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Income Tax Appellate Tribunal, Conducted through E-Court, Rajkot
Before: SHRI WASEEM AHMED & SHRI T.R SENTHIL KUMAR,
आदेश/O R D E R आदेश आदेश आदेश
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned two appeals have been filed at the instance of the Assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi arising in the matter of assessment order passed under s. 143(1) of the Income Tax Act, & 39/Rjt/2023 A.Y. 2018-19 & 2020-21 2 1961 (here-in-after referred to as "the Act") relevant to the Assessment Years 2018-2019 & 2020-21.
First, we take up AY 2018-19, an appeal by the assessee. 2. The assessee has raised the following grounds of appeal:
1. The learned ITO erred in law and on facts in passing the intimation order u/s.143(1) of IT Act, 1961 which is requested to be quashed.
2. The learned ITO erred in making addition of Rs.1272305/- being tax liability u/s.43B of the IT Act, 1961.
3. The only effective issue raised by the assessee is that the learned CIT(A) erred in confirming the addition made by the AO for Rs. 12,72,305/- under the provision of section 43B of the Act, which was disallowed in the intimation issued u/s 143(1) of the Act.
The facts in brief are that the assessee in the present case is a partnership firm and filed its return of income dated 31/10/2018. The return of income was processed u/s 143(1) of the Act, wherein the addition was made for Rs. 12,72,305/- representing the unpaid GST liability under the provision of section 43B of the Act. As such, the Auditor of the firm in the tax audit report has made the disallowance of outstanding tax liability on account of GST u/s 43B of the Act. Thus, the same was disallowed in the intimation generated u/s 143(1) of the Act.
Aggrieved assessee carried the matter before the Ld.CIT(A). The assessee before the Ld.CIT(A), submitted that the liability on account of GST was not passed through the profit & loss account but the same was routed through balance sheet. According to the assessee, the deduction on account of GST was not claim in the profit & loss account. Therefore, the same could not be disallowed in the return processed u/s 143(1) of the Act. & 39/Rjt/2023 A.Y. 2018-19 & 2020-21 3 5.1 Without prejudice to the above, the assessee also submitted that the amount of GST was deposited in the next Financial Year, therefore the same should be allowed as deduction in the next year if any addition is sustained in the year under consideration. However, the Ld. CIT(A) disregarded the contention of the assessee by observing as under: 5. I have perused the intimation and submissions of the appellant. The appellant has contended that the auditor while filing report in Form No.3CB & Form No.SCD has disallowed statutory tax liability u/s 43B amounting to Rs. 12,72,305/- which had not been disallowed by the assessee in the return of income. The assessee has claimed that this expenditure was not debited to the P & L Account and therefore \here was no reason to disallow the above expenditure. The appellant has cited several case laws in support of its contention. The appellant was specifically asked vide notice of hearing dated 04.11.2022 to show with evidence that the impugned GST and Service Tax had not been debited in the P & L account but had been routed directed to the Balance Sheet. However, the assessee has not submitted any reply in response That being so, it cannot be held, that the assessee has not debited the impugned expenditure to the P & L Account. Also, the auditor has not submitted that an error, has been made by him in Form No. 3CB & 3CD. The fact that the statutory tax liability has not been paid within the time given in sec 43B has been accepted by the appellant. In view of the above, the disallowance of expenditure of Rs.12,72,305/- u/s. 43B is upheld. Grounds of appeal are dismissed.
Being aggrieved by the order of learned CIT(A), the assessee is in appeal before us.
The learned AR before us filed a paper book running from pages 1 to 74 and reiterated the arguments as made before the Ld.CIT(A).
On the other hand, the Ld. DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that there was unpaid tax liability on account of GST amounting to Rs. 12,72,305/- which was disallowed by the Auditor in form 3CD under the provision of section 43B of the Act. Based on the Audit report, the same was also disallowed in the intimation generated u/s 143(1) of the Act. The Ld.CIT(A), also confirmed such addition on the reasoning that assessee has not provided financial statement to justify that & 39/Rjt/2023 A.Y. 2018-19 & 2020-21 4 the amount of GST was not routed through profit & loss account. However, the Ld. AR before us pleased to restore the issue to the file of the AO and assured to file audited financial statement to demonstrate that liability on account of GST was not routed through profit & loss account. The Ld. DR did not raise any objection if the matter is set aside to the file of the AO as per the provision of law.
9.1 Admittedly, the assessee did not file the Audited Financial statement before the Ld.CIT(A). However, the undisputed fact is this that the assessee has furnished the necessary item of profit & loss account in the return filed online along with the tax audit report. However, based on tax audit report, the disallowance was made under the provision of section 143(1) of the Act.
9.2 Be that, as it may be, the Ld.CIT(A), before rejecting the claim of the assessee should have referred the details furnished by the assessee in the income tax return before reaching to the conclusion that there was no detailed furnished by the assessee whether the amount of GST was routed through P & L account. However, in the interest of justice and fair play, we are inclined to give one more opportunity to the assessee to furnish the necessary details. Hence, the matter is set aside to the file of the AO for fresh adjudication as per the provision of law. Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
9.3 In the result, the appeal filed by the assessee is allowed for the statistical purposes.
Coming to by the assessee for A.Y. 2020-21
At the outset, we note that the issue raised by the assessee in its grounds of appeal for the AY 2020-21 is identical to the issue raised by the assessee in 2018-19. Therefore, the findings given in & 39/Rjt/2023 A.Y. 2018-19 & 2020-21 5 2020-21. The appeal of the assessee for the A.Y. 2018-19 has been decided by us vide paragraph No. 9 of this order for the statistical purposes. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2018- 19 shall also be applied for the assessment years 2020-21. Hence, the ground of appeal filed by the assessee is hereby allowed for the statistical purposes.
In the result, the appeal filed by the assessee is allowed for the statistical purposes.
In the combined result, both the appeals filed by the assessee are allowed for the statistical purposes.
Order pronounced in the Court on 19/05/2023 at Ahmedabad.