DEPUTY COMMISSIONER OF INCOME TAX 1(1), vs. M/S GANPATI MOTORS

PDF · subscribers
TAXC/29/2019HC ChhattisgarhCGHC01019764201924 July 2019Author: HON'BLE THE CHIEF JUSTICE,HON'BLE SHRI JUSTICE PARTH PRATEEM SAHU3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal, holding that no substantial question of law was raised. The Court noted that the issue had already been considered and decided by a coordinate bench of the same High Court in Tax Case No. 30 of 2016, decided on 25.04.2017, where interference was declined in a similar appeal preferred by the Department. The ITAT had finalized the matter by referring to this jurisdictional High Court verdict. Therefore, the High Court found no reason to disagree with the ITAT's decision, which was based on the prior ruling of a coordinate bench. The operative direction was the dismissal of the appeal.

What were the facts?

The Deputy Commissioner of Income Tax (Appellant) appealed against an order of the Income Tax Appellate Tribunal (ITAT) which upheld the deletion of Rs. 8,71,72,350/- by the Commissioner of Income Tax (Appeal). This deletion reversed an addition made by the Assessing Officer (AO). The AO had included this amount, representing unpaid VAT, in the assessee's total turnover during reassessment proceedings under Section 147 read with Section 148 of the Income Tax Act, 1961. The assessee's initial return declared a turnover of Rs. 1,47,07,196/-. The AO's revised assessment fixed the total turnover at Rs. 10,21,65,290/-. The CIT(A) accepted the assessee's contention that unpaid VAT should be excluded, and the ITAT affirmed this decision.

What were the issues?

1. Whether the ITAT was justified in confirming the deletion of Rs. 8,71,72,350/- made by the AO, by applying Section 43B of the Income Tax Act, 1961, on account of unpaid VAT, particularly when the Supreme Court in Chowringhee Sales Bureau (P) Ltd. vs. CIT held that unpaid sales tax liability should be included as part of receipts, thereby attracting Section 43B? 2. Whether the ITAT was justified in allowing the assessee to route the Value Added Tax (VAT) amount out of its regular profit and loss account in contravention of Section 145A of the Income Tax Act, 1961? 3. Whether the ITAT was justified in considering unpaid VAT as allowable in contravention of Section 43B of the Income Tax Act, 1961? Assessee's Contention: The assessee contended that the unpaid VAT amount should not be treated as part of the turnover for taxation purposes and was accepted by the CIT(A). Revenue's Contention: The Revenue argued that unpaid sales tax/VAT retained by the assessee should be treated as part of the turnover for taxation. The Revenue relied on the Supreme Court decision in Chowringhee Sales Bureau (P) Ltd. vs. CIT and decisions of the Gauhati High Court in India Carbon Limited v. Inspecting Assistant Commissioner and Another and the Delhi High Court in Commissioner of Income Tax vs. Noble & Hewitt (India) (P) Ltd. to support the applicability of Section 43B.

Which sections of the Income-tax Act were involved?

Section 43B,Section 145A,Section 147,Section 148,Section 260A

AI-generated summary — verify with the full judgment below

1 NAFR HIGH COURT OF CHHATTISGARH, BILASPUR Tax Case No. 29 of 2019 Deputy Commissioner of Income Tax 1(1), 32/32 Bungalows, Bhilai, District Durg (C.G.) ---- Appellant Versus  M/s Ganpati Motors, G.E. Road Supela, Bhilai, District Durg (C.G.) ---- Respondent For Appellant : Shri Amit Chaudhari, Senior Standing Counsel. Hon'ble Shri P. R. Ramachandra Menon, Chief Justice Hon'ble Shri Justice Parth Prateem Sahu, Judge Judgment on Board Per P. R. Ramachandra Menon, Chief Justice 25.07.2019

1.

The challenge involved in this appeal preferred by the Deputy Commissioner of Income Tax is with regard to the correctness and sustainability of the verdict passed by the Income Tax Appellate Tribunal, whereby the deletion of a sum of Rs. 8,71,72,350/- as ordered by the Commissioner of Income Tax (Appeal), interdicting the verdict passed by the Assessing officer, has been upheld. The following questions of law are suggested as involving substantial question of law:

“1. Whether on the point of law and on the facts and circumstances of the case, the ITAT was justified in confirming the order of the ld. CIT(A) who has deleted the addition of Rs. 8,71,72, 350/- made by the AO by applying the provisions of Section 43B of I.T. Act, 1961 on account of unpaid VAT when particularly, the Hon'ble Supreme Court in are attracted? (2) Whether in law and on facts & circumstances of the case, the ITAT was justified in allowing the assessee to route his Value Added Tax (VAT) amount out of his regular profit and loss account in contravention of Section 145A of the Income Tax Act, 1961? (3) Whether in law and on facts & circumstances of the case, the ITAT was justified in considering unpaid VAT as allowable in contravention of Section 43B of the Income Tax Act, 1961?”

2.

Heard the learned standing counsel for the Appellant.

3.

The point of dispute is with reference to the applicability of Section 43B of the Income Tax Act, 1961 and whether the amount of Sales Tax / VST, not satisfied by the Assessee and retained at Assessee's hands could be treated as part of the turnover, to be reckoned for taxation.

4.

As a matter of fact, the Assessee had filed a return on 27.03.2012 declaring the total turnover of Rs. 1,47,07,196/-. The matter was subject to scrutiny and assessment and later, it is stated that the proceedings were subjected to reassessment proceedings invoking the power and procedure under Section 147, read with Section 148 of the Income Tax Act, 1961. Ultimately the Assessing Officer disallowed the deletion amounting to Rs. 8,71,72,350/- and the total income was worked out, also reckoning the said amount, fixing the total turnover as Rs. 10,21,65,290/-, in turn, fixing the tax liability accordingly. This was sought to be challenged by filling an appeal before the Commissioner of Income Tax, where the contention of the Assessee was accepted and the amount covered towards the 'unsatisfied tax' was deleted. The said order was of Delhi in Commissioner of Income Tax vs. Noble & Hewitt (India) (P) Ltd. reported in 2008 305 ITR 0324, considering the applicability of the above provision. In fact, the circumstances under which the law declared by the Court in Chowringhee's case would be attracted was discussed in detail by a co- ordinate Bench of this Court and as per the verdict passed on 25.04.2017 in Tax Case No. 30 of 2016, interference was declined in the said appeal preferred by the Department. It was referring to the said verdict of the jurisdictional High Court, that the matter was finalized by the Income Tax Appellate Tribunal.

6.

The learned counsel for the Appellant clearly concedes that the issue has been considered and decided by this Court and a copy of said verdict is also placed for perusal of this Court. After going through the pleadings and proceedings, the relevant provisions of law and also the verdict passed by a co-ordinate Bench of this Court as mentioned above, this Court is of the firm view that no question of law has been raised, much less any substantial question of law, so as to call for interference in terms of Section 260(A) of Income Tax Act, 1961 and the issue stands already decided by the Court. There is no reason to disagree.

7.

The appeal stands dismissed accordingly.

(P. R. Ramachandra Menon) (Parth Prateem Sahu) Chief Justice Judge Brijmohan

More judgments on Section 43B

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

Recent GST High Court judgments

Search GST case law →