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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI MAHAVIR SINGH & DR. DIPAK P. RIPOTE
आदेश / O R D E R
PER DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, dated 18.08.2021 pertaining to assessment year 2018-19, emanating from the order passed u/s.143(1) of the Act, dated 13.12.2019.
The assessee has raised the following grounds of appeal:
The order of National Faceless Appeal Centre at Delhi in DIN & Order No. ITBA/NFAC/S/250/2021-22/1034950184(l) dated 18.08.2021 for the above assessment year is contrary to law, facts, and in the circumstances of the case.
2. The NFAC erred in sustaining the disallowance of Rs.1,00,01,554/- being the GST amount payable by invoking the provisions of section 43B of the Act based on the tax audit report filed without assigning proper reasons and justification.
The NFAC failed to appreciate that the provisions of section 43B of the Act had no application to the facts of the case and further ought to have appreciated that there was no claim for deduction of the said GST component as an expenditure thereby negating the applicability of section 43B of the Act.
The NFAC failed to appreciate that there was no debit in the Profit & Loss A/c or claim of deduction made in the memo while computing taxable total income thereby vitiating the applicability of section 43B of the Act to sustain the addition.
5. The NFAC failed to appreciate that narrow scope of section 143(1) of the Act / intimation order was not taken into consideration while sustaining the addition made solely based on the tax audit report without granting opportunity of hearing to the appellant.
6. The NFAC failed to appreciate that the disclosure in Tax Audit Report in Form No. 3CB-3CD would not automatically amount to violation of the provisions in section 43B of the Act and ought to have appreciated that the Tax Audit Report would aid the completion of assessment while the observations of the Tax Auditor should not be reckoned as conclusive.
7. The NFAC failed to appreciate that in any event the entire re-computation of taxable total income was wrong, erroneous, unjustified, incorrect, invalid and not sustainable both on facts and in law. „ .
The NFAC failed to appreciate that the impugned adjustment made is beyond the scope of the proceedings u/s 143(1) of the Act thus vitiating the addition made therein.
The NFAC failed to appreciate that there was no proper / reasonable opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.
The Appellant craves leave to file additional grounds/arguments at the time of hearing.
3. The Ld.AR submitted that the order u/s.143(1) of the Act, passed by the DCIT, CPC, is erroneous and not maintainable. They have added Rs.1,00,01,554/- for the following reasons:
“Inconsistency in amount debited to profit and loss account of the previous year but disallowable under section 43B”.
The Ld.CIT(A) has also not considered the submissions of the assessee in the correct legal frame work. The Ld.AR submitted for the AY 2018-19 that the assessee raised a contract bill to the tune of Rs.8,91,61,999/- and shown as debtor in the balance sheet as on 31.03.2018. The eligible GST on the said amount was Rs.1,00,01,554/-, which was not paid during the year. The Tax Auditor has shown this fact in the Tax Audit Report. The Ld.AR further submitted that the said GST amount of Rs.1,00,01,554/- was never debited to the P&L A/c and it has never been claimed as allowable expenditure by the assessee during the year. As per Sec.43B of the Act, the assessee is entitled to claim the said amount of GST during the year in which it is paid. Since, this amount was not paid during AY 2018-19, it was never claimed. But, as per the accounting proceedings, it is mandatory to show the said amount in the Tax Audit Report. The Ld.CIT(A) and the AO failed to appreciate these facts.
The Ld.DR relied on the order of the lower authorities. The Ld.DR specifically mentioned that since the assessee himself has incorporated this figure in the Tax Audit Report, there is no error by the AO in adding the said amount.
We have heard both the parties and perused the records. On a specific query from the Bench, the Ld.AR for the assessee explained that the amount of Rs.1,00,01,554/- was never debited and never claimed as expenditure during the year. The Bench specifically asked the Ld.DR to confirm these facts. However, the Ld.DR was unable to verify these facts.
We are of the opinion that as per Sec.43Bof the Act, the assessee is entitled to claim the GST amount in the year in which it is paid. This fact is not emanating from the order of the Ld.CIT(A) and also from the assessment order. Therefore, in the interest of natural justice, we set aside the issue to the file of the AO with a direction to verify the claim of the assessee that impugned amount was never claimed as expenditure during the assessment year. If the assessee had not claimed the impugned amount as expenditure during the assessment year, there shall not be any addition.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 26th day of August, 2022, in Chennai.