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Facts
The assessee filed its return of income. The Assessing Officer made an addition on account of GST refund. The CIT(A) confirmed the addition. The assessee appealed to the Tribunal.
Held
The Tribunal found that the assessee was not given sufficient opportunity of being heard by both the Assessing Officer and CIT(A). Therefore, the matter was remitted back to the Assessing Officer for fresh adjudication.
Key Issues
Whether the GST refund received by the assessee could be added to its income when not offered to tax and opportunity of being heard was denied. Whether the matter should be remitted back to the AO.
Sections Cited
143(1)
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Income Tax Appellate Tribunal, HYDERABAD “A” BENCH : HYDERABAD
Before: SHRI LALIET KUMAR & SHRI G. MANJUNATHA
ORDER PER G. MANJUNATHA, A.M. : This appeal filed by the assessee has been directed against the order of the Addl/JCIT(A), Bhubaneswar, dated 07.05.2024 relating to assessment year 2021-2022.
2 ITA.No.605/Hyd./2024 2. Facts of the case, in brief, are that the assessee company filed it’s return of income on 11.03.2022 declaring income at Rs.10,35,04,070/-. The said return was processed by the Assessing Officer-CPC u/sec.143(1) of the Act and determined the total income of the assessee at Rs.12,49,52,670/- by making addition of Rs.2,14,48,600/- on account of GST refund vide order dated 25.10.2022.
On being aggrieved, the assessee carried the matter in appeal before the learned CIT(A) and the learned CIT(A) confirmed the addition of Rs.2,14,48,600/- made in the hands of the assessee.
Aggrieved by the order of the learned CIT(A), the assessee carried the matter in appeal before the Tribunal.
During the course of hearing, Learned Counsel for the Assessee submitted that both the lower authorities erred in law and on facts in making the addition of Rs.2,14,48,600/-. He submitted that the impugned amount is refund of GST to the company for the assessment year 2020-2021 and such refund is out of actual payments of GST by the company in earlier years which was never
3 ITA.No.605/Hyd./2024 charged to P & L A/c as expenditure and, therefore, never claimed in the income tax return. He accordingly, pleaded that the GST refund sum of Rs.2,14,48,600/- cannot be taxed in the hands of the assessee and the said addition sustained by the learned CIT(A) be deleted in the interest of substantial justice. Learned Counsel for the Assessee further submitted that the impugned addition has been made by the Assessing Officer-CPC during sec.143(1) proceedings and the learned CIT(A) sustained the same without providing ample opportunity of being heard to the assessee. He accordingly, in the alternative, pleaded that the matter may be sent back to the file of jurisdictional Assessing Officer to revaluate it’s VAT/GST claim in the interest of justice.
The Learned DR on the other hand strongly relied on the orders of the authorities below. He submitted that merely because the assessee did not charge the GST refund to it’s P & L A/c as expenditure, it did not preclude the authorities to make the addition in the hands of the assessee. Therefore, the learned CIT(A) sustained addition
4 ITA.No.605/Hyd./2024 made by the Assessing Officer by relying on the decision of Hon’ble Supreme Court in the case of Chowranghee Sales Bureau P. Ltd., vs. CIT [1973] 87 ITR 542 (SC) wherein it has been held that sales tax collected by the assessee is revenue receipt even if it is not shown by the assessee as non-revenue one and such treatment of assessee is not a decisive one. He submitted that since the assessee did not shown the VAT/GST refund as the income of the company, the learned CIT(A) rightly sustained the addition made by the Assessing Officer –CPC.
We have heard the rival submissions of both the parties and perused the material available on record. Admittedly, it is not in dispute between the parties that the impugned sum of Rs.2,14,48,600/- is the VAT/GST refund of the assessee. It is the contention of the assessee that the said amount is refund of GST to the company for the A.Y. 2020-2021, which has not been disclosed by the assessee company in it’s return of income. Therefore, the Assessing Officer made the addition and the learned CIT(A) sustained the same. We find that the impugned addition has been by 5 ITA.No.605/Hyd./2024 the Assessing Officer-CPC u/sec.143(1) of the Act and thereby the assessee was prevented by sufficient opportunity of being heard to substantiate it’s claim. Even in the appeal before the learned CIT(A) also, he simply sustained the addition without affording proper opportunity of being heard to the assessee. We, therefore, deem it fit and appropriate to remit the matter in issue back to the fie of jurisdictional Assessing Officer with a direction to provide one more opportunity to the assessee to furnish any additional information or clarity before a final decision can be made on the impugned addition. Needless to say, it is the assessee’s risk and responsibility to plead and prove it’s case in consequential proceedings by providing all the requisite documents as called for by the Assessing Officer to re-evaluate the VAT/GST refund as per fact and law. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the Assessee is allowed for statistical purposes.
6 ITA.No.605/Hyd./2024 Order pronounced in the open Court on 24.02.2025.