CHIRAG JHIRWAL, DY. CIT, CIRCLE-3(1)(1), AHMEDABAD V. .SCORPIO ENTERPRISE, AHMEDABAD

ITA 1018/AHD/2024

AI Insights

The case involves an appeal by the Revenue against Scorpio Enterprise, concerning an addition of Rs.3,27,77,267 made by the ADIT-CPC Bangalore based on a GST refund amount reported in Clause 16(b) of Form 3CD. The assessee, Scorpio Enterprise, had filed its return declaring a total income of Rs.12,77,20,060. The CIT(A) allowed the appeal of the assessee, leading to the Revenue's appeal to the Tribunal. The Tribunal's decision focused on the interpretation of the GST refund reporting in the tax audit report and its implications for taxable income.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470517 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAMTA SINGH
• Assessee Lawyers: JYOTISH M. SHAH
• Section: 143(1)

Judgement Text

"ITA No.1018/Ahd/2024 A.Y: 2021-22 Chirag Jhirwal, DCIT, vs. Scorpio Enterprise Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.1018/Ahd/2024 Assessment Year: 2021-22 Chirag Jhirwal, Deputy Commissioner of Income Tax, Circle – 3(1)(1), Ahmedabad. Vs. Scorpio Enterprise, 5201, GIDC Estate, Phase-IV, Vatva, Ahmedabad – 382 445. [PAN – ABJFS 9461 K] (Appellant) (Respondent) Assessee by Shri Jyotish M. Shah, CA Revenue by Smt. Mamta Singh, Sr. DR Date of Hearing 21.11.2024 Date of Pronouncement 18.12.2024 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER: This appeal is filed by the Revenue against order dated 12.03.2024 passed by the Addl. Joint CIT(A)-11, Mumbai for the Assessment Year 2021-22. 2. The Revenue has raised the following ground of appeal :- “1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.3,27,77,267/- made by the ADIT-CPC Bangalore on the basis of GST refund amount reported in Clause 16(b) of Form 3CD and not to be considered as income.” 3. The assessee firm filed its return of income declaring total income of Rs.12,77,20,060/-. The ADIT CPC, Bengaluru i,e, the Assessing Officer passed order under Section 143(1) of the Income Tax Act, 1961 dated 12.12.2022 making total additions of Rs.3,27,77,267/-. ITA No.1018/Ahd/2024 A.Y: 2021-22 Chirag Jhirwal, DCIT, vs. Scorpio Enterprise Page 2 of 3 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. 5. The Ld. DR submitted that the CIT(A) erred in law in deleting the addition on the basis of GST refund amount reported in Clause 16(b) of Form 3CD and has not considered the income. The Ld. DR submitted that the Assessing Officer has rightly made the addition 6. The Ld. AR relied upon the order of the CIT(A). 7. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the findings given by the CIT(A) in paragraph no.5.2.4 that mere reporting under Clause 16(b) should not automatically lead to a conclusion that the amount of Rs.3,27,77,267/- is taxable in the hands of the assessee. This finding is justifiable and Clause 16(b) of TAR merely requires the Tax Auditor to inter-alia report refund of GST, where such refunds are not credited to the Profit & Loss Account and are admitted as due by the authorities concerned. Clause 16(a) of TAR requires Tax Auditor to report items falling within the scope of Section 28 if the same are not credited to the Profit & Loss account. This observation of the CIT(A) is in consonance with the method adopted by the assessee firm, i.e. Mercantile System of Accounting, and thus there is no need to interfere with the finding of the CIT(A). Thus, appeal of the Revenue is dismissed. 8. In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on this 18th December, 2024. Sd/- Sd/- (DR. BRR KUMAR) (SUCHITRA KAMBLE) Vice President Judicial Member Ahmedabad, the 18th December, 2024 PBN/* ITA No.1018/Ahd/2024 A.Y: 2021-22 Chirag Jhirwal, DCIT, vs. Scorpio Enterprise Page 3 of 3 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad "