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Facts
The assessee filed a return declaring Rs.32.39 lakh. The AO disallowed Rs.4,26,15,036 as service tax under Section 43B, noting that it was not paid before the due date of filing the return under Section 139(1). The CIT(A) affirmed the AO's order, despite the assessee's argument of a dispute with clients preventing timely deposit.
Held
The Tribunal observed that it was an admitted fact that the service tax was not deposited before the due date of filing the return of income. Following a precedent from a co-ordinate bench, the Tribunal held that if service tax collected is not paid to the government before the return filing due date, the assessee is not entitled to its deduction. Therefore, the appeal was dismissed.
Key Issues
Whether service tax collected by the assessee but not paid to the government before the due date for filing the return of income is eligible for deduction under Section 43B of the Income Tax Act.
Sections Cited
139(1), 43B, 143(3), 263
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Prakash Chand Yadav
Asst.Year 2017-2018 C.D.Nair Erectors The Deputy Commissioner of Sree Bhavan, Pallichal PO Income-tax, Cir.1(1) v. Pallichal, Trivandrum – 695 020. Trivandrum. PAN : AAFFC3256P. (Appellant) (Respondent) Appellant by : --- None --- Respondent by : Smt.Veni Raj, CIT-DR Date of Pronouncement : 20.05.2025 Date of Hearing : 19.05.2025. O R D E R
Per Prakash Chand Yadav, JM :
The present appeal of the assessee is arising from the order of the National Faceless Appeal Centre / learned Commissioner of Income-tax (Appeals) [“CIT(A)” for short] dated 02.12.2024, having DIN & Order No.ITBA/NFAC/S/250/2024- 25/1070805877(1) and relates to the assessment year 2017- 2018.
The brief facts of the case as coming out from the orders of the authorities below are that the assessee is an individual and has filed return of income for the impugned year on 12th August, 2017 declaring total income of Rs.32.39 lakh. Thereafter, the return of the assessee was picked up for scrutiny. During the course of assessment proceedings, the . C.D.Nair Erectors. Assessing Officer observed that the assessee has failed to make payment of service tax before the due date of filing of return u/s.139(1) of the Act and hence the claim of the assessee vis-à- vis deduction of service tax for an amount of Rs.4,26,15,036 deserves to be disallowed u/s.43B of the Act.
Aggrieved with the order of the AO, the assessee preferred an appeal before the ld.CIT(A). The assessee argued that there was dispute between the assessee and the clients and hence the assessee could not be able to deposit the service tax in time. However, the ld.CIT (A) could not be able to find any force in the submissions of the assessee and affirmed the order of the AO.
Aggrieved with the order of the ld.CIT (A), the assessee has come up in appeal before us. Today, when the matter was called on for hearing, no one appeared from the side of the assessee despite the service of notice. Therefore, we proceed to dispose of the appeal on merits after hearing the learned CIT- DR.
The learned CIT-DR appearing on behalf of the Revenue pointed out that it is an admitted position on fact that the assessee has not deposited the service tax before the due date of filing of the return of income and hence the assessee is not entitled for the deduction of an amount of Rs.4.26 crore.
We have heard the Ld DR and perused the material available on record. Perusal of the facts as coming out from the . C.D.Nair Erectors. orders of the authorities below would show that this is an appeal arising from the order of the AO passed u/s.143 (3) r.w.s. 263 of the Act. Further, it is also an admitted position of fact that the assessee failed to deposit the service tax for the assessment years 2014-2015, 2015-2016 and 2016-2017, as mentioned herein below:-
Service tax payable 2014-2015 Rs.2,16,27,538.60 Service tax payable 2015-2016 Rs.1,01,68,768.82 Service tax payable 2016-2017 Rs.1,08,18,729.00 ---------------------- Total Rs.4,26,15,036.42 ================
It is an admitted position of fact that the assessee could not deposit these amounts before filing of the return of income. Recently, the co-ordinate bench of the Tribunal in the case of ACIT v. Kunnel Engineers & Contractors Pvt. Ltd. in vide order dated 19th May, 2020 has categorically held that if the service tax collected by the assessee is not paid to the government before the due date of filing of the return, then the assessee is not entitled for the deduction of such sum. Respectfully following the verdict of the co-ordinate bench, we hereby dismiss this appeal.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced on this 20th day of May, 2025.