Sh.Ashok Kumar, Mohali V. DCIT( Centralised Processing Centre), Bengluru

ITA 323/CHANDI/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3218 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-05-2021
• Assessment Year: 2018-2019
• Appeal Filed On: 30-09-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Revised return
• Section: 43B; 143(1); 10; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A, CHANDIGARH !'#, $ !% ', ' & ' ( ) *, !% BEFORE: SMT.DIVA SINGH, JUDICAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO.323/CHD/2020 / ASSESSMENT YEAR : 2018-19 SH.ASHOK KUMAR, SCF-65, M/S LUXMI SANITARY AND HARDWARE STORE, PHASE-9, MOHALI (PUNJAB) THE DCIT (CENTRALISED PROCESSING CENTRE), INCOME TAX DEPARTMENT, BANGALURU. ./PAN NO: AGJPK9182C /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI MOHIT DHIMAN, CA ! / REVENUE BY : SMT.MEENAKSHI VOHRA, ADDL.CIT /DATE OF HEARING : 24.05.2021 /DATE OF PRONOUNCEMENT: 07. 06. 2021 (HEARING THROUGH WEBEX) /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : THE ABOVE APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS )-2 [IN SHORT THE LD.CIT(A)] , CHANDIGARH DATED 29.07.2020 RELATING TO ASSESSMENT YEAR 2018-19, PA SSED ITA NO.323 /CHD/2020 A.Y. 2018-19 PAGE 2 OF 10 U/S 250(6)) OF THE INCOME TAX ACT, 1961 (HEREINAFTE R REFERRED TO AS ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ORDER PASSED BY THE ID. CIT (APPEALS)-2. C HANDIGARH DATED 29.07.2020 IS BAD BOTH IN THE EYES OF LAW AN D FACTS. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE ID. CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDIT ION MADE THE ID. ASSESSING OFFICER (CPC) BY HOLDING THAT THE PROVISIONS OF SECTION 43B HAD NOT BEEN COMPLIED WITH BY THE AP PELLANT. 3. THAT THE ID. CIT( APPEALS) HAS ERRED IN LAW BY WRON GLY APPLYING THE PROVISION OF SECTION 23 BY HOLDING THA T EVEN IN CASE OF RENTAL INCOME THE DEDUCTION OF GST PAID WAS ALLOWABLE ONLY IT' IT WAS ACTUALLY PAID ALTHOUGH TH E PROVISO TO SECTION 23 VERY CLEARLY PRESCRIBES THE TERM 'TAXES LEVIED BY THE LOCAL AUTHORITY'. 4. THAT THE ID. C1T(A) HAS GROSSLY ERRED BY ASSUMING T HAT THE APPELLANT HAD CLAIMED DEDUCTION OF PROPERTY TAX, WH EREAS THE ISSUE INVOLVED WAS OF GST RELATING TO RENTAL IN COME DECLARED BY THE APPELLANT. 5. WITHOUT PREJUDICE TO THE ABOVE, (HE ID. CIT (APPEAL S) HAS ERRED IN NOT ALLOWING THE AMOUNT OF IMPUGNED GST LIABIL ITY OF RS.2.29,820/- WHICH HAD BEEN DULY ADJUSTED/PAID B EFORE THE DUE DATE PRESCRIBED U/S 43B R.W.S 139(1). THAT THE ID. CIT HAS ERRED IN CONFIRMING THE ACTION OF THE ID. ASSESSING OFFICER (CPC) AS WHILE PROCESSING THE ITR U/S 143(1). NO REASONABLE OPPORTUNITY OF BEING HEARD HA D BEEN PROVIDED TO THE APPELLANT. 7. THAT THE ID. CIT (APPEALS) HAS ERRED IN CONFIRMI NG THE ACTION OF THE ID. ASSESSING OFFICER (CPC). WHEREIN THE DISALL OWANCE U/S 43B HAD BEEN MADE MERELY ON THE BASIS OF REPORT ING IN AUDIT REPORT. 8. THAT THE WORTHY CIT(APPEALS) HAS FAILED TO PASS A SPEAKING AND REASONED ORDER. 9. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARI LY, ILLEGAL, BAD IN LAW AND VIOLATION OF RUDIMENTARY PR INCIPLES OF CONTEMPORARY JURISPRUDENCE. ITA NO.323 /CHD/2020 A.Y. 2018-19 PAGE 3 OF 10 10. THAT THE APPELLANT CRAVES LEAVE TO APPEND, A MEND OR WITHDRAW ANY GROUND OF APPEAL TILL IT IS FINALLY DE CIDED. 3. AT THE OUTSET ITSELF, IT WAS POINTED OUT THAT TH E ONLY ISSUE INVOLVED IN THE APPEAL RELATED TO DISALLOWANC E MADE U/S 43B OF THE ACT ON ACCOUNT OF GST REMAINING UNPA ID AS AT THE END OF THE YEAR, AMOUNTING TO RS.2,29,820/-. 4. THE LD.COUNSEL FOR THE ASSESSEE DREW OUR ATTENTI ON TO THE FACTS OF THE CASE STATING THAT THE ASSESSEE WAS IN THE BUSINESS OF TRADING IN SANITARY AND HARDWARE GOODS IN A PROPRIETARY CONCERN AT MOHALI AND HAD FILED HIS INC OME TAX RETURN FOR THE IMPUGNED YEAR ON THE E-FILING PORTAL OF THE DEPARTMENT REFLECTING A TOTAL INCOME OF RS.21,14,72 0/-. THAT THE CPC, BENGALURU, WHILE PROCESSING THE RETUR N U/S 143(1) OF THE ACT, DISALLOWED AN AMOUNT OF RS.2,29, 820/- UNDER THE HEAD 'INCOME FROM BUSINESS OR PROFESSION' ON THE BASIS OF REPORTING BY THE AUDITOR IN FORM NO.3CB-3C D FILED IN THE CASE OF THE ASSESSEE FOR THE IMPUGNED YEAR I .E. ASSESSMENT YEAR 2018-19. THE AUDITOR OF THE ASSESSE E, IN THE TAX AUDIT REPORT, FILED IN FORM NO.3CB-3CD, HAD MENTIONED THE GST PAYABLE OF THE SAID AMOUNT OF RS.2,29,820/- ON RENT RECEIVED BY THE ASSESSEE AND WHICH HAD REMAINED UNPAID TILL THE DATE OF THE AUDIT REPO RT I.E. 01.10.2018 AND THIS AMOUNT HAD BEEN PICKED UP BY TH E CPC AND ADDED BACK TO THE INCOME OF THE ASSESSEE. ITA NO.323 /CHD/2020 A.Y. 2018-19 PAGE 4 OF 10 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.C IT(A) WHERE THE ASSESSEE CONTENDED THAT THE IMPUGNED AMOU NT RELATED TO THE RENTAL INCOME RECEIVED BY THE ASSESS EE RETURNED UNDER THE HEAD INCOME FROM HOUSE PROPERTY , AND THE SAME COULD NOT HAVE BEEN ADDED BACK TO ITS TOTA L INCOME U/S 43B OF THE ACT WHICH PERTAINED TO ADJUSTMENTS T O BE MADE TO INCOME RETURNED UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. HE FURTHER CONTENDED THAT IN ANY CASE, THE SAID AMOUNT HAD BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME I.E. 31.10.2 018 BY ADJUSTING OUT OF EXCESS INPUT TAX CREDIT BALANCE AR ISING OUT OF PURCHASES MADE BY THE ASSESSEE. RELEVANT EVIDENC ES OF THE SAME IN THE FORM OF SALE AND PURCHASE REGISTER CONTAINING DETAILS OF TAX PAYABLE AND INPUT TAX CRE DIT ALONGWITH THE COPY OF GST RETURNS FILED SHOWING THE AFORESAID ADJUSTMENT WERE PLACED BEFORE THE LD.CIT( A). THE LD.CIT(A), HOWEVER, UPHELD THE DISALLOWANCE STATING THAT EVEN UNDER THE HEAD INCOME FROM HOUSE PROPERTY ON LY DEDUCTION OF ACTUAL TAXES PAID WAS ALLOWABLE AND TH E CLAIM OF THE ASSESSEE THAT THE GST WAS PAID BEFORE FILING THE RETURN DID NOT EMANATE OUT OF THE RETURN FILED. THE RELEVANT FINDINGS OF THE LD.CIT(A) AT PARA 5.2 OF THE ORDER ARE AS UNDER: ITA NO.323 /CHD/2020 A.Y. 2018-19 PAGE 5 OF 10 5.2 GROUND OF APPEAL NOS. 2, 3, 4 & 6: I HAVE PER USED THE FACTS OF THE CASE, THE ACTION OF THE A.O. AND T HE SUBMISSIONS OF THE APPELLANT. THE APPELLANT IN THIS CASE FILED THE RETURN WHEREIN IN THE AUDIT REPORT GST OF RS. 2 ,29,8207- IS SHOWN AS PAYABLE. NO DETAILS W.R.T. THE PAYMENT OF THE SAME AS REQUIRED U/S 43B ARE MENTIONED IN THE AUDIT REPORT. THE A.O HAS DISALLOWED THE CLAIM FOR DEDUCTION WHIL E PROCESSING THE RETURN U/S 143(1) OF THE INCOME TAX ACT, 1961. IN THE GIVE LIMITED FACTS ON RECORD AS BROUGHT OUT IN THE RETURN FILED BY THE APPELLANT THERE IS NO CASE FOR GRIEVAN CE. HOWEVER, THE APPELLANT IN THE APPEAL PROCEEDINGS IS MAKING T WO CLAIMS. FIRSTLY, THAT THE DISALLOWANCE U/S. 43B OF THE ACT IS NOT APPLICABLE TO THE RENTAL INCOME AND HENCE THE DISAL LOWANCE WAS NOT CALLED FOR. HOWEVER, AT THE SAME TIME, IT IS CLEAR THAT UNDER THE HEAD INCOME FROM HOUSE PROPERTY ONLY DEDU CTION OF ACTUAL TAXES 'PAID' IS ALLOWABLE. HENCE THIS CLAIM OF THE APPELLANT IS MISPLACED. THE CLAIM THAT THE GST WAS PAID BEFORE FILING THE RETURN IS ALSO NOT EMANATING OUT OF THE RETURN FILED. 5.2.1 IN THE GIVEN CIRCUMSTANCES, THERE ARE NO MERI TS IN THE APPEAL FILED BY THE APPELLANT AND THE SAME IS DISMI SSED. THIS IS NT A CASE WHERE IN A REVISED RETURN AS PER LAW BRIN GING OUT THE CORRECT CLAIMS AS PER LAW HAD BEEN FILED WHICH HAS NOT BEEN CONSIDERED WHILE PROCESSING THE RETURN. 6. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE STATE D THAT HE WISHED TO MAKE HIS CONTENTION ONLY ON THE MERITS OF THE CASE. THEREFORE, GROUND NO.6 RAISED BY THE LD.COUNS EL FOR THE ASSESSEE RELATING TO DENIAL OF REASONABLE OPPOR TUNITY OF BEING HEARD BEFORE ADJUSTMENT WAS MADE BY THE CPC, IS BEING DISMISSED. THE SAME IS ALSO NOT MAINTAINABLE SINCE NECESSARY OPPORTUNITY WAS GIVEN TO THE ASSESSEE BEF ORE THE LD.CIT(A) WHERE THE ASSESSEE WAS GIVEN ADEQUATE OPPORTUNITY TO MAKE ALL ARGUMENTS AND PLACE NECESSA RY EVIDENCES IN SUPPORT OF HIS CONTENTION AND WHICH TH E LD.COUNSEL FOR THE ASSESSEE WAS UNABLE TO CONTROVER T BEFORE ITA NO.323 /CHD/2020 A.Y. 2018-19 PAGE 6 OF 10 US. 7. THEREAFTER THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT THE ADJUSTMENT MADE BY THE CPC IN THE INTIMATI ON MADE U/S 143(1) OF THE ACT BY MAKING DISALLOWANCE O F GST PAYABLE AMOUNTING TO RS RS.2,29,820/- U/S 43B OF TH E ACT WAS NOT MAINTAINABLE FOR THE FOLLOWING REASONS: 1) THE GST RELATED TO RENT PAID WHICH WAS RETURNED UNDER THE HEAD INCOME FROM HOUSE PROPERTY ,WHILE DISALLOWANCE U/S 43B OF THE ACT COULD BE MADE ONLY AGAINST THE INCOME RETURNED UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION. 2) THE LD.COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE REFERENCE IN SECTION 23 OF THE A CT RELATING TO INCOME RETURNED UNDER THE HEAD INCOME FROM HOUSE PROPERTY OF DEDUCTION OF TAXES FROM THE RENTAL INCOME ONLY ON PAYMENT BASIS ,RELATED TO TAX ES LEVIED BY LOCAL AUTHORITY IN RESPECT OF THE PROPERT Y AND WAS NOT RELATABLE TO GST LEVIED ON THE RENTAL INCOM E AND, THEREFORE, DEDUCTION OF THE SAME WAS NOT TO BE ALLOWED ONLY ON PAYMENT BASIS AS HELD BY THE LD.CIT (A) IN HIS ORDER. 8. AT THIS JUNCTURE, THE LD.COUNSEL FOR THE ASSESSE E WAS ITA NO.323 /CHD/2020 A.Y. 2018-19 PAGE 7 OF 10 ASKED AT BAR TO SHOW WHAT INCOME WAS REFLECTED IN T HE RETURN OF INCOME FILED BY HIM FOR THE YEAR. HE TOOK US TO PAPER BOOK PAGE NO.7 BEING COMPUTATION OF INCOME FO R THE IMPUGNED YEAR AND ALSO TO THE INTIMATION MADE U/S 1 43(1) OF THE ACT BY THE CPC, PLACED SEPARATELY BEFORE US. ON PERUSAL OF THE SAME, IT WAS NOTICED THAT THE ASSESS EE HAD REFLECTED INCOME FROM BUSINESS AND PROFESSION AND A LSO RENTAL INCOME UNDER THE HEAD 'INCOME FROM HOUSE PRO PERTY'. THE ASSESSEE WAS, THEREFORE, ASKED AS TO HOW IT WAS EVIDENT THAT THE GST PAYABLE RELATED TO THE 'INCOME FROM HO USE PROPERTY' I.E. RENTAL INCOME AND NOT INCOME FROM BU SINESS AND PROFESSION. THE LD.COUNSEL FOR THE ASSESSEE IN THIS REGARD DREW OUR ATTENTION TO THE DETAIL OF RENT REC EIVED DURING THE IMPUGNED YEAR FILED BEFORE THE LD.CIT(A) AND PLACED BEFORE US AT PAPER BOOK PAGE NO.42. REFERRIN G TO THE SAME HE POINTED OUT THAT THE RENT RECEIVED FOR THE PRE-GST PERIOD WHEN GST WAS NOT IN FORCE I.E. FROM 01.04.20 17 TO 30.06.2017 AMOUNTED TO RS.2,11,960/- WHILE RELATIN G TO THE PERIOD WHEN GST WAS LEVIABLE I.E. FROM 01.07.2017 O NWARDS AMOUNTED TO RS.11,76,780/- ON WHICH GST LEVIED AMO UNTED TO RS.2,29,820/- AND TOTAL RENT RECEIVED DURING THE YEAR EXCLUDING GST AMOUNTED TO RS.14,88,740/-. A PERUSAL OF THE COMPUTATION OF INCOME FILED BY THE ASSESSEE REVEALE D THAT THE ASSESSEE HAD REFLECTED RENTAL INCOME OF RS.14,8 8,740/- ITA NO.323 /CHD/2020 A.Y. 2018-19 PAGE 8 OF 10 WHICH WAS EXCLUDING THE GST COMPONENT.ON NOTING THE SAME, THE LD. DR WAS ASKED AS TO HOW ANY ADJUSTME NT BY WAY OF DISALLOWANCE, WHATSOEVER, WAS POSSIBLE WHEN THE AMOUNT OF GST ITSELF, WAS POSSIBLY NOT REFLECTED IN THE INCOME RETURNED BY THE ASSESSEE. THE LD. DR STATED THAT THE FACTS AS SHOWN BY THE ASSESSEE NEEDED TO BE VERIFIE D. 9. ON HEARING BOTH THE PARTIES, THEREFORE, WE ARE O F THE VIEW THAT THE ISSUE HAS NOT BEEN ADJUDICATED BY THE LD.CIT(A) AFTER APPRAISING CORRECTLY AND COMPLETELY THE FACTS RELATING TO THE SAME. ADMITTEDLY, THE TAX AUDITOR H AS REPORTED THE GST PAYABLE AS OUTSTANDING, IN THE REP ORTING AT POINT NO 26 OF THE TAX AUDIT REPORT, RELATING TO DI SALLOWANCE TO BE MADE U/S 43B OF THE ACT. THE LD.COUNSEL FOR T HE ASSESSEE HAS CLAIMED THAT THE SAID SECTION HAS NO R ELEVANCE IN ITS CASE SINCE THE GST RELATES TO RENTAL INCOME RETURNED BY IT AND NOT INCOME FROM BUSINESS AND PROFESSION TO WHICH SECTION 43B OF THE ACT IS APPLICABLE. BUT AT THE SAME TIME, WE HAVE NOTED THAT THE ASSESSEE HAS RETURNED INCOME FROM BUSINESS AND PROFESSION ALSO. THE ASSESSEE H AS FILED COPIES OF GST RETURNS AND HAS ALSO FILED DETAILS OF GST BEING LEVIED ON RENTAL INCOME. BUT, THE FINDINGS OF THE LD.CIT(A) DO NOT REVEAL ANY VERIFICATION CONDUCTED ON THIS ASPECT NOR IS THERE ANY FINDING OF FACT RELATING TO WHICH ITA NO.323 /CHD/2020 A.Y. 2018-19 PAGE 9 OF 10 COMPONENT OF INCOME THE GST RELATES TO. FURTHER, AS WE HAVE NOTED FROM THE DETAIL FILED BY THE ASSESSEE T HAT THIS GST HAS NOT EVEN BEEN INCLUDED IN THE RENTAL INCOME RETURNED BY THE ASSESSEE AND THEREFORE THERE CANNOT BE ANY OCCASION FOR MAKING ANY DISALLOWANCE. THIS ASPECT A LSO APPEARS TO HAVE NEITHER BEEN NOTED BY THE LD.CIT(A) AND NOR THEREFORE VERIFIED. MOREOVER, THE ASSESSEE HAS ALSO ARGUED THAT EVEN AS PER SECTION 23 OF THE ACT, GST IS NOT A TAX COVERED UNDER IT FOR THE PURPOSE OF BEING ALLOWED A S DEDUCTION ONLY ON PAYMENT BASIS. 10. WE ARE OF THE VIEW THAT THE FACTS RELATING TO T HE ISSUE NEED TO BE DETERMINED AND VERIFIED IN THE FIRST PLA CE, INCLUDING AMONGST OTHER THINGS AS TO WHICH COMPONE NT OF INCOME THE GST RELATES TO WHETHER RENTAL INCOME OR INCOME FROM BUSINESS AND PROFESSION. IF IT FOUND TO RELATE TO RENTAL INCOME THEN WHETHER IT HAS BEEN INCLUDED IN THE RE NTAL INCOME RETURNED BY THE ASSESSEE . IF IT HAS NOT BE EN RETURNED, THERE IS NO OCCASION FOR MAKING ANY DISAL LOWANCE AT ALL, BUT IF IT HAS BEEN RETURNED AS RENTAL INCOM E, THEN THE ISSUE NEEDS TO BE DETERMINED IN THE LIGHT OF SECTIO N 23 OF THE ACT WHICH ALLOWS DEDUCTION OF LOCAL TAXES FRO M RENTAL INCOME ON PAYMENT BASIS AND IT NEEDS TO BE DECIDED WHETHER THE GST IS COVERED UNDER THE SAME OR NOT. ITA NO.323 /CHD/2020 A.Y. 2018-19 PAGE 10 OF 10 11. THE ISSUE OF DISALLOWANCE OF GST AMOUNTING TO RS.2,29,820/-IS THEREFORE RESTORED BACK TO THE LD. CIT(A) TO BE DECIDED AFRESH AFTER ASCERTAINING ALL RELEVANT F ACTS AND THEREAFTER ADJUDICATING THE ISSUE IN ACCORDANCE WIT H LAW, GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE CONCLUSION OF HEARING. SD/- SD/- (DIVA SINGH) (ANNAP URNA GUPTA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED: 07 TH JUNE, 2021 * * / COPY OF THE ORDER FORWARDED TO : / THE APPELLANT / THE RESPONDENT / CIT ( )/ THE CIT(A) , , +,-. / DR, ITAT, CHANDIGARH - / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR