Loading judgment…
Facts
The assessee, engaged in business of Erection, Fabrication, etc., filed its Income Tax Return (ITR) for AY 2019-20 declaring a total income. The ITR was processed under section 143(1) of the Income Tax Act, 1961, wherein the Assessing Officer (AO) disallowed expenditure indicated in the Audit Report, resulting in a disallowance of Rs. 1,95,27,206/-. This disallowance was related to GST and Service Tax amounts that were allegedly not paid before the due date.
Held
The Tribunal noted that the disallowance under section 43B of the Act is attracted only when a claim for deduction is made for a sum payable by way of tax or duty and such sum has not been actually paid. The Tribunal observed that the assessee did not debit these amounts to its Profit & Loss account, and therefore, section 43B could not have been invoked. The Tribunal also noted that in many instances, payments were made before the due date, or the disallowance pertained to earlier years. Consequently, the disallowance made by the AO and confirmed by the CIT(A) was held to be not sustainable. The appeals were allowed for statistical purposes, with directions to the AO to verify and delete the disallowed amounts in accordance with law.
Key Issues
Whether the disallowance of GST and Service Tax under Section 43B of the Income Tax Act is justified when the amounts were not debited to the Profit & Loss account or were paid before the due date.
Sections Cited
143(1), 250, 43B, 234A, 234B, 234C, 115JB, 29, 37(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI,
The ld. AO will verify the above figures with challans and delete the amount in accordance with the law as discussed herein above.
In terms of these observations, the appeal of the assessee in ITA no.
197/JP/2025 is allowed for statistical purpose.
Now we take up the appeal of the assessee in ITA no. 198/JP/2025.
In this appeal the assessee has raised the following modified grounds of appeal;
1. The impugned order u/s 143(1) passed by ld.AO on dated 28.12.2022 and confirmed by ld. CIT(A) u/s 250 on dated 27.12.2024 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be quashed.
2. Rs.1,71,69,480/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the order passed by ld. AO/CPC in disallowing of Rs.1,71,69,480/- [Rs.1,68,19,314/-(GST)+ Rs. 3,50,167/- (TDS)] made u/s 43B of the Act. The disallowance so made by the ld. AO/CPC is totally contrary to the provisions of law and facts on the record and hence the same kindly be deleted in full. to 199/JP/2025 Ahluwalia Erectors & Fabricators Pvt. Ltd.
3. Rs.2,19,391/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the order passed by ld. AO/CPC in allowing the credit of Prepaid Taxes/TDS of Rs.17,76,812/- instead of Rs.19,96,203/-. The action so made by the ld. AO/CPC is totally contrary to the provisions of law and facts on the record and hence the same kindly be deleted in full.
The ld. CIT(A) erred in law as well as on the facts of the case in confirming the interest charged by ld.AO u/s 234A, 234B & 234C of the Act. The appellant totally denies it liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, kindly be deleted in full.
The appellant prays your honour to add, amend or alter any of the grounds of the appeal on or before the date of hearing. In this appeal, the assessee has raised the additional ground of appeal;
“6. Rs.1,68,19,314/-: The outstanding amount of GST was not paid by the customers and thus having been lost such amount deserves to be allowed as a valid business expenditure incurred for business purposes u/s 37(1) and/ or as a business loss u/s 29 of the Act.” 15. Apropos to the grounds of appeal raised by the assessee the relevant finding of the ld. CIT(A) is as under :
5. Decision: 5.1 The main ground of appeal raised by the appellant that the CPC has erred in making a disallowance of Rs. 1,71,69,480/- under section 43B of the Act. On perusal of the Form 3CA in column no. 26(i) (B) (b) wherein it is mentioned that amount of Rs. 1,68,19,314/- and Rs. 3,50,167/- were not paid by the appellant for GST & TDS respectively. The appellant had not submitted the requisite challan even after issue of notice on 08.10.2024, 06.12.2024 & 16.12.2024. 5.2 On careful consideration of the facts and circumstances of the case, it is very clear that the appellant was only required to submit challan of the payment of GST and TDS during the appellate proceedings. However, the appellant in spite of being given ample opportunities has not submitted proof of payment of Challan. It is therefore, presumed that the appellant has not paid the amount payable towards GST and TDS. In view of the above, that the AO CPC correctly made to 199/JP/2025 Ahluwalia Erectors & Fabricators Pvt. Ltd. disallowance of Rs. 1,71,69,480/- (1,68,19,314/- and Rs. 3,50,167/-). Accordingly, this ground raised
by the appellant is hereby disallowed. 5.3 Further, grounds raised by the appellant for making addition as per provision u/s 115JB of the Act in the book profit of Rs.7,00,000/- on account of income tax paid or payable or its provision including the amount of deferred tax and provision thereof, the AO is hereby directed to verify the same and allow the provision for liability if applicable. The AO is hereby also directed to verify regarding the short credit of TDS deducted to the amount of Rs. 2,19,391/- as claimed by the appellant and allow the same if found in order. Grounds raised regarding charging of interest under section 234B & C are of consequential in nature, hence not adjudicated. Accordingly, the grounds of appeal raised hereby are partly allowed.
6. In the result, the appeals are partly allowed.
16. Feeling dissatisfied with the above findings, the assessee has preferred the present appeal. Apropos to the ground of disallowance of GST u/s. 43B of the Act the ld. AR of the assessee vehemently argued that the considering the provision of section 29 of the Act the correct income is required to be taxed in the hands of the assessee. The ld. AR of the assessee submitted it was due to technical error the assessee could not make the payment and also on account of the fact that certain buyers have not paid the GST to the assessee and therefore, that aspect of the matter the assessee is required to be given the benefit to the extent the same was not realized and benefit of cum tax amount be given to the assessee.
17. Per contra, ld. DR relied upon the fact that the disallowance was made u/s. 143(1) of the Act based on the record already placed on record. and therefore, she objected to the prayer of the assessee. The contention of the assessee that the GST account of the assessee was blocked and therefore, the payment could not be made is not the correct plea and is against the provision of law she relied upon the order of the ld. CIT(A).
We have heard the rival contentions and perused the material placed on record. Ground no. 1 raised by the assessee being general does not require our specific finding. Ground no. 2 relates to the disallowance of Rs. 1,71,69,480/- on this aspect of the matter the ld. AR of the assessee raised two folded arguments. One that is made is that the assessee before the due date of filling the return paid amount be allowed while computing the income of the assessee. Second the amount debited to the profit and loss account for the year under consideration can only be disallowed and in that the amount which was not realized the cum tax benefit be given. The arguments of the assessee and we are of the considered view that both plea of the assessee are in accordance with the law as section 43B of the Act specify that amount paid before the due date of filling the return of income is not supposed to be disallowed even thought the same was outstanding at the year. So far as the arguments of the amount debited to the current year be disallowed is also correct and cum tax benefit is nothing is directed to verify this aspect of the matter and pass appropriate order in accordance with law. Based on this observation ground no. 2 raised by the assessee is allowed for statistical purpose.
Ground no. 3 also require the correct amount lying as credit on account of prepaid taxed be given credit to the assessee. This being the factual aspect of the verification at the end of the ld. AO, we direct the ld.
AO pass appropriate relief to the assessee in accordance with law. Based on this observation the appeal of the assessee in is allowed for statistical purposes.
The fact of the case in is similar to the case in the materials available on record. The bench has noticed that the issues raised by the assessee in ITANo. 199/JP/2025 are equally similar on set of facts and grounds as that of with 198/JP/2025. Therefore, it is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in for Assessment Year 2021-22 shall apply mutatis mutandis in 199/JP/2025 for the Assessment Years 2022-23. In the result the appeal of is allowed for statistical purposes.
In the result, all the appeal of the assessee are allowed for statistical purposes
Order pronounced in the open court on 12/11/2025.
Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 12/11/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Ahluwalia Erectors & Fabricators Pvt. Ltd., Kota 2. izR;FkhZ@ The Respondent- DCIT/ACIT, Circle-02, Kota vk;djvk;qDr@ The ld CIT 3. vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZQkbZy@ Guard File (ITA Nos. 197 to 199/JP/2025) vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत