TRACO ENTERPRISES,KOLKATA vs. ADIT (CPC), BANGALORE, BANGOLORE

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ITA 378/KOL/2022Status: DisposedITAT Kolkata15 September 2022AY 2020-20213 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since the alleged contingent sales tax liability was not debited in the Profit & Loss account and not claimed as expenditure, the addition made by the CPC was not justified.

What were the facts?

The assessee's return for AY 2020-21 was processed with an addition for contingent sales tax liability based on the Tax Audit report. The assessee contended that this liability was not routed through the Profit & Loss account.

What were the issues?

Whether an addition for contingent sales tax liability is justified when it has not been debited in the Profit & Loss account and claimed as an expenditure.

Which sections of the Income-tax Act were involved?

Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA

Before: Dr. Manish Borad

Date of concluding the hearing : September 14, 2022 Date of pronouncing the order : September 15, 2022 आदेश O R D E R

This appeal at the instance of assessee for assessment year 2020-21 is directed against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 20.05.2022 passed under section 250 of the Income Tax Act, 1961.

2.

At the outset, ld. Counsel for the assessee submitted that the alleged addition for contingent sales tax liability of Rs.15,88,966/- is not justified as the same has not been routed through the Profit & Loss Account. On the other hand, ld. D.R. failed to controvert this fact. (A.Y. 2020-21) Traco Enterprises 3. I have heard the rival contentions and perused the relevant material placed before me. I find that the Centralised Processing Centre while processing the return of the assessee for A.Y. 2020-21 made an addition for contingent sales tax liability at Rs.15,88,966/- on the basis of the observation of the Tax Audit report of the assessee furnished in Form 3CD by the auditor. As submitted by the ld. Counsel for the assessee, rectification application was filed stating that the tax auditor inadvertently filled that column and the same was rejected. Appeal before the ld. CIT(Appeals) on this issue also did not bring any relief to the assesese. Ld. Counsel for the assessee took me through the audited financial statement. On perusal of page 4 of the paper book, which shows the manufacturing, trading and Profit & Loss account for the year ended on 31.03.2020 and I find that no such expenditure in respect of contingent sales tax liability at Rs.15,88,966/- has been debited in the Profit & Loss Account. This fact stands uncontroverted by the revenue authorities. Under these facts and circumstances, where the alleged sum has not been claimed as expenditure in the books of account, disallowance made in the on-line processing is not justified. I, therefore, set aside the order of ld. CIT(Appeals) and delete the addition made for contingent sales tax liability.

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