RAHUL JAIN,DELHI vs. ITO,WARD-59(8), DELHI

Heard both the parties at length. Case file perused.

The assessee raises the following substantive grounds in the instant appeal:

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 2 the addition beyond the scope of provisions of section 143(1) of the Income Tax Act, 1961 (“the Act”).

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.

(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.

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 3 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 Juri ictional 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. (Satbeer Singh Godara)