THE DEPUTY COMMISSIONER OF INCOME TAX-1(1), BHILAI(CG) V. M/S GANPATI MOTORS, BHILAI(CG)

ITA 143/BIL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3910 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 13-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P NAMDEO
• Assessee Lawyers: S R RAO
• Keywords: Business income; Question of law
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 143/RPR/2016 / ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX -1(1), 32/32 BUNGALOWS, BHILAI. DIST. DURG (C.G.)-490 006 ....... APPELLANT / V/S. M/S. GANPATI MOTORS, G.E. ROAD, SUPELA, BHILAI-490 006. PAN : AAEFG6628E / RESPONDENT ASSESSEE BY : SHRI S.R. RAO REVENUE BY : SHRI R.P. NAMDEO / DATE OF HEARING : 18.01.2019 / DATE OF PRONOUNCEMENT : 30.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM TH E ORDER OF LD. CIT(APPEALS)-II, RAIPUR (C.G.) DATED 03.03.2016 FOR THE ASSESS MENT YEAR 2011- 12 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS .8,71,72,350/- MADE BY THE ASSESSING OFFICER BY APPLYING THE PROVISIONS OF SECTION 43B OF THE IT ACT, 1961 ON ACCOUNT OF UNPAID ENTRY TAX AND VAT LI ABILITY WHEN PARTICULARLY, THE HON'BLE SUPREME COURT IN THE CASE OF CHOWRINGHEE SALES BUREAU (P) LTD. VS. CIT (1973) 87 ITR 542 HAS HELD THAT UNPAID SALES TAX 2 ITA NO.143 /RPR/2016 A.Y.2011-12 LIABILITY HAS TO BE INCLUDED AS PART OF RECEIPTS OF THE ASSESSEE AND THEREBY IN THE PRESENT CASE, THE PROVISION OF SECTION 43B A RE ATTRACTED? 2. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH I N LAW AND ON FACTS. 3. ANY OTHER GROUND THAT MAY BE ADDUCED AT THE TIME OF HEARING. 2. THE CRUX OF THE GRIEVANCE OF THE REVENUE IS DELETION O F ADDITION OF RS.8,71,72,350/- MADE BY THE ASSESSING OFFICER BY APPLYING T HE PROVISIONS OF SECTION 43B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFER RED TO AS THE ACT) ON ACCOUNT OF UNPAID ENTRY TAX AND VAT LIABILITY. 3. BEFORE THE LD. CIT(APPEALS), DETAILED WRITTEN SUBMISSIONS HAVE BEE N FILED BY THE ASSESSEE AND THEREIN IT WAS SUBMITTED THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE IN THE ASSESSEES OWN CASE BY T HE JURISDICTIONAL TRIBUNAL IN ITA NO.67/BLPR/2012 FOR THE ASSESSMENT YEAR 2009-10 . IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS BEEN MAINTAINING A SEPA RATE ACCOUNT AND DID NOT CHARGE VAT TO THE PROFIT AND LOSS ACCOUNT. IN SUCH CIRCUMSTANCES IT WAS SUBMITTED THAT THE LIABILITY MAY STILL BE UNPAID BUT IT CANNOT BE DISALLOWED BEING NOT CLAIMED AS DEDUCTION IN THE BOOKS OF ACCOUNTS. T HE LD. CIT(APPEALS) AFTER CONSIDERING THE ASSESSMENT ORDER, SUBMISSIONS OF TH E LD. AR AND THE FACTS AND CIRCUMSTANCES OF THE CASE HELD AS FOLLOWS: 2.5 I HAVE CONSIDERED THE GROUNDS OF APPEAL AND GON E THROUGH THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER AND HAVE ALSO PERUSED THE REMAND REPORT. THE APPELLANT ARGUED THAT IT HAD NOT CLAIMED DEDUCTION OF THE VAT LIABILITY WHICH WAS NOT CHARGED TO THE P & L ALE AND HENCE IT HAD NO IMPACT ON THE INCOME. THE COUNSEL SUBMITTED THAT THE ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE APPELLANT BY THE CIT( A) AND THE HON'BLE JURISDICTIONAL TRIBUNAL IN THE EARLIER YEARS AND IN THIS CONTEXT BROUGHT TO MY NOTICE THE ORDER OF THE JURISDICTIONAL TRIBUNAL IN THE APPELLANT'S OWN CASE ON THE SAME ISSUE IN APPEAL NO. ITA NO.67/BLPR/2012 FO R THE A.Y 2009-10 WHEREIN THE TRIBUNAL HELD AT PARA NO. 9 OF THE IMPU GNED ORDER AS UNDER: 'HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE, AS RAISED BY THE REVENUE DEPARTMENT NOW STOOD SQUARELY COVERED BY SEVERAL DE CISIONS. IN THE CASE OF INDIA CARBON LTD., VS. INSPECTING ASSTT. CO MMISSIONER & ANR. (1993) 200 ITR '0759, THE HON'BLE GAUHATI HIGH COURT HAS OPINED THAT SECTION 43B APPLIED ONLY WHEN ASSESSEE CLAIMS DEDUCTION FOR ANY AMOUNT PAYABLE BY WAY OF TAX OR D UTY. ACCORDING 3 ITA NO.143 /RPR/2016 A.Y.2011-12 TO THE HON'BLE COURT WHERE NO CLAIM OF DEDUCTION IS MADE AND THAT THERE WAS NO CHARGE MADE IN THE PROFIT AND LOSS ACC OUNT THEN SUCH LIABILITY COULD NOT BE DISALLOWED BY INVOKING THE P ROVISIONS OF SECTION 43B OF THE INCOME TAX ACT. FURTHER IN THE C ASE OF CIT VS. NOBLE & HEWITT (INDIA) (P) LTD., (2008) 305 ITR 324(DEL) IT WAS OPINED THAT ALTHOUGH THE ASSESSEE WAS FOLLOWING MER CANTILE SYSTEM OF ACCOUNTING AND COLLECTED THE SERVICE TAX BUT IT WAS NOT DEBITED TO PROFIT AND LOSS ACCOUNT AS AN EXPENDITURE, BY DISTI NGUISHING CHOWRINGHEE SALES BUREAU (P) LTD., VS. CIT (1997) 1 10 ITR 385 (CAL) THE HON'BLE DELHI HIGH COURT HAS HELD THAT THE QUES TION OF DISALLOWING U/S. 43B DID NOT ARISE.' I ALSO OBSERVE THAT THE RELIANCE PLACED BY THE AO O N THE SUPREME COURT DECISION IN THE CASE OF CHOWINGHEE SALES BURE AU PVT. LTD. VS. CIT OPERATES ON A DIFFERENT FOOTING AND IS NOT APPL ICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE IMPUGNED JUDG EMENT THE HON'BLE APEX COURT HELD THAT SALES TAX COLLECTED FR OM CLIENTS AND RETAINED BY THE DEALER WHICH WAS NOT PAID TO THE GO VERNMENT OR TO THE OWNERS OF THE GOODS PARTAKES THE CHARACTER OF T RADING OR BUSINESS RECEIPTS. IT COULD NOT BE CLAIMED AS A DED UCTION AS THE DEALER HAD NO SUCH LIABILITY TO PAY THE AMOUNT COLL ECTED TO THE GOVERNMENT. IN THE INSTANT CASE THE APPELLANT SUBMI TTED COPIES OF PAYMENTS MADE BY ON ACCOUNT OF VAT BY SUBMITTING CH ALLANS THAT WERE REFERRED TO THE AO WHO CONFIRMED THE PAYMENTS MADE BY THE APPELLANT TOWARDS HIS VAT LIABILITY. THE JURISDICTI ONAL TRIBUNAL HAS CONSIDERED THE IMPUGNED DECISION OF THE HON'BLE APE X COURT IN THE ORDER OF ALLOWING RELIEF TO THE APPELLANT. WITH THE ABOVE DISCUSSIONS AND CONSIDERING THE DECISION OF THE HON'BLE JURISDI CTIONAL TRIBUNAL IN THE APPELLANTS OWN CASE ON THIS ISSUE THE APPEAL O N THIS GROUND IS ALLOWED. 4. AT THE TIME OF HEARING, LD. AR OF THE ASSESSEE VEHEMEN TLY ARGUED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ASSESSEES OWN CASE BY THE HON'BLE JURISDICTIONAL HIGH COURT OF CHHATTISGARH AT BILASPUR AND DE CIDED IN FAVOUR OF THE ASSESSEE IN TAX CASE (INCOME TAX APPEAL) NO. 30 OF 2016 AND TAX CASE (INCOME TAX APPEAL) NO. 8 OF 2017. 5. ON THE OTHER HAND, THE LD. DR HAS PLACED RELIANCE ON THE ORDER OF ASSESSING OFFICER. 6. WE HAVE PERUSED THE CASE RECORDS AND CONSIDERED T HE JUDICIAL PRONOUNCEMENT PLACED BEFORE US. WE FIND THAT NOT ONLY TH E ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINAT E BENCH OF THE TRIBUNAL BUT ALSO BY THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT CHHATTISGARH 4 ITA NO.143 /RPR/2016 A.Y.2011-12 AT BILASPUR. THE RELEVANT PART OF THE DECISION OF THE HON' BLE JURISDICTIONAL HIGH COURT IS AS FOLLOWS: 2. HEARD LEARNED COUNSEL FOR THE REVENUE AND LEARNED C OUNSEL FOR THE RESPONDENT-ASSESSEE. THE FUNDAMENTAL ISSUE THAT ARI SES FOR DECISION IS, AS TO WHETHER A PARTICULAR AMOUNT WHICH IS SUBJECT MAT TER OF THE APPEAL IS TO BE TREATED AS RELATABLE TO VALUE ADDED TAX (VAT) PA YABLE BY THE ASSESSEE AND, IF SO, WHETHER IT HAS TO BE ACTUALLY PAID BY H IM BEFORE FILING OF THE RETURN UNDER THE INCOME TAX ACT. THIS QUESTION IS R ELEVANT, HAVING REGARD TO THE MANNER IN WHICH THE QUESTION OF LAW HAS BEEN FRAMED. THE ISSUE AS TO WHETHER SECTION 43-B OF THE INCOME TAX IS ATTRAC TED EVEN WHEN THE ASSESSEE DOES NOT CLAIM ANY DEDUCTION ON THE STRENG TH OF THAT PROVISION MAY ALSO BE RELEVANT. 3. THE ASSESSING AUTHORITY, ON THE INSTANT ISSUE, N OTICED THAT THE ASSESSE'S CLAIM REGARDING THE TREATMENT OF VAT IN THE BOOKS O F ACCOUNTS HAS BEEN VERIFIED FROM THE BOOKS AND THAT HAS BEEN FOUND TO BE IN ORDER. THE ASSESSING AUTHORITY ALSO FOUND THAT VAT HAS BEEN FO UND SEPARATELY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS. THE ONLY GR OUND ON WHICH THE ASSESSING AUTHORITY REFUSED TO EXCLUDE THE VAT COLL ECTED BY THE DEALER FROM THE PROFIT OF BUSINESS IS ON THE BASIS THAT TH E VAT COMPONENT WAS NOT PAID OFF ON OR BEFORE THE DUE DATE FOR FURNISHING T HE RETURN IN RELATION TO THE PREVIOUS YEAR UNDER SECTION 139(1) OF THE INCOME TA X ACT. THE FIRST APPELLATE AUTHORITY ALSO NOTICED THAT IT IS AN UNDI SPUTED FACT THAT THE APPELLANT DID NOT CHARGE VAT TO THE PROFIT AND LOSS ACCOUNT. IT WAS THEREFORE NOTED BY THE FIRST APPELLATE AUTHORITY TH AT IN SUCH CIRCUMSTANCES, THE LIABILITY MAY STILL BE UNPAID, BUT IT CANNOT BE DISALLOWED BEING NOT CLAIMED AS DEDUCTION IN THE BOOKS OF ACCOUNTS. 4. WITH THE AFORESAID FACT SITUATION, WE ARE UNABLE TO HOLD THAT THE TRIBUNAL WAS IN ERROR IN LAW IN DISMISSING THE REVENUES APP EAL MAKING A REFERENCE TO THE DECISIONS REFERRED TO BY IT. 5. THE DECISION OF THE APEX COURT IN CHOWRINGHEE SA LES BUREAU (P) LTD. VS. CIT, AIR 1973 SC 376 = (1973) 87 ITR 542, DEALT WIT H A CASE WHERE THE CONTENTS OF THE PROFIT AND LOSS ACCOUNT APPARENTLY SHOWED THAT THOUGH THE ASSESSEE HAD ATTEMPTED TO SHOW THAT THERE IS A SEPA RATE ACCOUNT FOR TAX COLLECTED, THE COLLECTION WOULD HAVE BEEN ONLY OF A COMPOSITE AMOUNT. THE TRANSACTION DEALT WITH IN CHOWRINGHEE'S CASE (SUPRA ) RELATED TO AUCTION AND THE NATURE OF THE INCOME DERIVED BY AN AUCTIONE ER IN THE PROCESS OF AUCTION. IN CONTRADISTINCTION THERETO, ARE THE DECI SIONS OF THE HIGH COURT IN DELHI COMMISSIONER OF INCOME TAX V. NOBLE & HEWITT ( INDIA) (P) LTD., 2008 305 ITR 0324, WHICH MAKE A NICE DISTINCTION BETWEEN CHOWRINGHEE'S CASE AND INSTANCES WHERE PROFIT AND LOSS ACCOUNTS AND SE RVICE TAX ACCOUNTS ARE MAINTAINED SEPARATELY FOLLOWING MERCANTILE SYST EM OF ACCOUNTING. AS RIGHTLY NOTICED THEREIN, IT IS NOT FOR THE INCOME T AX DEPARTMENT TO MAKE OUT A CASE RELATING TO THE CORRECTNESS OR OTHERWISE OF THE MERCANTILE SYSTEM OF ACCOUNTING, RESORTED TO AND MAINTAINED BY AN ASSESS EE. THE ACCEPTABILITY OR OTHERWISE OF THE ACCOUNTS IN A MERCANTILE SYSTEM WOULD OBVIOUSLY BE A MATTER OF CONCERN FOR OTHER TAXATION AUTHORITIES. 6. IN THE CASE IN HAND, AS ALREADY NOTED, THE FACT SITUATION THAT THE ASSESSING AUTHORITY AND THE FIRST APPELLATE AUTHORI TY DID NOT DOUBT THE MODALITY OF THE ACCOUNTING SYSTEM ADOPTED BY THE AS SESSEE IS AN OUTSTANDING PHENOMENON WHICH GOES IN FAVOUR OF THE ASSESSEE. UNDER SUCH CIRCUMSTANCES, IT IS NOT NECESSARY FOR THE AUT HORITIES TO CONSIDER WHETHER SECTION 43-B OF THE INCOME TAX IS TO BE REL IED ON BY THE ASSESSEE TO CLAIM ANY DEDUCTION. 5 ITA NO.143 /RPR/2016 A.Y.2011-12 7. FOR THE AFORESAID REASONS, ON THE FACTS AND CIR CUMSTANCES OF THE CASE IN HAND, WE ANSWER TO THE QUESTION FORMULATED IN THESE APPEALS IN THE NEGATIVE, THAT IS TO SAY, AGAINST THE REVENUE AND I N FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS, WE UPHOLD TH E RELIEF PROVIDED BY THE LD. CIT(APPEALS) TO THE ASSESSEE ON THIS ISSUE. HENCE, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 30TH DAY OF JANUARY, 2019. SD/- SD/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / RAIPUR ; / DATED : 30 TH JANUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-II, CIVIL LINES, RAIPUR (C.G) 4. THE PR. CIT-2, RAIPUR (C.G) !'# $$%& , ' %& , ()* , / DR, ITAT, RAIPUR BENCH, RAIPUR. 6. #+,-. / GUARD FILE. // TRUE COPY // '0 / BY ORDER, $1 %* / PRIVATE SECRETARY ' %& , / ITAT, RAIPUR. 6 ITA NO.143 /RPR/2016 A.Y.2011-12 DATE 1 DRAFT DICTATED ON 18 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 28 .01 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER