ASHOK PARNAMI, Jaipur V. ADDL. CIT, Jaipur

ITA 777/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5548 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAILASH MANGAL JCIT DHK
• Assessee Lawyers: MADHUKAR GARG
• Keywords: Business income; Depreciation; Opportunity of being heard
• Section: 43B; 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 777/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10. ASHOK PARNAMI, 314, ADARSH NAGAR, JAIPUR. CUKE VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE-5, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. ABPPP 0203 P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MADHUKAR GARG (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01/12/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 29/01/2016 VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 08/08/2013 OF THE LEARNED CIT(A)-II, JAIPUR FOR A.Y . 2009-10. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN HOLDING THAT SINCE THE APPELLANT HIMSELF HAS ADMITTED THAT HE WAS LIABLE TO PAY SERVICE TAX BEFORE THE DUE DATE OF FI LING OF RETURN TO THE EXTENT OF RS.49,65,614/- THE ADDITION MADE 2 ITA NO. 777/JP/2013 ASHOK PARNAMI VS ADDL.CIT BY THE ASSESSING OFFICER U/S 43B IS CONFIRMED TO TH IS EXTENT. THE SAID ACTION IS ILLEGAL AND UNJUSTIFIED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LEARNED CIT(APPEALS) HAS ERRED IN SUSTAINING DISALLO WANCE OF RS.49,65,614/- UNDER THE PROVISIONS OF SECTION 4 3B. THE DISALLOWANCE SUSTAINED IS UNJUSTIFIED AND EXCESSI VE. 3. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRM ING THE DISALLOWANCE O' RS.2,06,757/- OUT OF TELEPHONE EXPENSES, CONVEYANCE, CAR EXPENSES AND DEPRECIATION ON CAR. THE DISALLOWANCE CONFIRMED IS UNJUSTIFIED AND EXCESSIVE. 4. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN SUSTA INING DISALLOWANCE OF RS. 1,09,577/- OUT OF EXPENSES ON REPAIRS AND MAINTENANCE, GENERATOR SET RUNNING AND REPAIRS, MISCELLANEOUS, STAFF WELFARE, FESTIVAL AND ENTERTAINMENT EXPENSES. THE DISALLOWANCE SUSTAINED IS ILLEGAL, UNJUSTIFIED AND EXCESSIVE. 2. GROUND NOS. 3 AND 4 OF THE APPEAL ARE NOT PRESSE D, THEREFORE, WE DISMISS THE SAME AS NOT PRESSED. 3. GROUNDS NO. 1 AND 2 OF THE APPEAL ARE AGAINST SU STAINING THE DISALLOWANCE OF RS. 49,65,614/- BY CONTRAVENTION OF PROVISIONS OF SECTION 43B OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSEE IS A C&F OF VARIOUS COMPANIES, IN TRANSPORT BUSINESS AND OTH ER SOURCES. THE ASSESSEE FILED RETURN ON 08/2/2010 DECLARING TOTAL INCOME OF RS. 2,04,99,030/-. THEREAFTER THE RETURN WAS REVISED ON 20/03/2010 SHOWIN G INCOME OF RS. 3 ITA NO. 777/JP/2013 ASHOK PARNAMI VS ADDL.CIT 2,05,14,030/-. THE CASE WAS SCRUTINIZED U/S 143(3) O F THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE LD ASSESSING OFFICER O BSERVED THAT AS PER AUDIT REPORT IN FORM NO. 3CD, ANNEXURE-D, IT HAS BEEN REP ORTED BY THE AUDITOR THAT SERVICE TAX DUE HAD NOT BEEN DEPOSITED. THE ASS ESSING OFFICER VERIFIED THE RECORD AND FOUND THAT THE ASSESSEE HAD SHOWN LI ABILITY ON ACCOUNT OF SERVICE TAX FOR RS. 60,08,570/-, WHICH IS LIABLE TO BE PAID BEFORE DUE DATE OF FILING OF RETURN U/S 43B OF THE ACT. THE ASSESSING O FFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE, WHICH WAS R EPLIED BY THE ASSESSEE VIDE LETTER DATED 27/12/2011, WHICH HAS BEEN REPRODU CED BY THE ASSESSING OFFICER ON PAGE 3 AND 4 OF THE ASSESSMENT ORDER. AF TER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER HAS HELD THAT AS PER HON'BLE SUPREME COURT DECISION IN THE CASE OF CHOWRANGEE SAL ES BEURO VS. CIT 87 ITR 542, SALES TAX COLLECTED BY THE ASSESSEE FROM IT S CUSTOMERS CANNOT BE EXCLUDED WHILE COMPUTING TOTAL SALES OF THE ASSESSEE . SIMILAR VIEW HELD BY THE HONBLE APEX COURT IN THE CASE OF MC.DOWELL & CO . 154 ITR 148 THAT EXCISE DUTY COLLECTED BY THE ASSESSEE IS PART OF SA LES CONSIDERATION. HE FURTHER RELIED ON THE DECISION OF HON'BLE SUPREME C OURT IN THE CASE OF KEDARNATH JUTE MANUFACTURING CO. LTD. VS. CIT 82 ITR 363 AND HELD THAT SERVICE TAX CHARGED BY THE ASSESSEE IS AN INTEGRAL PART OF ITS TURNOVER. IT IS IMMATERIAL WHETHER THE SAME HAS BEEN DEBITED IN THE PROFIT AND LOSS 4 ITA NO. 777/JP/2013 ASHOK PARNAMI VS ADDL.CIT ACCOUNT OR NOT BECAUSE THE ENTRIES IN BOOKS OF ACCO UNT ARE NOT DECISIVE OR CONCLUSIVE. THE SERVICE TAX LIABILITY BEING A STATUT ORY CHARGE IS COVERED WITH THE PROVISIONS OF SECTION 43B OF THE ACT, THEREFORE , SERVICE TAX COLLECTED BUT NOT PAID BEFORE DUE DATE OF RETURN IS LIABLE TO BE DISALLOWED. ACCORDINGLY, HE MADE ADDITION OF RS. 60,08,570/- IN THE INCOME OF T HE ASSESSEE. 4. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD CON FIRMED THE ADDITION, WHICH WAS CHALLENGED BY THE ASSESSEE FOR RS. 49,65,61 4/-, ADDITION MADE BY THE ASSESSING OFFICER AT RS. 60,08,570/-. THE OPERAT IVE PORTION OF THE ORDER OF THE LD CIT(A) IS REPRODUCED AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSESSMENT ORDER AND APPELLANTS WRITTEN SUBMISSION. ASSESSING OFFICE R DISALLOWED SERVICE TAX NOT PAID TILL THE DUE DATE OF FILING RETURN. HOWEVER APPELLANT SUBMITTED THAT HE HAS RECE IVED SERVICE TAX ONLY TO THE EXTENT OF RS 49,65,614 AND THEREFORE PROVISIONS OF SECTION 43B IS ATTRACTED TO THIS AMOUNT AND NOT TO RS. 60,08,570. APPELLANT SUBMITTE D VARIOUS JUDICIAL DECISIONS INCLUDING THE DECISION O F JURISDICTIONAL TRIBUNAL IN WHICH IT IS HELD THAT THE LIABILITY TO PAY SERVICE TAX ARISES ONLY AFTER RECEIVING PAYMENT OF SERVICES AND NOT BEFORE THAT. SINCE APPELLANT CLAIM ED THAT HE DID NOT RECEIVE PAYMENT FOR SERVICES FOR SOME AM OUNT, THERE WAS NO LIABILITY TO PAY SERVICE TAX IN RESPECT OF THAT. 5 ITA NO. 777/JP/2013 ASHOK PARNAMI VS ADDL.CIT RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTIONA L TRIBUNAL AND ALSO VARIOUS OTHER DECISIONS RELIED UP ON BY THE APPELLANT, IT IS HELD THAT APPELLANTS LIABILIT Y TO PAY SERVICE TAX ARISES ONLY AFTER RECEIVING PAYMENT AND THEREFORE SERVICE TAX ON THE UNPAID SERVICES WILL NO T BE LIABLE FOR DISALLOWANCE UNDER SECTION 43B. SINCE APP ELLANT HIMSELF ADMITTED THAT IT WAS LIABLE TO PAY SERVICE T AX BEFORE DUE DATE OF FILING RETURN TO THE EXTENT OF R S 49,65,614, ADDITION MADE BY THE AO UNDER SECTION 43 B IS CONFIRMED TO THIS EXTENT. FOR THE REMAINING DISALLOWANCE, ASSESSING OFFICER WIL L VERIFY WHETHER APPELLANT RECEIVED PAYMENT FOR SERVIC ES TILL THE END OF THE FINANCIAL YEAR OR NOT. IF BECAUSE OF NON RECEIPT OF PAYMENT FOR SERVICES, APPELLANT IS NOT L IABLE TO PAY SERVICE TAX, ADDITION IN RESPECT OF SERVICE TAX RELATING TO SUCH SERVICE CHARGES CANNOT BE MADE UNDER SECTIO N 43B. AS REGARDS APPELLANTS CLAIM OF SERVICE TAX PAID D URING THE YEAR BUT DISALLOWED IN EARLIER YEARS, IT IS HELD THA T APPELLANT DISPUTED THE ADDITIONS AND NO FACTS ARE O N RECORD, THEREFORE THIS CLAIM CANNOT BE ENTERTAINED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R OF THE ASSESSEE HAS SUBMITTED THAT THE SERVICE TAX COLLECTED BY THE ASSESSEE WAS NOT LIABLE TO DEPOSIT ANY SERVICE TAX, WHICH HAD NOT BEEN RECEI VED BY HIM DURING THE YEAR UNDER CONSIDERATION. THE SERVICE TAX HAS ALSO N OT BEEN DEBITED IN THE 6 ITA NO. 777/JP/2013 ASHOK PARNAMI VS ADDL.CIT P&L ACCOUNT DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING. HE FURTHER RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOBLE HEWITT (I) (P) LTD. [2008] 305 ITR 324 (DEL) WHEREIN IT HAS BEEN HELD TH AT WHERE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING BUT HAD NEITHER DEBITED THE AMOUNT OF SERVICE TAX IN THE PROFIT AND LOSS ACCOUN T NOR HAD CLAIMED ANY DEDUCTION. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING PART OF SERVICE TAX COLLECTED EVEN IF THEY ARE NOT DEPOSITE D IN THE GOVERNMENT ACCOUNT. THE LD CIT(A) HAD GIVEN THE FINDINGS THAT TH E ASSESSEE COLLECTED SERVICE TAX TO THE TUNE OF RS. 49,65,614/- NOT RS. 60,08,570/-. THE PROCEDURE ADOPTED BY THE ASSESSEE IS THAT WHILE RAI SING INVOICE IN C&F CHARGES IN THE SHAPE OF REMUNERATION, RENT OR OTHER CHARGES, SERVICE TAX IS SEPARATELY SHOWN AND THE ACCOUNT OF THE PARTY IS DEB ITED BY FULL AMOUNT INCLUSIVE OF SERVICE TAX, THE REMUNERATION ACCOUNT IS CREDITED WITH THE AMOUNT OF REMUNERATION AND SERVICE TAX IS SEPARATEL Y SHOWN IN THE SERVICE TAX ACCOUNT. THIS PROCEDURE IS ALSO ADOPTED IN RESPE CT OF FREIGHT CHARGES ALSO. THUS THE ASSESSEE IS NOT CLAIMING ANY EXPENDIT URE BY DEBITING THE SERVICE TAX TO THE P&L ACCOUNT, WHICH IS BEING REFL ECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THEREFORE, NO ADDITION CAN BE MADE U/S 43B OF THE ACT. HE HAS FURTHER DRAWN OUR ATTENTION TO THE DECIS ION OF HONBLE BOMBAY 7 ITA NO. 777/JP/2013 ASHOK PARNAMI VS ADDL.CIT HIGH COURT IN THE CASE OF CIT VS. M/S CALIBRE PERSON NEL SERVICES PVT. LTD., MUMBAI IN TAX APPEAL NO. 158 OF 2013 ORDER DATED 02/ 02/2015 WHEREIN IDENTICAL VIEW HAD BEEN CONFIRMED BY THE HON'BLE HIG H COURT, WHERE THE HON'BLE SUPREME COURT HAS ALSO REJECTED THE SLP FIL ED BY THE DEPARTMENT. THEREFORE, HE PRAYED TO DELETE THE ADDITION. 6. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LD CIT(A) AND ARGUED THAT THE ASSESSEES CASE IS COVERE D U/S 43B OF THE ACT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEE H AS NOT DEBITED SERVICE TAX IN P&L ACCOUNT, WHICH HAS BEEN SHOWN IN SERVICE TAX ACCOUNT SEPARATELY. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOBLE HEWITT (I) (P) LTD. (SUPRA) HAS HELD THAT THE ASSESS EE FOLLOWED MERCANTILE SYSTEM OF ACCOUNTING AND COLLECTED SERVICE TAX. THE AMOUNT OF SERVICE TAX HAS NOT BEEN DEBITED IN THE P&L ACCOUNT AS ALSO NOT CLAIMED AS DEDUCTION, THEREFORE, AMOUNT COULD NOT BE DISALLOWED. FURTHER T HE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S CALIBRE PERSON NEL SERVICES PVT. LTD. (SUPRA) BY CONSIDERING THE HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. NOBLE HEWITT (I) (P) LTD. (SUPRA) WHEREIN BOTH THE ISSUES I.E. SECTION 43B AND ISSUE OF MERCANTILE SYSTEM OF ACCOU NTING HAD ALSO BEEN 8 ITA NO. 777/JP/2013 ASHOK PARNAMI VS ADDL.CIT CONSIDERED AND HELD THAT IN CASE OF ASSESSEE, SECTI ON 43B NO DISALLOWANCE CAN BE MADE. THE HON'BLE SUPREME COURT HAS ALSO DISM ISSED THE SLP FILED BY THE DEPARTMENT IN THE CASE OF CIT VS. M/S CALIBRE PERSONNEL SERVICES PVT. LTD. (SUPRA). BY RESPECTFULLY FOLLOWING THE DEC ISION OF BOTH THE HONBLE COURTS, WE DELETE THE ADDITION CONFIRMED BY THE LD C IT(A). 8. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29 TH JANUARY, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI ASHOK PARNAMI, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE ADDL.CIT, RANGE-5, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 777/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR