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Facts
The assessee appealed against the Ld. CIT(A)'s order which confirmed the AO's addition of Rs. 10,50,615/- as GST receivable, treating it as taxable income for AY 2021-22. The assessee contended that this addition was beyond the scope of Section 143(1) and that GST receivable should not be treated as income.
Held
The Tribunal, relying on precedent, ruled that if GST receivable is neither claimed as a deduction nor debited to the Profit and Loss account, Section 43B is not applicable, and therefore no disallowance can be made. Consequently, the impugned addition of GST receivables was deleted.
Key Issues
1. Whether an adjustment for GST receivable can be made under Section 143(1) if it's beyond the permissible clauses. 2. Whether GST receivable can be treated as taxable income or disallowed under Section 43B if it's not routed through the Profit and Loss account or claimed as a deduction.
Sections Cited
143(1), 43B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. Satbeer Singh Godara
Asstt. Year : 2021-22 Rahul Jain, Vs Income Tax Officer, P-8, Naveen Shahdara, Rohtash Ward-59(8), Nagar, Delhi-110032 New Delhi (APPELLANT) (RESPONDENT) PAN No. AFNPJ4346Q Assessee by: Ms. Uma Upadhyay, CA Revenue by : Sh. Sanjay Kumar, Sr. DR Date of Hearing: 22.04.2025 Date of Pronouncement: 22.04.2025 ORDER
This assessee’s appeal for Assessment Year 2021-22, arises against the Addl./JCIT(A)-4, Chennai’s DIN & order No. ITBA/APL/S/250/2024-25/1070518020(1) dated 21.11.2024, in proceedings u/s 143(1) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
The assessee raises the following substantive grounds in the instant appeal:
“1. On the facts and circumstances of the case, the order passed by the Learned Commissioner of Income Tax, (Appeals) [“Ld. CIT(A)”] is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the AO (CPC) has made Rahul Jain the addition beyond the scope of provisions of section 143(1) of the Income Tax Act, 1961 (“the Act”).
3. On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the action of the AO (CPC) despite the fact that the adjustment made under section 143(1) of the Act is not a permissible adjustment under any of the clauses specified under section 143(1) of the Act. 4. (i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the addition of Rs. 10,50,615/- on account of GST receivable treating the same as income. (ii) That the Ld. CIT(A) has erred both on facts and in law in confirming the abovesaid addition, rejecting the detailed submissions and explanations along with the evidences brought on record by the assessee in this regard.”
It is thus clear from a perusal of the assessee’s above extracted pleadings that both the learned authorities have treated the assessee’s GST receivable of Rs.1,05,615/- as his taxable income of the relevant previous year. Learned counsel quotes ATS Real Estate Builders P. Ltd. Vs. DCIT 2025 (1) TMI 1348-ITAT Delhi, deciding the very issue against the department as under: “6. The ground no. 2 to 4 of appeal are in respect of single issue i.e. disallowance made under provisions of section 43B of the Act in respect of Goods & Service Tax payable. The short contention of the assessee is that GST amounting to Rs.3,55,01,693/- has not been routed through Profit and Loss account, therefore, no disallowance can be made in respect of aforesaid amount u/s. 43B of the Act. Similar submission was made by the assessee before the CIT(A). We find that the fact the amount disallowed u/s. 43B of the Act has not been routed through P&L account is not rebutted by the Revenue. No contrary material has been placed before us, by the Revenue to show that the assessee has claimed deduction in respect of GST Rs.3,55,01,693/-. The contention of the assessee that aforesaid amount has been reflected as GST payable under the head current Rahul Jain liabilities is uncontroverted. The Hon’ble Delhi High Court in the case of CIT vs. Noble and Hewitt (I) P. Ltd. (supra) held that where the assessee has neither claimed deduction on account of Service Tax nor has debited the amount to Profit and Loss account, the provisions of section 43B of the Act do not get attracted. Hence, question of disallowance of deduction not claimed does not arise.
In light of facts of the case and the decision rendered by Hon’ble Jurisdictional High Court, we find merit in submissions of the assessee. Hence disallowance made by the AO u/s. 43B of the Act is directed to be deleted. The findings of the CIT(A) in respect of this issue are reversed and ground no. 2 to 4 of appeal are allowed.”
I adopt the above detailed discussion mutatis mutandis to delete the impugned addition of GST receivables in very terms.
This assessee’s appeal is allowed. Order Pronounced in the Open Court on 22/04/2025.