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Income Tax Appellate Tribunal, DELHI BENCH “A”, NEW DELHI
Before: SHRI H.S. SIDHU
ORDER PER H.S. SIDHU : JM
The Revenue has filed this Appeal against the impugned Order dated 26.02.2016 of the Ld. CIT(A)-4, New Delhi, relevant to assessment year 2011-12.
The following are the grounds taken by the Department:-
“1. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition made u/s. 43B of the Act to the extent of Rs. 1,95,32,414/- in respect of service tax liability.
2. The appellant craves leave for reserving the right to amend, modify, add and forego any ground(s) of appeal at any time before or during the hearing of appeal.
The brief facts of the case are that the assessee company is engaged in the business of consultancy, trading of hardware and software products during the year under consideration. The assessee company has e-filed its return of income on 30.9.2011 showing total income of Rs. 1,81,68,550/-. Notice u/s. 143(2) of the Income Tax Act, 1961 was issued on 27.8.2013 in response to which the assessee company has produced books of accounts and supporting documents which have examined on test check basis.
Thereafter, the AO has passed the assessment order u/s. 143(3) of the Act on 28.3.2014 and made a total addition of Rs. 2,11,15,603/- on account of non-payment of service and ESI/PF Dues and on addition on account of non-deposit of employee contribution of EPF/ESI, by completing the assessment at Rs. 3,92,84,173/-.
Against the aforesaid assessment order, assessee appealed before the Ld. CIT(A)-4, New Delhi who vide his impugned order dated 26.02.2016 has partly allowed the appeal of the assessee.
Aggrieved with the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal.
Ld. DR relied upon the Order of the AO and reiterated the contentions raised in the grounds of appeal.
In this case, Notice of hearing to the assessee was sent by the Registered AD post, in spite of the same, assessee, nor its authorized representative appeared to prosecute the matter in dispute, nor filed any application for adjournment. However, the notice was received back with the remarks “This factory has been closed” and no new address has been furnished by the assessee.
Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, we are of the view that no useful purpose would be served to issue notice again and again to the assessee, therefore, we are deciding the present appeal exparte qua assessee, after hearing the Ld. DR and perusing the records.
We have heard the Ld. DR and perused the relevant records, especially the impugned order. We find that the assessee company has neither claimed Service Tax as a deduction from income nor has debited to Profit & Loss account as a part of expenditure. It had collected the service tax from the clients on behalf of the government and the same is paid to the government and has been shown in the books of accounts as a current liability and accordingly provisions of section 43B of the Income Tax Act. 1961 are not applicable. We note that Judgement of Chowringhee Sales Bureau (87 ITR 542) cited by AO in his assessment order is totally distinguishable from the case in hand as it is related to issue of Sales Tax and not Service Tax. Thus, from perusal of provisions of section 43B of the Income Tax Act, 1961 and order of jurisdictional High Court in the case of CIT vs. NOBLE & HEWITT (I) P LTD (2008)
305 ITR 324 Delhi and various other cases as relied upon by the assessee company, we are of the considered opinion that the assessee company has not debited the amount of service tax to the Profit & loss account as expenditure and not claimed any deduction of the same, therefore the Assessing Officer was not justified in making addition of Rs. 1,95,32,414/- and invoking the provisions of section 43B of the Income Tax Act, 1961 in the present case.
Accordingly, the addition of Rs. 1,95,32,414/- was rightly deleted by the Ld. CIT(A), which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) and accordingly reject the ground raised by the Revenue.
In the result, the Appeal filed by the Department stands
dismissed.
Order pronounced in the Open Court on 16/11/2017.