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

ITA 239/RPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3537 (ITAT-RAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 26-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P NAMDEV
• Assessee Lawyers: S R RAO
• Keywords: 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 CHAUDHU RY , JM . / I TA NO. 239 /RPR /20 1 7 / ASSESSMENT YEAR : 2013 - 14 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 A SSESSEE BY : SHRI S.R. RAO REVENUE BY : SHRI R.P. NAMDEV / DATE OF HEARING : 09.05 .2019 / DATE OF PRONOUNCEMENT : 09 .0 5 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF LD. CIT(APPEALS) - II, RAIPUR (C.G.) DATED 02.06.2017 FOR THE ASSESSMENT YEAR 201 3 - 14 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 2 ITA NO. 239 /RPR /20 1 7 A.Y. 2013 - 14 1. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 1,55,60,822 / - & RS.13,424/ - 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 LIABILITY 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 LIABILITY HAS TO BE INCLUDED AS PART OF RECEIPTS OF THE ASSESSEE AND THEREBY IN THE PRESENT CASE, THE PROVISI ON OF SECTION 43B ARE ATTRACTED. 2. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(APP EALS) WAS JUSTIFIED IN ALLOWING THE ASSESSEE TO ROUTE HIS VAT AND SERVICE TAX AMOUNT OUT OF HIS REGULAR PROFIT AND LOSS ACCOUNT IN CONTRAVENTION OF SECTION 145A OF THE I.T.ACT. 3. WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) W AS JUSTIFIED IN CONSIDERING UNPAID VAT AND SERVICE TAX AS ALLOWABLE IN CONTRAVENTION OF SECTION 43B OF THE I.T.ACT, 1961. 4. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH IN LAW AND ON FACT. 5 . ANY OTHER GROUND THAT MAY BE ADDUCED AT THE TIME OF HEARING. 2. THE CRUX OF THE GRIEVANCE OF THE REVENUE IS DELETION OF ADDITION OF RS.1,55,60,822/ - & RS.13,424/ - MADE BY THE ASSESSING OFFICER BY APPLYING THE PROVISIONS OF SECTION 43B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON ACCOUNT OF UNPAID ENTRY TAX AND VAT LIABILITY. 3. BEFORE THE LD. CIT(APPEALS), DETAILED WRITTEN SUBMISSIONS HAVE BEEN 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 THE J URISDICTIONAL TRIBUNAL IN ITA NO.67/BLPR/2012 FOR THE ASSESSMENT YEAR 2009 - 10. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS BEEN MAINTAINING A 3 ITA NO. 239 /RPR /20 1 7 A.Y. 2013 - 14 SEPARATE 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. THE LD. CIT(APPEALS) AFTER CONSIDERING THE ASSESSMENT ORDER, SUBMISSIONS OF THE LD. AR AND THE FACTS AND CIRCUMSTANCES OF THE CASE HELD AS FOLLOWS: 5. I HAVE CONSIDERED THE GROUNDS OF APPEAL, GONE THROUGH THE SUBMISSIONS OF THE APPELLANT AND SEEN THE ORDER OF THE AO. I FIND THAT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE APPELLANT BY THE HONBLE JURISDICTIONAL TRIBUNAL IN THE APP ELLANTS OWN CASE IN ITA NO. 67/BLPR/2012 DATED 30.10.2015. THE HONBLE TRIBUNAL HELD 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 DECISIONS. IN THE CASE OF INDIA CARBON LIMITED VS. INSPECTING ASSTT. COMMISSIONER OF ANR,(1993) 200 ITR 0759, THE HONBLE GAUHATI HIGH COURT HAS OPINED THAT SECTION 43B APPLIES ONLY WHEN ASSESSEE CLAIMS DEDUCTION FOR ANY AMOUNT PAYABLE BY WAY OF TAX. OR DUTY. ACCORDING TO THE HON BLE COURT, WHERE NO CLAIM OF DEDUCTION IS MADE AND THAT THERE WAS NO CHARGE MADE IN THE PROFIT AND LOSS ACCOUNT, THEN SUCH LIABILITY COULD NOT BE DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 43B OF THE INCOME TAX AC T. FURTHER IN THE CASE OF CIT VS. NOBLE & HEWITT (INDIA) (P) LTD., (2008) 305 ITR 324 (DEL.) IT WAS OPINED THAT ALTHOUGH THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND COLLECTED THE SERVICE TAX BUT IT WAS NOT DEBITED TO P&L ALE. AS AN EXPEN DITURE BY DISTINGUISHING CHOWRINGHEE SALES BUREAU (P) LTD. VS. CIT (1997) 110 ITR 385 (CAL) THE HON BLE DELHI HIGH COURT HAS HELD THAT THE QUESTION OF DISALLOWING U7S.43B DID NOT ARISE. IN THE LIGHT OF ABOVE DECISIONS AS WELL AS CONSIDERING THE ADMITTED F ACTUAL POSITION THAT THE ASSESSEE HAS MAINTAINED AN EXCLUSIVE METHOD OF ACCOUNTING HOWEVER THE SAID VAT TAX ACCOUNT HAS REFLECTED THE DETAILS OF TAX COLLECTED AND TAX PAID WHICH WAS REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE AND DID NOT FORM PART OF THE P&L A/C. THEREFORE THE VIEW TAKEN BY THE CIT(A) DESERVES TO BE APPROVED. IN THE RESULT WE FIND NO FORCE IN THE GROUND OF REVENUE WHICH IS DISMISSED. 4 ITA NO. 239 /RPR /20 1 7 A.Y. 2013 - 14 4. AT THE TIME OF HEARING, LD. AR OF THE ASSESSEE VEHEMENTLY 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 DECIDED IN FAVOUR OF THE ASSESSEE IN TAX CAS E (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 THE JUDICIAL PRONOUNCEMENT PLACED BEFORE US. WE FIND THAT NOT ONLY THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL BUT ALSO BY THE DECISION OF THE HON'B LE JURISDICTIONAL HIGH COURT CHHATTISGARH 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 COUNSEL FOR THE RESPONDENT - ASSESSEE. THE FUNDAMENTAL ISS UE THAT ARISES FOR DECISION IS, AS TO WHETHER A PARTICULAR AMOUNT WHICH IS SUBJECT MATTER OF THE APPEAL IS TO BE TREATED AS RELATABLE TO VALUE ADDED TAX (VAT) PAYABLE BY THE ASSESSEE AND, IF SO, WHETHER IT HAS TO BE ACTUALLY PAID BY HIM BEFORE FILING OF THE RETURN UNDER THE INCOME TAX ACT. THIS QUESTION IS RELEVANT, 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 ATTRACTED EVEN WHEN THE ASSESSEE DOES NOT CLAIM ANY DEDUCT ION ON THE STRENGTH OF THAT PROVISION MAY ALSO BE RELEVANT. 3. THE ASSESSING AUTHORITY, ON THE INSTANT ISSUE, NOTICED THAT THE ASSESSE'S CLAIM REGARDING THE TREATMENT O F VAT IN THE BOOKS OF 5 ITA NO. 239 /RPR /20 1 7 A.Y. 2013 - 14 ACCOUNTS HAS BEEN VERIFIED FROM THE BOOKS AND THAT HAS BEEN FOU ND TO BE IN ORDER. THE ASSESSING AUTHORITY ALSO FOUND THAT V AT HAS BEEN FOUND SEPARATELY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS . THE ONLY GROUND ON WHICH THE ASSESSING AUTHORITY REFUSED TO EXCLUDE T HE VAT COLLECTED BY THE DEALER FROM THE PROFIT OF BUSINESS IS ON THE BASIS THAT THE VAT COMPONENT WAS NOT PAID OFF ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN IN RELATION TO THE PREVIOUS YEAR UNDER SECTION 139(1) OF THE INCOME TAX ACT. THE FIRST APPELLATE AUTHORITY ALSO NOTICED THAT IT IS AN UNDISPUTED FA CT THAT THE APPELLANT DID NOT CHARGE VAT TO THE PROFIT AND LOSS ACCOUNT. IT WAS THEREFORE NOTED BY THE FIRST APPELLATE AUTHORITY THAT IN SUCH CIRCUMSTANCES, THE LIABILITY MAY STILL BE UNPAID, BUT IT CANNOT BE DISALLOWED BEING NOT CLAIMED AS DEDUCTION IN TH E 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 APPEAL MAKING A REFERENCE TO THE DECISIONS REFERRED TO BY IT. 5. THE DECISION OF THE APEX COURT I N CHOWRING HEE SALES BUREAU (P) LTD. VS. CIT, AIR 1973 SC 376 = (1973) 87 ITR 542, DEALT WITH A CASE WHERE THE CONTENTS OF THE PROFIT AND LOSS ACCOUNT APPARENTLY SHOWED THAT THOUGH THE ASSESSEE HAD ATTEMPTED TO S HOW THAT THERE IS A SEPARATE ACCOUNT FOR TAX COLLECTED, THE COLLEC TION WOULD HAVE BEEN ONLY OF A COMPOSITE AMOUNT. THE TRANSACTION DE ALT WITH IN CHOWRINGHEE'S CASE (SUPRA) RELATED TO AUCTION AND THE NATU RE OF THE INCOME DERIVED BY AN AUCTIONEER IN THE PROCESS OF AUCTION. IN CONTRADISTINCTION THERETO, ARE THE D ECISIONS 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 SERVICE TAX ACCOUNTS ARE MAINTAINED SEPARATELY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. AS RIGHTLY NOTICED THEREIN, IT IS NOT FOR THE INCOME TAX DEPARTMENT TO MAKE OUT A CASE RELATING TO THE CORRECTN ESS OR OTHERWISE OF THE MERCANTILE SYSTEM OF ACCOUNTING, RESORTED TO AND MAINTAINED BY AN ASSESSEE. 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 AUTHORITY DID NOT DOUBT THE MODALITY OF THE ACCOUNTING SYSTEM ADOPTED BY THE ASSESSEE IS AN OUTSTANDING PHENOMENON WHICH GOES IN FAVOUR OF THE ASSESSEE. UND ER SUCH CIRCUMSTANCES, IT IS NOT NECESSARY FOR THE AUTHORITIES TO CONSIDER WHETHER SECTION 43 - B OF THE INCOME TAX IS TO BE RELIED ON BY THE ASSESSEE TO CLAIM ANY DEDUCTION. 7. FOR THE AFORESAID REASONS, ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND, WE ANSWER TO THE QUESTION FORMULATED IN THESE APPEALS IN 6 ITA NO. 239 /RPR /20 1 7 A.Y. 2013 - 14 THE NEGATIVE, THAT IS TO SAY, AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE AFORESAID DECISION S , WE UPHOLD THE RELIEF PROVIDE D 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 PRO NOUNCED ON 09 TH DAY OF MA Y , 201 9 . SD/ - SD/ - ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / RAIPUR ; / DATED : 09 TH MAY , 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) 5. , , , / DR, ITAT, RAIPUR BENCH, RAIPUR . 6. / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, RAIPUR . 7 ITA NO. 239 /RPR /20 1 7 A.Y. 2013 - 14 DATE 1 DRAFT DICTATED ON 09.05 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 09.05 .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 8 ITA NO. 239 /RPR /20 1 7 A.Y. 2013 - 14 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