SDCE PROJECTS PRIVATE LIMITED,VADODARA, GUJARAT vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, VADODARA, GUJARAT

PDF · subscribers
ITA 1393/AHD/2025Status: DisposedITAT Ahmedabad29 April 2026AY 2016-20175 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the service tax amount was not debited to the Profit & Loss Account but was shown as a liability in the Balance Sheet, it did not affect the Profit & Loss Account for the assessment year. Therefore, the addition was not justified.

What were the facts?

The assessee company, engaged in civil work contracts, had its income selected for scrutiny. The Assessing Officer made an addition of Rs. 89,01,461/- on account of late payment of service tax.

What were the issues?

Whether the disallowance of service tax on account of late payment, when not debited to the Profit & Loss Account, is justified under Section 43B of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 43B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD

Before: DR. BRR KUMAR & MS. SUCHITRA KAMBLE

For Respondent: Shri Abhijit, Sr. D.R
Hearing: 03.03.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. No. 1393/Ahd/2025 (Assessment Year: 2016-17) SDCE Projects Pvt. Ltd., Vs. Assistant Commissioner of Tower-A, 2nd Floor, Darshnam Oxy Income Tax, Park, Vasna Bhayli Road, Circle-2(1)(1), Vadodara-390015 Vadodara [PAN No.AALCS7588K] (Appellant) .. (Respondent) Shri Parin Shah, AR Appellant by : Respondent by : Shri Abhijit, Sr. D.R. Date of Hearing 03.03.2026 29.04.2026 Date of Pronouncement O R D E R PER: SUCHITRA KAMBLE, JM: The appeal filed by the assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi on 03.03.2025 for A.Y. 2016-17.

2.

The grounds of appeal raised by the assessee are as under:

“1. On the facts and the circumstances of the case and as per law, the H'ble CIT(A) has erred in confirming addition made by the Ld. Assessing Officer and as a result, appeal of the Appellant Company is dismissed. 2. On the facts and circumstances of the case and in law, the H’ble CIT(A) has erred in facts and in law, by confirming addition of Rs.89,01,461/- on account of Late payment of Service Tax - Disallowance u/s 43B of the Income Tax Act, 1961. Your Appellant submits that addition made is not justified and same be deleted. 3. On the facts and circumstances of the case and in law, the H'ble CIT(A) has erred in not appreciating the fact that the Appellant Company has duly paid whole

ITA No. 1393/Ahd/2025 SDCE Projects Pvt. Ltd. vs. ACIT Asst.Year–2016-17 - 2 - amount of Service Tax Liability of Rs.1,22,16,469/- for the year under consideration and hence addition/disallowance made is unjust and same be deleted. 4. On the facts and circumstances of the case, the H'ble CIT(A) has overlooked Appellant's submission dated 28.02.2025 as no inference or consideration of the said submission is discernible forming part of the impugned order, thereby indicating that the Appellant's submission has been completely disregarded by the H'ble CTT(A). 5. On the facts and circumstances of the case, the impugned Order appears to have been passed in a mechanical and hurried manner, without proper consideration of the facts and submissions placed on record. Order u/s 250 of the Act was passed by H'ble CIT(A) in just two clays of Submission of Written Submission i.e. on 03.03.2023, Appellant has made Written Submission on 28.02.2025 comprising of various facts and supporting evidences but. just within two days thereafter. Order u/s 250 of the Act was received; 01.03.2025 & 02.03,2025 being Saturday and Sunday respectively. The matter being long pending with H'ble CIT(A) and considering the gravity and cruciality of the facts on record it can be said that the Order was passed in undue haste, thereby failing to exercise the requisite judicial discretion and fairness expected under the provisions of the Act. 6. On the facts and circumstances of the case and in law, the H'ble CIT(A) has passed the impugned Order in undue haste, without affording sufficient opportunity of virtual hearing and/or stating requirement for further details/documents/ explanation in conjunction with Submission made on 28.02.2025 as prayed while making submission dated 28.02.2025, thereby violating the principles of natural justice. 7. On the facts and circumstances of the case, the Ld. Assessing Officer has unlawfully hold Refund due to the Appellant Company for various Assessment Years since filing of Appeal even after payment of 20% of Tax Demand due as per Notice of Demand. The Appellant Company is a registered 'Micro, Small and Medium Enterprise (MSME)' engaged in active business operations. 'The Appellant Company not only contributes to economic activity but also provides employment to a large number of unskilled and semi-skilled workers, thereby supporting livelihoods and promoting inclusive growth. Due to unnecessary hold of Refund, despite of all necessary compliance and documentation being submitted, Appellant Company is facing serious financial hardship which is adversely affecting its ability to meet operational costs, finance costs and other dues. 8. The Appellant craves to leave, to add, to amend and/or to alter any of the ground of appeal, if need be.” 3. The brief facts of the case are that the assessee had e-filed its return of income and declaring total income at Rs. 25,24,800/-. The case was selected for complete scrutiny under CASS. The assessee company is engaged in the

ITA No. 1393/Ahd/2025 SDCE Projects Pvt. Ltd. vs. ACIT Asst.Year–2016-17 - 3 - business of civil work contract. Notice under Section 143(2) and notice under Section 142(1) of the Income Tax Act were issued to the assessee. In response, Shri DC Parikh, CA Authorized Representative of the assessee company furnished submission through. The details / information furnished by the AR have duly been considered. After verification of the details furnished during the course of assessment proceedings and examination of return of income, following addition has made by the Assessing Officer on account of late payment of service tax Rs. 89,01,461/-.

4.

Being aggrieved by the assessment order the assessee filed appeal before the CIT(A), the CIT(A) dismissed the appeal of the assessee.

5.

There is a delay of 31 days for which the assessee has filed the delay condonation application and the reason given therein appears to be genuine. Hence, the delay is condoned.

6.

Being aggrieved by the order of the CIT(A), the assessee filed appeal before the Tribunal.

7.

The Ld. AR submitted that the assessee has shown gross revenue of Rs. 10,81,51,882.43/- during the year under consideration with the net sales of Rs. 9,34,92,588.22/- only and service tax of Rs. 1,46,59,294.21/- was reduced by assessee. The assessee has debited the amount of service tax in the Profit & Loss Account by reducing the amount from the gross revenue only for the purpose of presentation from Company Act 2013, 2013 and in the books of account the same was not shown in Profit & Loss Account. But the same was accounted and shown as liability in the Balance Sheet without

ITA No. 1393/Ahd/2025 SDCE Projects Pvt. Ltd. vs. ACIT Asst.Year–2016-17 - 4 - giving effect in Profit & Loss Account. The company is engaged in the business of civil work contract and required to pay service tax to the Central Government as per accounting policies regularly followed, the company has not debited the amount of service tax to the Profit & Loss Account but credits as liability to the Balance Sheet as current liabilities under the head service tax payable and service tax payable is debited as and when the payment of service tax is made. The assessee operates only as intermediator between its customers and government for service tax liability. The Ld. AR relied upon the decision of Hon’ble Delhi High Court in case of CIT vs. Noble and Hewitt (I) (P) Ltd. 305 ITR 324. The Ld. AR also relying on the decision of the Tribunal in assessee’s own case for AY 2013-14.

8.

The Ld. DR relied upon the assessment order and the order of the CIT(A).

9.

We have heard both the parties and perused all the relevant materials available on record. The Assessing Officer made addition of Rs. 89,01,461/- on account of late payment of service tax but since the assessee has not debited the amount of service tax in the Profit & Loss Account by reducing the amount from the gross revenue only for the purpose of Companies Act, besides this the assessee itself books of account has not shown the said amount in Profit & Loss Account but accounted as liability in Balance Sheet which has not resulted any effect in the Profit & Loss Account. Thus, the assessee has taken a cognizance view and therefore, that cannot be treated as addition in the present assessment year as the Ld. AR supported in the subsequent year the same said liability has not been shown as the service tax

ITA No. 1393/Ahd/2025 SDCE Projects Pvt. Ltd. vs. ACIT Asst.Year–2016-17 - 5 - payment would be made in the year under consideration. Thus, the appeal of the assessee is allowed.

10.

In result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 29/04/2026

Sd/- Sd/- (DR. BRR KUMAR) (SUCHITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 29/04/2026 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

1.

Date of dictation 29.04.2026 2. Date on which the type draft is placed before the Dictating Member 29.04.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S .04.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement .04.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 29.04.2026 7. Date on which the file goes to the Bench Clerk 29.04.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. Date of Dispatch of the Order……………………………………

More judgments on Section 43B

All 7,161 judgments and leading authorities on Section 43B →

Recent GST High Court judgments

Search GST case law →