case and hence the basis on which the proceedings are completed is not in accordance with the law. 2 That the Id. CIT(A) erred in sustaining addition of Rs. 6232262/- on account of VAT, which has not been debited to profit loss account. The case of the appellant is covered by Jurisdiction High Court decision in the case of Ganpati motors v/s State of Chhattisgarh and Hon'ble ITAT Raipur Bench in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. 4. Aggrieved with the aforesaid additions, assessee preferred an appeal before the first appellate authority i.e., Ld. CIT(A) u/s 246A(1)(a) of the Act. 5. Contentions of the assessee were duly considered by the Ld. CIT(A) during the appellate proceedings before him, however, he was not fully persuaded with the explanations / arguments of the assessee, consequently, the appeal of the assessee was partly allowed by the Ld. CIT(A) with the following observations / decision: 5. Decision:- 5.1 The primary contention in this case revolves around the disallowance by the AO(CPC) of Rs. 2,50,90,568/- towards outstanding VAT liabilities of Rs. 2,42,29,739/- Entry tax amounting to Rs. 7,28,661/-, and CST Rs. 1,32,168/- under section 43B of the Income Tax Act due to the inconsistencies between ITR and TAR (Tax Audit Report) which was filed in Form 3CD on 30.3.2019. 5.2 It is observed from records that the appellant had filed original Form 3CD on 30.3.2019 for the A.Y. 2018-19, wherein the auditor has reported unpaid statutory liabilities of Rs. 2,50,90,568/- as on 31.3.2018 as under:- 26(i)(B)(b) Not paid on or before the aforesaid date Section Nature of liability Amount Tax, Du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal turnover, rendering the appellant's exclusive method inconsistent with statutory requirements. 5.4.3 The inclusion of VAT in turnover has been upheld by Income Tax Appellate Tribunal (ITAT), Varanasi by the Honorable ITAT, Varanasi vide ITA No. ITA No.3/VNS/2022 dated 25.8.2022 Assessment Year: 2019-2020 in the case of Smt. Husna Parveen, N-12/224, Bajardiha, Varanasi PANCSEPP4360A vs Commissioner of Income Tax (Appeal), National Faceless Appeal Centre (NFAC), Delhi, following the Supreme Court decision in the case of Chowringhee Sales Bureau (P.) Ltd. v. CIT [1973] 87 ITR 542 (SC). 5.4.4 The appellant's argument that the issue is debatable and cannot be invoked under section 143(1) is rejected. The AO(CPC) utilized clauses (a)(iv) of subsection (1) of section 143(1) to disallow the GST payable. The broad scope of intimation under section 143(1)(a), allowing adjustments based on errors apparent from the return of income, is supported by a relevant decision of the Hon'ble Madras High Court. AA520 in the case of Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. vs. DCIT (2022) 138 taxmann.com 571 Therefore, the appellant's claim that CPC cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions to Ld. AO to reopen the case of assessee for earlier years. On such request of the Ld AR to withdraw the aforesaid ground, revenue has not shown any protest. Considering the request of the assessee, which was not objected by the department, the permission to withdraw ground no. 8 has been granted, accordingly, said ground of assessee s appeal, stands dismissed as withdrawn. 8. Coming to ground no. 1 to ground no. 7 of the present appeal of the assessee, assailing the sole controversy involved in the present case, qua the addition / disallowances of Rs. 62,32,262/- on account of nonpayment of VAT before the prescribed date for filing of return u/s 139(1) of the Act. It was the submission of Ld AR, that the amount of VAT was not debited to the profit and loss account, as exclusive method of accounting was followed by the assessee. Ld. AR further added that under similar facts and circumstances additions were vacated by the ITAT, Raipur, which was further approved by the Hon ble Jurisdictional High Court, thus, the assessee has the support of settled jurisprudence in its favour which the Ld. CIT(A) had not accepted. Ld. AR on this aspect had placed reliance and averred tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The fundamental issue that arises for decision is, as to whether a particular amount which is subject matter of the appeal is to be treated as relatable to Value Added Tax (VAT) payable by the assessee and, if so, whether it has to be actually paid by him before filing of the return under the Income Tax Act. This question is relevant, having regard to the manner in which the question of law has been framed. The issue as to whether Section 43-B of the Income Tax is attracted even when the assessee does not claim any deduction on the strength of that provision may also be relevant. 3. The Assessing Authority, on the instant issue, noticed that the assessee s claim regarding the treatment of VAT in the Books of Accounts has been verified from the Books and that has been found to be in order. The Assessing Authority also found that VAT has been found separately accounted for in the Books of Accounts. The only ground on which the Assessing Authority refused to exclude the VAT collected by the dealer from the profit of business is on the basis that the VAT component was not paid off on or before the due date for furnishing the return in relation to the previous year under Section 139( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay, against the revenue and in favour of the assessee. Ganeshan Puroshothaman Achari Vs. The Deputy Commissioner of Income Tax CPC, Bengaluru in ITA Nos. 146 to 148/RPR/2022 for the AY 2017-18 to 2019-20 11. I have given a thoughtful consideration to the issue in hand in the backdrop of the contentions advanced by the Ld. authorized representatives of both the parties. I may herein observe that the 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 (Income Tax Appeal) No.30 of 2016 dated 25.04.2017 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. For the sake of clarity, the relevant observations of the Hon ble High Court are culled out as under: 2. Heard learned Counsel for the revenue and learned Counsel for the respondent-assessee. The fundamental issue that arises for decision is, as to whether a particular amount which is subject matter of the appeal is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it and Loss accounts and Service Tax accounts are maintained separately following mercantile system of accounting. As rightly noticed therein, it is not for the Income Tax department to make out a case relating to the correctness or otherwise of the mercantile system of accounting, resorted to and maintained by an assessee. The acceptability or otherwise of the accounts in a mercantile system would obviously be a matter of concern for other taxation authorities. 6. In the case in hand, as already noted, the fact situation that the Assessing Authority and the First Appellate Authority did not doubt the modality of the accounting system adopted by the assessee is an outstanding phenomenon which goes in favour of the assessee. Under such circumstances, it is not necessary for the authorities to consider, whether Section 43-B of the Income Tax is to be relied on by the assessee to claim any deduction. 7. For the aforesaid reasons, on the facts and circumstances of the case in hand, we answer to the question formulated in these appeals in the negative, that is to say, against the revenue and in favour of the assessee. 12. Considering the aforesaid judgment of the Hon ble Jurisdictional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court has categorically answered the question of law raised by the revenue, against the revenue and in favour of the assessee, but under specific circumstances, observing as under: 6. In the case in hand, as already noted, the fact situation that the Assessing Authority and the First Appellate Authority did not doubt the modality of the accounting system adopted by the assessee is an outstanding phenomenon which goes in favour of the assessee. Under such circumstances, it is not necessary for the authorities to consider, whether Section 43-B of the Income Tax is to be relied on by the assessee to claim any deduction. (emphasis supplied by us) 12. Adverting to the analogy drawn by the Hon ble Jurisdictional High Court that in aforesaid case, wherein the modality of the accounting system adopted by the assessee are not doubted by the revenue authorities below, then in that case the question to invoke provisions of section 43B does not arise or necessitate, as answered in favour of the assessee, with a precise remark that, under such circumstances it is not necessary for the authorities to consider, whether Section 43-B of the Income Tax is to be relied on by the assessee to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentions of the assessee. We may herein again observe that, the question of law framed in the case of Ganapati Motors (supra) was answered against the revenue under specific circumstances, observing that, the revenue authorities have not raised any doubt regarding modality of accounting system adopted by the assessee, then the revenue is not supposed to look into the claim of assessee qua deduction u/s 43B. Contrary to the circumstance, under which the judgment in the case of Ganapati Motors (supra) was accorded, in the present case, Ld. CIT(A) had specifically taken a note of infirmities in the accounting system of the assessee, stating in loud and clear words that, the assertions of the assessee that it was following the exclusive accounting method by not debiting the amount of taxes to its profit and loss account, is untenable. It was further observed by him (Ld. CIT(A)) that, such accounting treatment is not tenable under the statutory provisions and accounting standards, necessitating the assessee to include the amount of VAT in turnover, which the assessee has not followed in an attempt to avoid disallowance u/s 43B, through alternative accounting methods which are impermissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment. Explanation 2. For the purposes of this section, (a) public financial institution shall have the meaning assigned to it in clause (72) of section 2 of the Companies Act, 2013 (18 of 2013); (b) recognised stock exchange shall have the meaning assigned to it in clause (ii) of Explanation 1 to clause (5) of section 43; (c) scheduled bank shall have the meaning assigned to it in clause (ii) of the Explanation to clause (viia) of sub-section (1) of section 36. (b) interest received by an assessee on compensation or on enhanced compensation, as the case may be, shall be deemed to be the income of the year in which it is received. 15. The aforesaid provisions of Section 145A(ii) are self-explanatory, that any tax, duty, cess or fee paid or incurred has to be taken into account for valuation of goods. Accordingly, it was not at the option for the assessee to adopt a method of accounting wherein valuation of the goods or service can be accountant for without including any tax, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rued that the First Appellate Authority has rightly recorded his dissatisfaction and doubt on the exclusive method of accounting by the assessee, much less, Ld CIT(A) had categorically rejected the method / modality of accounting system adopted by the assessee, whereas such observations of the authorities below were missing in the case of Ganapati Motors (supra), as observed by Hon ble High Court. It is apparent that, such missing observations was the circumstance / basis wherein Hon ble Jurisdictional High Court had decided the issue against the revenue. In view of such facts and circumstances, the contention of assessee that the issue in the present case is totally covered by the order of Hon ble Jurisdictional High Court is found to be devoid and bereft of substance, as the facts of the present case are distinguishable from the facts in the case of Ganapati Motors (supra). Herein, it is pertinent to mention that the decision of Hon ble Jurisdictional High Court is binding on the tribunal, the tribunal is under abundant duty to adopt the same by ritually following each and every word emanating from the said judgment, therefore, going by the Judicial discipline, respectfully adher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not debited to P/L Account, stands dismissed. 19. Ground no.9 of the present appeal of assessee is general and academic in nature, therefore, the same is dismissed as not pressed. 20. ITA No. 208/RPR/2024 by the revenue: Under common facts as described hereinabove, since the addition made through intimation u/s 143(1) by the CPC, Bangaluru were partly deleted by the Ld. CIT(A), therefore, the department is in appeal against the decision of Ld. CIT(A) qua the reliefs extended to the assessee. The grounds of appeal assailed by the department, reads as under: 1. Whether on the facts and in the circumstance of the case, and in law, the Id. JCIT(A) was justified in deleting the disallowance of Rs. 1,79,97,376/- on account of unpaid VAT? 2. Whether on the facts and in the circumstance of the case, and in law, the Id. CIT(A) was justified in deleting the disallowances of Rs. 1,32,168/- on account of CST payable? 2. Any other ground which may be adduced at the time of hearing. 21. Referring to the grounds of the appeal of the revenue wherein the controversy raised by the revenue regarding justification of part deletion by Ld. CIT(A), of disallowance made u/s 43B in intimation u/s 143(1) b ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
