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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
Aayakr ApIla saM./ (inaQa-arNa baYa- / Assessment Year 2007-08) The Maharashtra State Co-op. The Asst. Commissioner of Marketing Federation Limited Income Tax-Ward 17(2), Vs. Manmoor House, Narsi Natha Aayakar Bhavan, M.K. St., Masjid, Mumbai-400 009 Road, Mumbai-400 020 .. (p`%yaqaaI- / Respondent) (ApIlaaqaI- / Appellant) स्थायी लेखा िं./PAN No. AAAAT6218L अपीलाथी की ओर े / Appellant by : Shri GP Joshi, AR प्रत्यथी की ओर े / Respondent by : Shri SK Bepari, DR ुनवाई की तारीख / Date of hearing: 24.10.2018 घोषणा की तारीख / Date of pronouncement : 24.10.2018 AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-28, Mumbai [in short CIT(A)], in appeal No. CIT(A)-28/IT-522/ACIT-17(3)/2015-16 for vide dated 12.10.2017. The Assessment was framed by the Asst. Commissioner of Income Tax, Ward1 17(3), Mumbai (in short ‘ACIT/ AO’) for the A.Y. 2007- 08 vide dated 16.03.2015 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
The only issue in this appeal of assessee is against the order of CIT(A) confirming the addition made by AO in respect of sale tax refund received by assessee amounting to ₹ 39,06,634/-. For this assessee has raised the following argumentative grounds: -
“On the facts and in the circumstance of the case, the Learned Commissioner of the Income Tax (Appeals) erred in facts and in law in confirming the addition of Rs.39,06,634/- in respect of sales tax refunded received.
Leaned Commissioner of the Income Tax (Appeals) states that -
• it seems to argue that when provisions are made for Sales Tax payments to arise in future they are debited advance sales tax account and they are not debited to profit and loss account
"when this provision or is-hat the appellant called Advance Sales Tax payments is made. where does the money come from? The general ledger cop;' shows a debit balance. From this payment are made further. The source of these is not appropriation of profits because no such plea was made before me. It is change against profit. If so the amount has not suffered tax.
It seems the learned Commissioner of the Income Tax (Appeals) has passed the order under wrong understanding that the sales tax account against which refund is adjusted has credit balance and the same is created by charge to profit and loss account. He failed to understand that these arc actual payments made and debited to Sales Tax account under current assets in balance sheet, having debit balance. This is not provision for future sales tax liability or rather cannot be so as the account is having debit balance towards the payments made. If at all any provision would have been made, sales tax account would have credit balance, as provision is always created by making debit to the profit and loss account.
Leaned Commissioner of the Income Tax (Appeals) has failed to understand that the sale tax payments carried forward as debit balance in balance sheet are not towards regular sales tax liability but payments on demand by sales tax authority. Since this is not accepted sales tax liability and appellant is confident of getting them refunded by making rectification application and/or appeal. As the appellant is hopeful to succeed in appellate proceedings and thus accounted these payments under current assets. These cases were pending for longer period and appellant finally received refund during the period. Sales tax officer while giving appeal effect calculated refund due to the assessee but never give breakup as to tax refund from assessment, tax payments made on appeal and interest. Since appellant has debited payments made during the assessment \ appellate proceedings to sales tax account under current assets and as refund include these payments. adjusted them against the refund received and remaining amount is credited to profit and loss account.”
I have head the rival contentions and gone through the facts and circumstances of the case. I find that the assessee is Apex co-operative Marketing Society engaged in the business of marketing the agricultural commodities procured through its member co-operative societies throughout the state of Maharashtra. The assessee is mainly acting his agent for Government of Maharashtra for implementing its various procurement and distribution schemes under minimum support price program and public distribution system respectively. The AO noted during the course of assessment proceedings that the assessee has received a sum of Rs. 83,81,868/- as sale tax refund for the year 1992-93, 1993-94 and 1994-95. According to him, the assessee has offered an amount of ₹ 44,75,234/- for tax and the balance amount of ₹ 39,06,634/- was not offered. The assessee explained before him is that this amount is entangled in litigation and pending in stay either in appeal or in stay application is filed before the court but no evidence was produced. Accordingly, AO added this amount to the returned income of the assessee. Similarly, the assessee could not produce any evidence before CIT(A) and hence, he confirmed the action of the Assessing Officer. Aggrieved, now assessee is in appeal before Tribunal.
I find from the facts of the that the assessee’s claim is that they have not debited this amount of ₹ 39,06,634/- to the profit and loss account and secondly this is pending in litigation. I find from the records that these assertions are not supported by any evidence. However, to allow one more opportunity to the assessee, I set aside the orders of the lower authorities and remand the matter back to the file of the AO to consider the assertions made by assessee and let the assessee lead the evidences to explain its case. Accordingly, the appeal of assessee is allowed for statistical purposes.
In the result, the appeal of assessee allowed for statistical purposes.
Order pronounced in the open court on 24-10-2018. AadoSa kI GaaoYaNaa Kulao mao idnaMk 24-10-2018kao kI ga[- .