APICES STUDIO PVT LTD, PREVIOUSLY KNOWN AS 3D ARCHITECTURE PVT LTD,THANE vs. INCOME TAX OFFICER, WARD 1(1), THANE , THANE

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ITA 8131/MUM/2025Status: DisposedITAT Mumbai30 September 2026AY 2013-146 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the crux of the dispute was the reconciliation of Service Tax collected and paid. It observed that the reconciliation statement, which would have been crucial, was not produced before the AO or the JCIT(A). Neither party objected to remitting the matter back to the lower authorities for verification and reconciliation. Therefore, in the interest of justice, the Tribunal set aside the impugned order of the JCIT(A) and remanded the specific issue of Service Tax reconciliation to the AO for fresh adjudication. The assessee was directed to cooperate and furnish all required information. Ground No. (iii) regarding the addition of Rs. 1,20,549/- was not pressed and was left undecided. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Apices Studio Pvt. Ltd. (formerly 3D Architecture Pvt. Ltd.), engaged in architecture and interior design services, filed its return for assessment year 2013-14 declaring a total income of Rs. 12,10,170/-. The Assessing Officer (AO) noted a discrepancy between AIR information showing gross total receipts of Rs. 1,28,33,258/- and the declared gross receipts of Rs. 1,13,68,109/-, a difference of Rs. 14,65,149/-. The AO added this amount to the assessee's total income as no response was received to the show cause notice. The assessee appealed to the JCIT(A), who confirmed the addition. The JCIT(A) noted that the assessee collected Service Tax of Rs. 13,44,600/- but failed to substantiate its deposit with the government, citing Supreme Court decisions that unremitted tax collected is assessable as income. The assessee's appeal to the ITAT challenges the confirmation of this addition.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the addition of Rs. 14,65,149/- made by the AO and confirmed by the JCIT(A) is legally tenable? (Question of law and fact, concerning the determination of total income). 2. Whether the Service Tax of Rs. 13,44,600/- collected by the assessee can be treated as its income and added to its total income? (Question of law and fact, concerning the nature of Service Tax). 3. Whether the addition of Rs. 1,20,549/- confirmed by the JCIT(A) is legally tenable? (Question of law and fact). Assessee's contentions: The assessee argued that Service Tax is a statutory levy collected on behalf of the Government and cannot form part of its total income. It also submitted a reconciliation statement of Service Tax collected and paid, along with supporting documents, which it claimed had been furnished in the assessment proceedings, though admitted these were not placed before the AO or JCIT(A). Revenue's contentions: The Departmental Representative supported the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “K (SMC

Before: SHRI ANIKESH BANERJEE & SMT RATNA DASGUPTA

For Appellant: Shri Ajay Uke (Sr. DR.)
For Respondent: Shri Ajay Uke (Sr. DR.)
Hearing: 02/09/2026Pronounced: 30/09/2026

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “K (SMC)” MUMBAI BEFORE SHRI ANIKESH BANERJEE (JUDICIAL MEMBER) AND SMT RATNA DASGUPTA (ACCOUNTANT MEMBER) ITA No. 8131/MUM/2025 Assessment Year: 2013-14 Apices Studio Pvt. Ltd, Income Tax Officer Ward (Previously known as 3D 1(1), Architecture Pvt. Ltd.), Vs. 6th Floor, Income tax 203, Lodha Supremus, Department, Ashar IT Park, Road No. 22, Wagle Estate, Thane, Thane, 400604 Maharashtra- 400601 Maharashtra- 400069 PAN NO. AAACZ2153L Appellant Respondent : Shri Tanmay Padhke Adv. Appellant by Respondent by : Shri Ajay Uke (Sr. DR.) Date of Hearing : 02/09/2026 Date of pronouncement : 30/09/2026

ORDER PER RATNA DASGPUTA, AM: The captioned appeal by the assessee is directed against order dated 15/09/2025 passed by Ld. Addl/JCIT(Appeals), Panaji, [in short, JCIT(A)] under section 250 of the Income-tax Act,1961[in short, ‘the Act’] for assessment year 2013-14 on the following grounds of appeal:- i. “On the facts and in the circumstances of the case and as per the law, the National Faceless Appeal Centre/Commissioner of Income Tax (Appeals) [the learned Commissioner (Appeals)] erred in confirming the addition of Rs 14,65,149/- (Rs. 13,44,600/- and Rs. 1,20,549/-) as made by the learned Respondent/Assessing officer. Thus, the said addition being untenable in law may be deleted.

Apices Studio Private Limited 2 ITA No. 8131/MUM/2025

ii. On the facts and in the circumstances of the case and as per the law, the learned Commissioner (Appeals) erred in treating the service tax of Rs. 13,44,600/- as income of the Appellant and consequently confirming the addition. Thus, the said addition being untenable in law may be deleted. iii. On the facts and in the circumstances of the case and as per the law, the learned Commissioner (Appeals) erred in confirming the addition of Rs. 1,20,549/-. Thus, the said addition being untenable in law may be deleted. iv. The Appellant craves leave to add, alter, rescind, or amend any of the above grounds of appeal.” 2. Briefly stated, the facts of the case are that the assessee is a registered company engaged in the business of providing services for architecture and interior design. For the year under consideration, the assessee filed its return of income on 28/09/2013, declaring a total income of Rs.12,10,170/-. The case was thereafter selected for scrutiny under CASS, and notices u/s 143(2) and 142(1) were issued and served on the assessee. During the course of assessment proceedings, the Ld. Assessing Officer (in short, AO) noted that while the AIR information showed that the assessee had gross total receipts of Rs.1,28,33,258/-during the relevant year, the assessee had disclosed gross receipts of only Rs. 1,13,68,109/- in its return of income. The assessee was asked to show cause why this differential amount of Rs.14,65,149/- should not be added back to its total income. It transpires from the assessment order that no response was received to this show cause notice. Presuming that the assessee had nothing to say in this matter, the Ld. AO added back

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Rs.14,65,149/- to the assessee’s total income. Aggrieved with this order, the assessee carried the matter in appeal before the Ld. CIT(A). In the course of proceedings before him, the Ld.CIT(A) noted that the assessee had collected Service Tax of Rs.13,44,600/- during the year but had failed to substantiate whether the same had been deposited with the Government. The assessee contended that service tax is not income but a statutory levy collected on behalf of the Government. The Ld. CIT(A) observed that while such indirect taxes like Service Tax do not form part of the business income when duly accounted for and remitted to the exchequer, this was a case where the assessee had failed to produce evidence, in the shape of challans or returns, to demonstrate that the collected service tax had actually been deposited in Government account. Citing the decisions of the Hon’ble Supreme Court in Chowringhee Sales Bureau Pvt Ltd v. CIT (110 ITR 385) and in Sinclair Murray & Co.(P) Ltd. v. CIT (97 ITR 615), where it was held that amounts collected as tax but not proved to be paid to the government are assessable as income, the Ld. CIT(A) held that the Ld. AO was justified in adding back the amount of Rs.13,44,600/- to the assessee’s total income. It is against this order of the Ld. CIT(A) that the assessee has preferred appeal before this Tribunal.

3.

Before us, the Ld. Authorized Representative of the assessee (in short, AR) filed a Paper Book containing, inter alia, copies of letters dated 03/12/2015 and 07/01/2016, along with their annexures,

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addressed to the Ld. AO. He tried to show that necessary financials, reconciliation statement, parties’ ledgers, Service tax ledgers, etc. had been furnished in the course of assessment proceedings.

3.1. The Ld. AR also submitted another Paper Book containing a month-wise reconciliation statement of Service Tax, together with copies of related documents, in the following format –

Statement of service tax for Financial Year 2012-13: Months Sales as per Sales as per Service Tax Service Service Input Tax Service Tax books (B) payable as Tax in tax paid Credit Return (A) per Service cash paid as per Availed (F) Tax Return as per return in (C) Books (D) cash (E) April 23,09,445 23,09,445 1,33,488.00 1,32,280 1,32,280 1,206.00 May 4,96,950 4,96,950 61,361.00 60,520 60,519 841.00 June 2,28,000 2,28,000 28,181.00 27,473 27,473 822.00 July 9,01,150 9,01,150 1,11,382.00 1,10,153 1,10,153 1,451.00 August 3,02,777 3,02,777 34,990.00 -- 34,990.00 September 6,03,499 6,03,499 74,592.00 70,290 70,290 4,287.00 October 10,44,942 10,44,942 1,23,044.00 1,02,993 1,02,993 20,050.00 November 13,70,099 13,70,099 1,69,344.00 1,68,170 1,68,169 1,176.00 December 14,16,297 14,16,297 1,74,375.00 1,30,077 1,30,077 44,297.00 January 2,73,060 2,73,060 33,750.00 32,331 32,310 1,440.00 February 11,62,713 11,62,713 1,43,712.00 1,17,976 1,17,784 25,926.00 March 12,59,178 12,59,178 1,26,999.00 -- 1,26,999.00 Total 1,13,68,110 1,13,68,110 12,15,218.0 9,52,263 9,52,048 2,63,485.00 0

Admittedly, these documents were not placed on record before the Ld. AO or the Ld. CIT(A).

3.2. The Ld. AR reiterated his view that Service tax, which is collected on behalf of the Government, cannot form part of the assessee’s total income for any given year. Per contra, the

Apices Studio Private Limited 5 ITA No. 8131/MUM/2025

Departmental Representative (in short, Sr. AR) supported the orders of the lower authorities.

4.

We have considered the rival submissions of both the parties in the light of the material placed before us. The crux of the disputed issue is reconciliation of Service Tax collected and paid to the Government. The reconciliation statement as above which in our opinion, would be crucial to set the controversy at rest, had not been produced either before the Ld. AO or before the Ld. CIT(A). Neither the Ld. AR nor the Departmental Representative expressed any objection to remitting the matter back to the lower authorities for necessary verification and re-conciliation. In view of this, in the interest of justice, we deem it fit to set aside the impugned order dated 15/09/2025 of the Ld. JCIT(A) and remand this specific issue to the file of the Ld. AO for fresh adjudication as per law after giving the assessee adequate opportunity of being heard. The assessee is also directed to cooperate in the fresh proceedings and furnish all relevant information/documents as may be required.

5.

Ground No. (iii) regarding addition of Rs.1,20,549/- has not been pressed before us. The same is, therefore, left open without any adjudication.

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6.

In the net result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open Court on 30/09/2026 Sd/- Sd/- (ANIKESH BANERJEE) (RATNA DASGPUTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 30/09/2026 Z.U., P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai

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