ITO, Ward-3(3)(11), Ahmedabad V. Shri Sanjay Rampayare Prajapati, Ahmedabad

ITA 2401/AHD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4385 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 02-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P D SHAH
• Section: 43B; 143(2)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA.NO.2401/AHD/2017 / ASSTT.YEAR : 2013-14 ITO, WARD - 3(3)(11) AHMEDABAD. VS SHRI SANJAY RAMPAYARE PRAJAPATI B-01, SKYLARK APARTMENT NR. SHIVRANJANI CROSS ROAD AHMEDABAD 380 015. PAN : AFSPP 3143 E / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI VINOD TANWANI, SR.DR ASSESSEE BY : SHRI P.D. SHAH, AR / DATE OF HEARING : 26/02/2020 / DATE OF PRONOUNCEMENT: 27/02/2020 !'/ O R D E R PER RAJPAL YADAV, VICE-PRESIDENT REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST TH E ORDER OF THE LD.CIT(A)-3, AHMEDABAD DATED 22.8.2017 PASSED FOR T HE ASSTT.YEAR 2013-14. 2. THOUGH THE REVENUE HAS TAKEN FOUR GROUNDS OF APP EAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE VIZ. THE LD.CIT(A) H AS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,34,04,061/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM CONSTRUCTION BUSINESS. HE HAS FILED HI S RETURN OF INCOME ON 24.10.2014 DECLARING TOTAL INCOME AT RS.44,26,155/- . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UND ER SECTION 143(2) WAS ITA NO.2401/AHD/2017 2 ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY O F THE ACCOUNTS, IT REVEALED TO THE AO THAT IN THE CERTIFIED AUDIT REPORT UNPAID SERVICE TAX LIABILITY OF RS.1,27,22,684/- AND RS.1,07,81,377/- HAVE BEEN SHO WN BY THE ASSESSEE. VIDE SHOW CAUSE NOTICE DATED 5.2.2016, THE LD.AO HA S CONFRONTED THE ASSESSEE AS TO WHY THIS UNPAID SERVICE TAX LIABILITY BE NOT DISALLOWED TO THE ASSESSEE UNDER SECTION 43B OF THE INCOME TAX ACT. AFTER HEA RING THE ASSESSEE, THE LD.AO HAS ADDED BACK THIS AMOUNT. IN THIS WAY, AN ADDITION OF RS.2,2,35,04,061/- HAS BEEN MADE. 4. DISSATISFIED WITH ADDITION, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A). THE ASSESSEE HAS SUBMITTED T HAT THIS AMOUNT WAS NOT PAID BY THE ASSESSEE. IT REPRESENTS SERVICE TAX, B UT IT HAS NOT BEEN CLAIMED AS DEDUCTION IN THE PROFIT & LOSS ACCOUNT. IN OTHER W ORDS, THE ASSESSEE HAS NOT DEBITED THIS AMOUNT IN THE P&L ACCOUNT, AND THEREFO RE CANNOT BE DISALLOWED. THE LD.FIRST APPELLATE AUTHORITY EXAMINED THIS ASPE CT, AND THEREAFTER DELETED THE ADDITION. THE FINDING RECORDED BY THE LD.CIT(A) RE ADS AS UNDER: 3.2 DECISION: I HAVE PERUSED THE FACTS OF THE CASE AS ENUMERATED BY THE AO AND AS SUBMITTED BY THE APPELLANT. THE EXPL ANATION OF THE APPELLANT HAS BEEN CONSIDERED BY THE AO BUT REJECTE D AS THE FIGURES WERE IN SUNDRY CREDITOR IN BALANCE SHEET. THE AR A T VERY OUTSET OF PROCEEDINGS SUBMITTED THAT THE APPELLANT HAS BEEN G OING THROUGH ACUTE FINANCIAL EXIGENCIES. THE AO WHO IS ALSO AUDITOR I N THIS CASE VEHEMENTLY ARGUED THAT THE IMPUGNED AMOUNT HAS NOT BEEN CLAIMED IN THE P&L ACCOUNTS, THEREFORE, THE QUESTION OF DISALL OWANCE AS PER PROVISIONS US/43B DOES NOT ARISE. THE AR ALSO RELI ED OF THE DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. NOBLE & HEWIT T (1) P.LTD. 305 ITR . THE PARA-6& & OF THE JUDGMENT REPRODUCED AS UNDER: 6. IN OUR OPINION SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE PROFIT & LOSS ACCOUNT AS AN EXPENDITURE NOR DID THE ASSESSEE CLAIM ANY DEDUCTION RESPECT OF THE AMOUNT AND CONSIDERING THAT THE ASSESSEE IS FOLLOWING MERCANTI LE SYSTEM OF ACCOUNTING THE QUESTION OF DISALLOWING THE DEDUCTIO N NOT CLAIMED WOULD NOT ARISE. ITA NO.2401/AHD/2017 3 7. LEARNED COUNSEL FOR THE REVENUE SUBMITTED THAT T HE ASSESSEE HAS SOUGHT TO EVADE TAX UNDER THE MERCANTI LE SYSTEM OF ACCOUNTING. WE ARE OF THE VIEW THAT IT IS NOT FOR THE REVENUE AUTHORITIES TO TELL THE ASSESSEE HOW TO MAINTAIN IT S ACCOUNTS. IN VIEW OF THE FACT THAT APPELLANT HAS NOT CLAIMED THE IMPUGNED AMOUNT IN P&L ACCOUNT AS CERTIFIED FROM THE BALANCE SHEET ON RECORD AND THE RATIO LAID DOWN BY HONBLE DELHI HIGH COURT ON SIMI LAR ISSUE, THE AO IS DIRECTED TO DELETE THE ADDITION. THE GROUND NO. 1 & 2 ARE ALLOWED. 5. BEFORE US, THE LD.DR RELIED UPON THE ORDER OF TH E AO, WHEREAS, THE LD.COUNSEL FOR THE ASSESSEE RELIED UPON ORDER OF TH E LD.CIT(A). HE FURTHER MADE REFERENCE TO THE ORDER OF THE ITAT IN THE CASE OF SDCE PROJECTS P.LTD. VS. DCIT, ITA NO.2556/AHD/2017. HE PLACED ON RECOR D COPY OF THE TRIBUNALS ORDER. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS, AND G ONE THROUGH THE RECORD CAREFULLY. SECTION 43B PROVIDES THAT IF ANY SUM IS PAYABLE BY AN ASSESSEE BY WAY OF TAX, DUTY, CESS OR FEES BY WHATE VER NAME CALLED UNDER ANY LAW FOR THE TIME BEING IN FORCE, THEN SUCH AMOUNTS SHALL BE ALLOWED TO THE ASSESSEE IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM INCURRED BY THE ASSESSEE, ACCORDING TO THE ACCO UNTING METHOD REGULARLY EMPLOYED BY HIM, ONLY IN COMPUTING THE INCOME IN TH E YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM. IN OTHER WORDS, IF TH ESE STATUTORY LEVIES WERE REQUIRED TO BE CLAIMED BY THE ASSESSEE, THEN THE DE DUCTION OF SUCH AMOUNT COULD BE CLAIMED IN THE YEAR IN WHICH THEY WERE ACT UALLY PAID. IN THE PRESENT CASE, THE ASSESSEE HAS NOT PAID SERVICE TAX LIABILI TY. THUS, IT CANNOT CLAIM DEDUCTION. THE ASSESSEE HAS NOT CLAIMED THE DEDUCT ION IN ITS ACCOUNT. THEREFORE, NOTHING WAS TO BE DISALLOWED BY THE AO. BY THIS EXERCISE, THE AO HAS MADE DOUBLE ADDITIONS; VIZ (I) ASSESSEE HIMSELF HAS NOT CLAIMED THE ITA NO.2401/AHD/2017 4 DEDUCTION, AND (II) THE AO HAS ADDED BACK THIS AMOU NT. THE LD.CIT(A) HAS RIGHTLY RELIED UPON THE DECISION OF HONBLE DELHI H IGH COURT IN THE CASE OF CIT VS. NOBLE & HEWITT (I) P LTD., 166 TAXMAN 48, A ND DELETED THE ADDITION. 7. ON DUE CONSIDERATION OF THE ABOVE FACTS AND CIRC UMSTANCES, WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVENUE. IT I S DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE COURT ON 27 TH FEBRUARY, 2020 AT AHMEDABAD. SD/- SD/- ( T.S. KAPOOR ) ACCOUNTANT MEMBER (RAJPAL YADAV) VICE-PRESIDENT