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Facts
The assessee's appeal arises from an order disallowing GST payable at year-end but unpaid by the due date of filing the return of income, as per Section 43B. The assessee contended that the GST was paid before the due date, but the CIT(A) rejected this for lack of evidence.
Held
The Tribunal held that the assessee's accounting method did not prevent disallowance under Section 43B. However, the argument regarding the timing of GST payment (after Tax Audit but before the due date of return filing) was found to carry weight and was restored to the CIT(A) for verification.
Key Issues
Whether disallowance under Section 43B is justified when GST is paid after the Tax Audit Report but before the due date of filing the return of income, and whether such disallowance can be made at the processing stage by CPC under Section 143(1).
Sections Cited
143(1), 43B, 145, 145A, 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, CHANDIGARH
Before: HON’BLE SHRI RAJPAL YADAV & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रण वष� / Assessment Year: 2022-23) M/s Orbit Aviation Private Limited DCIT-Circle-1(1) बनाम/ 1st Floor Metro Plaza, SCO 54-55 Aaykar Bhawan Vs. Sector 9-D, Chandigarh CR Building, Chandigarh. �थायीलेखासं./जीआइआरसं./PAN/GIR No. AAACO-9386-Q (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Shri Aditya Kumar (CA) a/w Shri Ashwani Kumar (CA) – Ld. ARs ��थ�कीओरसे/Respondent by : Sh. Anil Kumar Sharma (Addl. CIT) - Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 27-08-2025 घोषणाकीतारीख /Date of Pronouncement : 16-09-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2022-23 arises out of an order of learned Addl. / Joint Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 10-01-2025 in the matter of an intimation issued by CPC u/s 143(1) on 07-08-2023 making disallowance u/s 43B for Rs.1,07,54,593/- on account of GST payable at year-end but remaining unpaid by due date of furnishing of return of income u/s 139(1). Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.
From case records, it emerges that the assessee filed return of income on 29-11-2022 and its accounts were duly audited u/s 44AB vide Tax Audit Report dated 30-09-2022. In the Tax Audit Report, Tax Auditor reported impugned disallowance u/s 43B. Accordingly, CPC made disallowance as reported by Tax Auditor. During first appeal, the assessee contended that GST amount of Rs.81,31,423/- was paid on 03-11-2022 which was after the date of Tax Audit Report but before due date of furnishing of return of income u/s 139(1) and therefore, disallowance to that extent was not justified. It was also contended that the assessee did not claim any such expenditure in the Profit & Loss Account. Though the said payment was not paid by Tax Audit Report date but the same was duly paid before due date of furnishing of return of income u/s 139(1). However, Ld. CIT(A) rejected the submissions of the assessee for want of verifiable evidences. Aggrieved, the assessee is in further appeal before us.
The Ld. AR has contended that the expenditure was not routed through Profit & Loss Account and therefore, no such disallowance could have been made by CPC. The said plea is to be rejected outrightly. It could be observed that the assessee is following ‘exclusive method’ of accounting to account for GST component as against ‘inclusive method’ of accounting. Whatever method is followed by the assessee, the same would have same similar impact on the Profit / Loss of the assessee. The assessee following ‘inclusive method’ as against ‘exclusive method’ could not be differentiated as such merely on the basis of method of accounting for the purpose of disallowance u/s 43B. The provisions of Sec.145 / 145A and ICDS mandate inclusion of this component in the turnover. Accordingly, the argument that the expenditure was not routed through Profit & Loss account under ‘exclusive method’ would not be a correct proposition. The same stand rejected.
Another argument made by Ld. AR is that no such disallowance could have been made by CPC u/s 143(1) at the time of processing of return of income. This plea is also to be rejected at its threshold. The reporting made by Tax Auditor could certainly be taken into account while processing return of income u/s 143(1). The processing by CPC is based on the documents as furnished by the assessee along with the return of income which certainly includes Tax Audit Report. Therefore, this adjustment could very well be made u/s 143(1) since the same emanates from reporting made by Tax Auditor. The provisions of Sec.143(1)(a)(iv) duly empowers CPC to disallow expenditure as reported in the tax audit report but not taken into account in computing the total income in the return of income. This plea also stand rejected.
Finally, Ld. AR has contended that the amount of Rs.81,31,423/- was paid on 03-11-2022 which was after the date of Tax Audit but before due date of furnishing of return of income u/s 139(1) and therefore, disallowance to that extent was not justified. Thus argument carry weight and the same is in accordance with the provisions of Sec.43B. The Ld. CIT(A) has not accepted the same for want of verifiable evidences. Therefore, for the said limited purposes, we restore the issue, to that extent, to the file of Ld. CIT(A) for verification. The assessee is directed to substantiate this plea.
The appeal stand partly allowed for statistical purposes. Order pronounced on 16-09-2025.