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Facts
The assessee filed three appeals concerning assessment years 2018-19, 2019-20, and 2021-22. For AY 2018-19 and 2019-20, there was a significant delay in filing appeals, which the assessee attributed to pending rectification applications u/s 154 before the AO, and the CIT(A) had dismissed these appeals for non-condonation of delay. The issue for these years related to disallowance u/s 43B regarding leave encashment and bonus. For AY 2021-22, the appeal concerned a disallowance u/s 28 for GST collected from customers, which the assessee claimed was paid to the government and not taxable income.
Held
The Tribunal condoned the delay in filing appeals for AY 2018-19 and 2019-20, finding the assessee's reason of awaiting rectification orders bona fide. Consequently, for all three appeals (AY 2018-19, 2019-20, and 2021-22), the matters were set aside to the Assessing Officer for fresh verification and adjudication on merits. All appeals were allowed for statistical purposes.
Key Issues
Whether there was reasonable cause for delay in filing appeals; Whether disallowance u/s 43B for employee benefits was justified; Whether disallowance u/s 28 for GST collected was justified.
Sections Cited
143(1), 154, 43B, 28
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Income Tax Appellate Tribunal, DELHI BENCH, ‘B’: NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI BRAJESH KUMAR SINGH
ORDER PER BRAJESH KUMAR SINGH, AM,
This bunch of three appeals filed by the same assessee are against the following orders:-
Order of the Ld. CIT(A)/JCIT Order of the AO Year 2308/Del/2024 2018-19 ADDL/JCIT(A)-1, Vadodara in Order u/s 143(1) appeal No. ADDL/JCIT(A)-1 dated VADODARA/10001/2017-18 07.11.2019, CPC, dated 15.03.2024 Bengaluru 2309/Del/2024 2019-20 ADDL/JCIT(A)-1, Vadodara in Order u/s 143(1) appeal No. ADDL/JCIT(A)-1 dated VADODARA/10002/2018-19 27.06.2020, CPC, dated 15.03.2024 Bengaluru 2847/Del/2024 2021-22 ADDL/JCIT(Appeals)-1, Order u/s 143(1) Vadodara in appeal No. dated NFAC/2020-21/10184775 30.09.2022, CPC, dated 05.04.2024 Bengaluru 1.1 Since all these appeals have similar issues and therefore the same are decided by this common order.
We note that there is delay of three and half years in filing of the appeal for AY 2018-19. Similarly, there is a delay of three years in filing of the appeal for Assessment Year 2019-20. In both the years, it was submitted by the assessee before the Ld. CIT(A) that after the receipt of the respective intimations u/s 143(1) of the Act, the assessee had filed rectification applications before the AO and was in constant follow up with the same and was hopeful of getting a favourable order from the AO and therefore the appeal was not filed. The same was not accepted by the Ld. CIT(A) and he held that in absence of specific reasons, it cannot be presumed that there was reasonable and sufficient cause for delay in filing the appeal. Therefore, the Ld. CIT(A) dismissed the respective appeals of the assessee on the ground of the rejection of petition for condonation of delay. Further, the Ld. CIT(A) held that in absence of submission, merit of the case was not discussed.
During the appellate proceeding before us, the Ld. AR reiterated its submissions made before the ld. CIT(A) and submitted that the assessee did not file an appeal because the assessee was hopeful of getting suitable relief in respect of the petitions u/s 154 of the Act filed by it as according to him the adjustment in total income vide respective orders u/s 143(1) were on account of mistakes apparent from record. However, since, the said rectification petitions were not adjudicated by the AO and therefore it was constrained to file these appeals. In light of these facts, the Ld. AR submitted that the delay in filing the respective appeals may be condoned and the appeals may kindly be decided on merits.
We have considered the rival contentions and perused the materials available on record. The submission of the assessee has been carefully perused by us and we found that there was a reasonable cause for the delay in filing of these two appeals. The submission of the assessee that it was hopeful of getting relief by filing the respective rectification petition and therefore it did not prefer an appeal after the receipt of the order u/s 143(1) of the Act is bona fide and reasonable. We therefore, condone the delay for both the assessment years and decide the appeals on its merits.
Brief facts of the case:- The sole grievance of the assessee is with respect to disallowance of Rs.2,62,84,207/- made u/s 43B of the Act on account of leave encashment and bonus to employees. In this regard, the ld. AR submitted that these expenses were incurred during the year under consideration and actually paid before the due date of furnishing of the return of income and therefore it was an allowable expenditure. In this regard, the ld. AR submitted that the Ld. CIT(A) did not adjudicate the appeal on merits because he had rejected the condonation 3 application regarding the delay in filing of the appeal. Therefore, the Ld. AR submitted that the matter may be set-aside to the file of the AO for necessary verification of the claim made by the assessee and allow the claim as per law.
In this regard, the Ld. DR did not have any serious objection to the above request of the assessee.
We have considered the rival submissions and perused the materials available on record. The issue relates to the verification of the fact as to whether the amount of Rs.2,62,84,207/- on account of leave encashment and bonus to employees were incurred during the year under consideration and actually paid before the due date of furnishing of the return of income and therefore was an allowable expenditure.As discussed above, we have already condoned the delay in filing of this appeal. Since, the Ld. CIT(A) did not adjudicate the issue on merits, we, therefore, set-aside the order of the Ld. CIT(A) and restore the matter to the file of the AO for necessary verification regarding claim of the assessee and passing fresh order as per law.
In the result, the appeal of the assessee is allowed for statistical purpose. to grounds raised (except for the difference in the amount) decided by us in earlier part of this order. Therefore, our above decision would apply mutatis- mutandis to these grounds of the appeal also. Accordingly, this appeal of the assessee is also allowedfor statistical purpose.
The sole grievance in this appeal is the disallowance made u/s 28 of the Act amounting to Rs.28,92,49,858/- on account of GST collected from the customers.
The Ld. AR submitted that the amount of Rs.28,92,49,858/- collected as GST from the customer was paid directly to the Government as indirect taxes and hence not considered as income of the assessee. It was further submitted that the Ld. CIT(A) erred in holding that the assessee did not submit the necessary challans evidencing the aforesaid payment to the Government account. The Ld. AR, therefore, requested that the matter may be set-aside to the file of the AO for necessary verification and allowance of the claim as per law.
In this regard, the Ld. DR did not have any serious objection to the above request of the assessee.
We have considered the rival contentions and perused the material available on record. The matter needs verification with respect to the claim of the assessee that the amount of Rs.28,92,49,858/- collected as GST from the customer was paid directly to the Government as indirect taxes and hence not considered as income of the assessee. Therefore, the order of the Ld. CIT(A) is set-aside and the matter is restored to the file of the AO for necessary verification and passing fresh order as per law. 5
In the result, the appeal of the assessee is allowed for statistical purpose.
In the result, all the three appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open court on 27th December, 2024