NIKHIL AGRAWAL,BILASPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CPC, BENGALURU, BEGALURU

Controversy involved in the present appeal lies in a narrow compass, i.e., sustainability of the disallowance of IGST/CST of Rs.12,75,592/- made by the A.O vide his order passed u/s.154 of the Act, dated 08.06.2020.

Shorn of unnecessary details, the assessee had failed to deposit IGST/CST within prescribed time limit, as under:

CST Rs.1,69,806/- Rs.1,70,000 04/10/2018 Bank

Based on the aforesaid qualification of the Auditor, the A.O vide his intimation u/s.143(1) of the Act, dated 19.06.2019 disallowed the aforesaid amount of Rs.12,57,592/- u/s.43B of the Act.

The assessee, thereafter, filed an application u/s.154 dated 04.05.2020 seeking rectification of the mistake qua the disallowance of Rs.12,57,592/- (supra) u/s.43B of the Act. However, the A.O vide his order passed u/s.154 dated 08.06.2020 declined the assessee’s claim and upheld the disallowance made u/s.143(1) of the Act.

Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without any success. The CIT(Appeals) while dismissing the appeal of the assessee observed that the assessee would be entitled to claim deduction of the amount disallowed u/s.43B of the Act in the period relevant to A.Y.2019-20.

The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me.

Admittedly, it is a matter of fact borne from record that the assessee’s Auditor had categorically stated in his Audit Report in “Form No.3CB” that the assesee had failed to deposit the IGST/CST of Rs.12,75,592/- on or before the “due date” of furnishing of his return of income u/s.139(1) of the Act. In fact, he had stated that

As the assesee had claimed to have deposited the aforesaid amount on IGST/CST of Rs.12,75,592/- prior to the “due date” of filing of his return of income for the year under consideration i.e. 31.10.2018, therefore, he had sought for the rectification of the said mistake vide his letter filed u/s.154 of the Act, dated 04.05.2020 which, however, was declined by the A.O.

The Ld. Authorized Representative (for short ‘AR’) for the assessee in the course of proceeding before me, had drawn my attention to the copy of “GST payable account” and “CST payable account” as appearing in the books of account of the assesee, Page 26-27 of APB a/w. copy of challans aggregating to Rs.12,69,949/- evidencing the payment of the outstanding amount of IGST/CST, Page 28 to 32 of APB. It was averred by the Ld. AR that now when the aforesaid amount of Rs.12,69,949/- (supra) had been paid by the assessee prior to the “due date” of filing of his return of income u/s. 139(1) of the Act i.e. 31.10.2018, therefore, as per the “proviso” to

Per contra, the Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities.

I have heard the ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.

I have given a thoughtful consideration to the issue in hand and find substance in the claim of the Ld. AR. As it is a matter of fact borne from record that the assesee had deposited the outstanding amount of IGST/CST of Rs.12,69,949/- (out of Rs.12,75,592/-) before the “due date” of filing of his return of income for the year under consideration i.e. A.Y.2018-19, therefore, as per the “proviso” to Section 43B(a) of the Act the said amount was duly allowable as a deduction during the year under consideration itself. Although, it is the claim of the assesee before me that an amount of Rs.5,838/- was also deposited towards outstanding IGST on 30.09.2018, however, in absence of any supporting material which would substantiate his said claim I am not inclined to accept the same. I am, thus, in terms

At this stage, I may herein observe that the aforesaid factual position as regards payment of the outstanding amount of IGST/CST had duly been admitted by the CIT(Appeals) at Para 4.4 of his order, wherein, he had observed that though the assessee had made the payment of the outstanding IGST/CST during the period 28.09.2018 to 04.10.2018, but the same was to be allowed as deduction u/s.43B of the Act only for the period relevant to A.Y.2019-20. On the basis of the aforesaid facts, I am of the considered view that now when the assessee had admittedly made the payment of Rs.12,69,949/- prior to the “due date” of filing of his return of income during the year under consideration i.e. A.Y.2018-19, therefore, to the said extent no disallowance u/s 43B of the Act of the outstanding amount of IGST/CST was called for in his hands.

In the result, appeal of the assessee is allowed in terms of the aforesaid observations.