Appeal Details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 4912 (ITAT-JAIPUR)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
10 month(s) 27 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-11-2016
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
Not Allotted
Assessment Year
2012-2013
Appeal Filed On
21-12-2015
Judgement Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH ,-MH-TSU]] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI A.D.JAIN, JM & SHRI VIKRAM SINGH YADAV , AM VK;DJ VIHY LA-@ ITA NO.987/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 SVG EXPRESS SERVICES, D-76, GHIYA MARG, BANI PARK, JAIPUR CUKE VS. THE DY. CIT, CIRCLE-1, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABLFS 6714 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L. PODDAR (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08. 09.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 17/11/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), I JAIPUR DATED 06.11.2015 WHEREIN THE ASSESSEE HAS TA KEN FOLLOWING GROUNDS OF APPEAL: (1). THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. AO IN INV OKING THE PROVISIONS OF SECTION 145(3) OF THE INCOME TAX ACT, 1961 AND SUST AINING THE ADDITION OF RS. 7,78,308/- BY APPLYING THE GP RATE OF 7.50% AS AGAINST 6.60% DECLARED BY THE ASSESSEE. (2) THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 88,79,713/ - U/S 43B OF THE INCOME TAX ACT, 1961. ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 2 2. IN RESPECT OF GROUND NO. 1, THE FACTS OF THE CAS E AS SUMMARISED BY THE LD. CIT(A) ALONG WITH HIS FINDING ARE AS UNDER: (I) I HAVE CAREFULLY PERUSED THE SUBMISSIONS OF TH E ASSESSEE AND THE MATERIAL PLACED ON RECORD. IN THE ASSESSMENT ORDER THE AO OBSERVED AS UNDER: ALL THE VOUCHERS PRODUCED WERE UNSIGNED NO BILLS WERE PRODUCED NO DETAILS OF WORK DONE ON THE VOUCHERS VOUCHERS ACCOMPANIED BY SIMILAR COMPUTER PRINTOUTS AND SOME HANDMADE WRITTEN PAGES WITH NAMES OF PERSONS TO WHO M PAYMENTS CLAIMED TO BE MADE NO IDENTITY MARK OR PROOF OF AUTHENTICITY OF SUCH S IMILAR PRINTOUTS. NO DETAILS OR IDENTITY PROOF OF PERSONS TO WHOM PAY MENTS WERE CLAIMED TO BE MADE. (II) THE AO ISSUED SHOW CAUSE NOTICE U/S 145(3) OF THE ACT AND MADE AN ADDITION OF RS. 12 LAC THOUGH THE AO DID NOT SPECIF ICALLY REJECTED THE BOOKS OF ACCOUNTS U/S 145(30 OF THE ACT. (III) DURING THE APPELLATE PROCEEDINGS THE APPELLAN T WAS REQUIRED TO FILE COPIES OF ACCOUNTS OF ITS TWO MAIN CUSTOMERS I.E. AIRCEL LTD. AND BHARTI HEXACON LTD. AS APPEARING IN ITS BOOKS OF ACCOUNTS AND ONE BILL EACH RAISED BY THE APPELLANT TO THESE COMPANIES IN RELATION TO THE CLAIM OR SERVICE TAX AS DISCUSSED EARLIER IN THIS ORDER. FROM THESE DETAIL S, IT HAS BEEN OBSERVED THAT: THE APPELLANT RAISED INVOICE NO. 20110330 ON 23.05. 2011 FOR RS. 17,50,481/- IN THE NAME OF BHARTI HEXACON LTD. WHEREAS THE SAME IS APPEARING IN THE ACCOUNT OF BHARTI HEXACON LTD. ON 20.04.2011. SIMILARLY, TH E APPELLANT RAISED INVOICE NO. 20111059 ON 02.11.2011 IN THE NAME OF M/S AIRCE L LTD. ON 15.07.2011 ND EEN THER INVOICE NO. SHOWN AS 20110460. (IV) DURING THE APPELLATE PROCEEDINGS, THE AR WAS REQUIRED TO EXPLAIN THE SAME BUT NO REPLY WAS FURNISHED BY HIM. IT IS DIFF ICULT TO UNDERSTAND HOW IT IS POSSIBLE TO MAKE ENTRIES IN ADVANCE IN THE BOOKS O F ACCOUNTS BEFORE RAISING THE INVOICE. THE ABOVE INSTANCES REVEALED THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT ARE MANIPULATED ONE AND THEY DO NOT REFLE CT THE TRUE STATE OF AFFAIRS OF THE APPELLANT. (V) IN VIEW OF THESE FACTS COUPLED WITH THE DISCREP ANCIES OBSERVED BY THE AO AS STATED EARLIER, IT IS HELD THAT THE BOOKS OF ACC OUNTS OF ASSESSEE ARE LIABLE TO BE REJECTED U/S 145(3) OF THE ACT. ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 3 (VI) IT WAS THE CONTENTION OF THE APPELLANT THAT IT S NET PROFIT RATE IS BETTER IN COMPARISON TO THE EARLIER YEARS AND THUS THE AO WAS NOT RIGHT IN MAKING ADDITION OF RS. 12 LACS I HAVE EXAMINED THE SAID CO NTENTION OF THE APPELLANT AND FOUND TO BE NOT CONVINCING AT ALL. IT WAS NOT THE CASE OF THE APPELLANT THAT ITS EARLIER CASES WERE COMPLETED UNDER SCRUTINY PRO CEEDINGS AND ITS BOOKS OF ACCOUNTS WERE ACCEPTED IN THESE ASSESSMENTS. FOR THE YEAR UNDER CONSIDERATION AS PER ITS P&L ACCOUNT, THE APPELLANT HAS SHOWN NP RATE OF 6.60% ON TOTAL TURNOVER OF RS. 87,60,84,239/-. LOOKING TO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, I THINK IT WOULD BE APPR OPRIATE TO TAKE THE NP RATE AT 7.50% WHICH GIVES NET PROFIT OF RS.64,56,317/- A GAINST RS.56,78,009/- DECLARED THE APPELLANT. THEREFORE, ADDITION OF R S.7,78,308/- IS SUSTAINED OUT OF ADDITION OF RS. 12 LACS MADE BY THE AO. 2.1 THE LD AR SUBMITTED THAT THE APPELLANT HAS MAIN TAINED REGULAR BOOKS OF ACCOUNTS NAMELY, CASH BOOK, LEDGER, BANK BOOK, JOUR NAL AND OTHER SUPPORTING. THE BOOKS OF THE APPELLANT STAND AUDITED U/S 44AB O F THE ACT. ALSO NO DISCREPANCIES HAVE BEEN POINTED OUT BY THE TAX AUDI TORS. NO CASE FOR REJECTION OF BOOKS BY THE ASSESSING OFF ICER : THE APPELLANT HUMBLY SUBMITS THAT, THE NATURE OF BU SINESS OF THE APPELLANT IS SUCH THAT, BILLS ARE NOT GIVEN BY THE PERSONS THROU GH WHOM THE SERVICES LIKE VERIFICATION OF ADDRESSES, DELIVERING OF COURIERS, COLLECTION OF KYC FORMS ETC ARE UNDERTAKEN BY THE APPELLANT. THESE ARE MOSTLY PERSO NS DOING THE JOB AT INDIVIDUAL LEVEL, AND HENCE NO PROPER BILLS ARE GIV EN BY THEM. INSTEAD THESE PERSONS SUBMIT EITHER A HANDWRITTEN SLIP OR A COMPU TER PRINTOUT FOR THE WORK DONE BY THEM MAY BE ON A MONTHLY BASIS OR ONCE IN T WO MONTHS, DEPENDING UPON THE VOLUME OF WORK DONE. THIS IS A COMMON PRACTICE LOOKING INTO THE NATURE O F BUSINESS OF THE APPELLANT. FURTHER, THE APPELLANT HAD SUBMITTED BEFORE THE ASS ESSING OFFICER THAT, SUCH PAYMENTS ARE MADE BY IT ONLY BY ISSUING CHEQUES, AN D THUS, THE IDENTITY OF THE PAYEES IS ESTABLISHED. ALSO, THE ASSESSING OFFICER DID NOT MAKE AN ATTEMPT TO CONFIRM THE CONTENTION OF THE APPELLANT BY ISSUING SUMMONS TO A FEW OF SUCH PAYEES AND VERIFYING THE CLAIM OF THE APPELLANT, BE FORE OUT RIGHTLY REJECTING THE BOOKS OF THE APPELLANT, ON PURE ASSUMPTIONS AND SUR MISES, WITHOUT APPRECIATING THE NATURE OF BUSINESS OF THE APPELLAN T. ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 4 IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT, T HE EXPENSES CLAIMED BY THE APPELLANT ARE EXCESSIVE OR BOGUS. THUS, REJECTING B OOKS ONLY ON THE GROUND THAT THE VOUCHERS WERE UNSIGNED, OR THE BILLS WERE HAND WRITTEN IS UNWARRANTED AND BAD IN LAW, ESPECIALLY WHEN THE BOOKS ARE AUDITED A ND NO DISCREPANCIES HAVE BEEN POINTED. RESULTS DECLARED ARE BETTER THAN EARLIER YEARS THE ASSESSING OFFICER ON FLIMSY DEFECTS POINTED BY HIM, PROCEEDED TO MAKE ADDITION ON ADHOC BASIS AT RS. 12 LACS, WHICH WAS FURTHER RE-CALCULATED BY THE LEARNED CIT(A), BY ESTIMATING THE NP RATE AT 7. 5% AS AGAINST 6.6% DECLARED BY THE APPELLANT. THE APPELLANT HUMBLY SUBMITS THAT, IT IS A SETTLED POSITION OF LAW, THAT, WHEREIN A CASE THE PROVISIONS OF SEC 145(3) ARE INVOKED THE ASSESSING OFFICER HAS TO FIRST CONSIDER THE PAST HISTORY OF THE ASSESSEE, AS IT TH E BEST GUIDE FOR ESTIMATING THE PROFITS. IN CASE OF THE APPELLANT RESULTS OF THE EA RLIER THREE YEARS IS AS UNDER:- PARTICULARS ASSESSMENT YEAR 2010-11 ASSESSMENT YEAR 2011-12 ASSESSMENT YEAR 2012-13 TURNOVER 29327924 73564911 86084239 NET PROFIT AS PER P/L A/C 1144109 4503085 5678009 NP (%) 3.9% 6.12% 6.6% DEPRECIATION 793519 19670627 2779306 NP BEFORE DEPRECIATION 1937628 6473712 9249851 NP RATE BEFORE DEPRECIATION 6.61% 8.8% 10.75% THE ABOVE CHART CLEARLY ESTABLISHES THE FOLLOWING:- 1. NP DISCLOSED DURING THE YEAR IS AT AN ALL TIME HIGH AS COMPARED TO THE LAST THREE YEARS. 2. NP AFTER DEPRECIATION IS ALSO BETTER. 3. THE INCREASE IN NP IS ALONG WITH AN INCREASE IN TUR NOVER. THUS IN VIEW OF THE ABOVE FINDINGS, THE APPELLANT H UMBLY SUBMITS THAT, THERE WAS NO NEED TO INVOKE PROVISIONS OF SEC 145(3), MER ELY ON FLIMSY GROUND. AND EVEN WHEN THE BOOKS ARE REJECTED, THERE WAS NO NEED TO DISTURB THE DECLARED RESULTS, IN VIEW OF ITS COMPARISON WITH EARLIER YEA RS. ALSO, THE NP RATE ESTIMATED ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 5 BY THE LEARNED CIT(A) HAS NO BASIS, AND THUS THE EN TIRE ADDITION MADE, BY INVOKING THE PROVISIONS OF SEC 145(3) NEEDS TO BE F ULLY DELETED AND THE APPELLANT PRAYS ACCORDINGLY. 2.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD CIT(A) HAS CLOSELY EXAMINED THE A SSESSEES BOOKS OF ACCOUNTS AND HAS COME TO A WELL-REASONED ORDER THAT THE SAME ARE NOT RELIABLE AND RIGHTLY HELD TO BE REJECTED UNDER SECTION 145(3) OF THE ACT. AS FAR AS ESTIMATION OF PROFITS IS CONCERNED, IT IS NOTED THAT NO BASIS HAS BEEN GIVEN BY THE AO WHILE ESTIMATING THE N.P RATE AND MAKING AN ADDITION OF R S 12,00,000 AND THEREAFTER BY THE LD CIT(A) WHILE REDUCING THE N.P RATE AT 7.5 % AS AGAINST 6.60% DECLARED BY THE ASSESSEE. FURTHER, GIVEN THE PAST HISTORY O F THE ASSESSEE, IT IS NOTED THAT IT HAS DISCLOSED N.P BEFORE DEPRECIATION AT 10.75 % WHICH IS HIGHER AS COMPARED TO PAST TWO YEARS. IN LIGHT OF ABOVE, WE SEE NO REASON TO INTERFERE WITH THE N.P RATE DECLARED BY THE ASSESSEE. HENCE, THE TRADING ADDITION MADE ON THIS ACCOUNT IS DELETED. 3. NOW COMING TO GROUND NO. 2, BRIEFLY THE FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE AO THAT THERE WAS A DIFFERENCE OF RS. 80,79,713/- IN THE TOTAL RECEIPTS AS PER FORM 26AS AND AS PER P&L ACCOUNT FILED BY THE ASSESSEE. IT WAS SUBMITTE D BY THE APPELLANT BEFORE THE AO THAT THE DIFFERENCE WAS ON A/C OF SERVICE T AX RECEIPTS BY THE ASSESSEE AND THE SAME HAS NOT BEEN PASSED THROUGH P&L ACCOU NT. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS CLAIMED CENVAT CRE DIT OF RS., 78,84,332/- ON ACCOUNT OF SERVICE TAX COLLECTED BY THE VENDORS FRO M HIM AND AS SUCH THE DIFFERENCE OF RS.9,95,381/- WAS REFLECTED AS SERVI CE TAX BY THE APPELLANT IN ITS BALANCE SHEET AS ON 31.03.2012. THE APPELLANT SUBMITTED BEFORE THE AO THAT ITS CLA IM OF INPUT CENVAT CREDIT OF RS.78,84,332/- FOR THE SERVICE TAX CHARGED BY VENDO RS FROM THE ASSESSEE STANDS REJECTED BY THE SERVICE TAX DEPARTMENT AND THUS THE APPELLANT PAID SERVICE TAX OF RS. 88,79,713/- FOR THE YEAR UNDER CONSIDERATION ON 18.12.2013 AND 20.12.2013 WHEREAS DUE DATE OF FILING OF RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS 30.09.2012. AFTER DE LIBERATING THE ISSUE IN DETAIL, IT WAS HELD BY THE AO THAT THE ASSESSEE MAD E FALSE CLAIM OF RS. 78, 84,332/- ON ACCOUNT OF CENVAT CREDIT AND TH IS EXPENDITURE WAS NEVER INCURRED BY THE ASSESSEE. IT WAS ALSO OBSERVED BY THE AO THAT THOUGH THE ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 6 ASSESSEE CLAIMS THAT NO DEDUCTION WAS CLAIMED ON AC COUNT OF SERVICE TAX AND HENCE NO DISALLOWANCE IS WARRANTED BUT THE ASSESSEE DELIBERATELY FAILED TO POINT OUT THAT THE SERVICE TAX RECEIPTS HAVE ALSO N OT BEEN CREDITED TO THE P&L ACCOUNT AT THE SAME TIME. IT WAS FURTHER NOTED BY THE AO THAT THE ASSESSEE HAS ALREADY DECLARED RS. 9,95,381/- AS SERVICE TAX PAYABLE IN ITS BALANCE SHEET AS ITS STATUTORY LIABILITY. THE AO CONCLUDED THAT THE CLAIM OF THE ASSESSEE THAT NO AMOUNT HAS BEEN CLAIMED AS DEDUCTION ON ACCOUNT OF SERVICE TAX PAYABLE IS INCORRECT, FALSE AND MISLEADING AND IN FACT THE ASS ESSEE HAS DISCLOSED ONLY A PART OF SERVICE TAX RECEIPTS AS PAYABLE AND NOT THE WHOLE AMOUNT AS THE INTENTION WAS TO CLAIM SET OFF OF RS. 78,84,332/- A S SERVICE TAX PAID TO THE VENDORS, WHICH WAS ACTUALLY NEVER PAID. THE AO REL IED ON DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S CHOWRINGHEE SALES BUREAU (P) LTD VS. CIT WEST BENGAL (87 ITR 542) AND HELD THAT SERVICE TAX IS ALSO A PART OF PROFESSIONAL FEE OR TURNOVER AND INVOKING THE PROVISIONS OF SEC TION 43B OF THE ACT, THE AO MADE ADDITION OF RS. 88,79,713/-. 3.1 WE NOW REFER TO THE FINDINGS OF THE LD. CIT(A) AS UNDER: I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE ASSES SEE VERY CAREFULLY. IT IS RELEVANT TO MENTION HERE THAT THE APPELLANT RAIS ED INVOICES WHEREIN IT HAD CHARGED SERVICE TAX, EDUCATION CESS AND SECONDA RY EDUCATION CESS AND INCLUDED THESE AMOUNT IN THE TOTAL AMOUNT OF TH E INVOICES RAISED BY IT. FURTHER, THE COPY OF ACCOUNT OF ONE OF ITS CUS TOMER NAMELY BHARTI HEXACON LTD. REVEALED THAT THE INVOICE WISE PAYMENT S WERE MADE BY THE CUSTOMERS OF THE APPELLANT I.E. SERVICE TAX, EDUCAT ION CESS AND SECONDARY EDUCATION CESS WERE PAID WITH THE VALUE OF SERVICES PROVIDED BY THE APPELLANT. IT IS EVIDENT THAT THE ASSESSEE DID NOT ROUTED THE SERVICED TAX COLLECTED BY IT THROUGH ITS PROFIT AND LOSS ACCOUNT AS IT HAD NOT PAID THE SAME WITHIN THE STIPULATED TIME TO THE GOVT. ACCOU NT. IT WOULD BE RELEVANT TO REPRODUCE HERE THE PROVISIONS OF SECTIO N 43B OF THE ACT AS UNDER: CERTAIN DEDUCTION TO BE ONLY ON ACTUAL PAYMENT. 43B NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTH ER PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RESPECT OF (A) ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX, DUTY, C ESS OR FEE, BY WHATEVER NAME CALLED, UNDER ANY LAW FOR THE TIME BE ING IN FORCE, OR) ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 7 THUS IT IS VERY CLEAR THAT ANY TAX BY WHATEVER NAME CALLED IS COVERED U/S 43B OF THE ACT. IT MAY BE MENTIONED THAT IN THE CAS E OF CHOWRANGHEE SALES BUREAU, THE HONBLE SUPREME COURT HELD THAT T HE SALES TAX COLLECTED AND NOT DEPOSITED WITH THE TREASURY WOULD FORM PART OF THE ASSESSEES TRADING RECEIPT. IN THE INSTANT CASE UNDER CONSIDE RATION, THE APPELLANT HAD COLLECTED SERVICE TAX FROM ITS CLIENTS BUT DID NOT PAY THE SAME BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THEREF ORE , THE RATIO IN THE CASE OF CHOWRINGHEE SALES BUREAU IS CLEARLY APPLICA BLE TO THE FACTS OF THE INSTANT CASE UNDER CONSIDERATION. IT MAY BE MENTIONED THAT THE HONBLE ITAT, BANGALOR E BENCH IN THE CASE OF JAIN CHRISTOPHER (2013) 36 CCH 0011 HELD THAT T HE ASSSSEES PLEA THAT SALES TAX WAS DIFFERENT FROM SERVICE TAX CANNOT BE ACCEPTED IN THE PRESENT CIRCUMSTANCES AS WHAT THE ASSESSEE WAS A FI RM OR CHARTERED ACCOUNTANTS IS SELLING IS SERVICES AND NOT GOODS, S O THE TAX APPLICABLE IS SERVICE TAX WHICH STANDS ON THE SAME BRACKET AS SAL ES TAX IN TERMS OF SERVICES RENDERED AS SALES TAX HOLDS FOR GOODS SOLD . WE HAVE ALSO OBSERVED THAT THE AO HAD POINTED OUT THAT THE SAID AMOUNT HAS BEEN INCLUDED AS BUSINESS RECEIPTS IN ITS TDS CERTIFICAT E AND AS SUCH THE SAME SHOULD HAVE BEEN INCLUDED IN ITS RECEIPTS. THIS HA S NOT BEEN PRECISELY DONE BY THE ASSESSEE. IN THE INSTANT CASE, IT IS AN ADMITTED THAT THAT DU RING THE COURSE OF ASESSEES PROFESSION A SUM OF RS. 29,60,000/- WAS R EALISED/ COLLECTED AS SERVICE TAX PAYABLE AND THE SAME IS NOT CAPITAL REC EIPT. THE MOMENT THE SERVICE TAX IS REALISED, IT BECOMES PAYABLE TO THE GOVT. ACCOUNT AND IF IT IS NOT PAID, IT PARTAKES THE CHARACTER OF INCOME OF TH E ASSESSEE, SINCE THE ASSESSEE COULD UTILISE THIS AMOUNT IN ANY MATTER WH ATSOEVER, THERE IS NO RESTRICTION PLACED ON ITS UTILIZATION. THIS IS AMP LY CLEAR FROM THE TDS CERTIFICATE FURNISHED BY THE ASSESSEE AND ALSO THE CREDIT APPEARING IN THE ASSESSEES BANK ACCOUNT. THEREFORE TO ARRIVE AT TH E PROFESSIONAL INCOME, THE SERVICE TAX REALIZED SHOULD HAVE BEEN INCLUDED IN THE GROSS RECEIPTS UNLESS PAID TO GOVERNMENT EXCHEQUER WITHIN THE DUE DATE OF FILING OF RETURN. SINCE SERVICE TAX REALIZED IS INCLUDED IN THE TOTAL INCOME, THE SAME IS TO BE ALLOWED AS A DEDUCTION IN THE YEAR IT IS PAID TO THE GOVERNMENT ACCOUNT. IN THE INSTANT CASE THIS IS WH AT HAS BEEN DONE BY THE LD. CIT(A). THE CIT(A) HAD ALLOWED THE ALTERN ATIVE PLEA OF THE ASSESSEE AND HAD DIRECTED THE AO TO DEDUCT THE SERV ICE TAX WHEN THE PAYMENT IS MADE TO THE GOVT. ACCOUNT IN THE SUBSEQU ENT YEAR. THEREFORE, WE FIND THERE IS NO MERIT IN THE CONTENTION RAISED IN BEHALF OF THE ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 8 ASSESSEE AND THIS ISSUE IS DECIDED AGAINST THE ASSE SSEE. IT IS ORDERED ACCORDINGLY. IN VIEW OF THE ABOVE DISCUSSION, IT IS HELD THAT TH E AO WAS JUSTIFIED IN MAKING ADDITION RS. 88,790,713/- U/S 43B OF THE ACT AND HENCE THE SAME IS SUSTAINED AS THE UNPAID SERVICE TAX COLLECTED FR OM ITS CLIENTS FORM PART OFTHE TRADING RECEIPTS OF THE APPELLANT. 3.2 THE LD AR OF THE ASSESSEE SUBMITTED THAT HE PL ACES RELIANCE ON ITS SUBMISSIONS MADE BEFORE THE LEARNED CIT (A) AND FUR THER HUMBLY SUBMITS THAT NO DEDUCTION IS CLAIMED IN THE P/L A/C BOTH AS RE GARDS TO SERVICE TAX PROVIDED ON SERVICES AVAILED BY THE APPELLANT AS WELL AS SER VICE TAX CHARGED BY THE APPELLANT, HENCE THE PROVISIONS OF SEC 43B ARE NOT ATTRACTED: THE APPELLANT HAS NOT SHOWN THE RECEIPTS INCLUSIVE OF SERVICE TAX CHARGED BY IT. ALSO NO DEDUCTION ON THIS ACCOUNT IS CLAIMED IN THE COMPUTATION OF INCOME FILED BY IT. THE PROVISION FOR SERVICE TAX MADE BY THE APPELLANT, ON SERVICES AVAILED BY IT HAS ALSO NOT BEEN DEBITED TO THE P/L A/C. THUS, THE P/L A/C IS TOTALLY FREE OFF THE BURDEN OF SERVICE TAX. SEC 43B READS AS UNDER: 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RES PECT OF [(A) ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX, DUTY, CESS, OR FEE, BY WHATEVER NAME CALLED, UNDER ANY LAW FOR THE TIME BE ING IN FORCE, OR] .' IT IS SUBMITTED THAT SEC 43B STARTS WITH A NON-OBST ANTE CLAUSE, AND SPECIFIES THAT A DEDUCTION 'OTHERWISE ALLOWABLE ' UNDER THE ACT, SHALL NOT BE ALLOWED UNLESS IT IS ACTUALLY PAID. THIS MEANS THAT THE CLA IM HAS TO BE FIRSTLY PREFERRED BY THE ASSESSEE, AND THE SAME COULD BE DISALLOWED O NLY FOR THE REASON OF FAILURE TO MAKE THE ACTUAL PAYMENT, BEFORE THE FILI NG OF RETURN. IN THE CASE OF THE APPELLANT, AS THERE WAS NO CLAIM OF SERVICE TAX, IN THE P/L A/C OR THE COMPUTATION OF INCOME, THERE WAS NO QUES TION OF DISALLOWING THE SAME U/S 43B. THE APPELLANT PLACES RELIANCE ON THE FOLLOWING DECISION: SRIKAOLLU SUBARAO & CO VS. UNION OF INDIA [ 173 IT R 708] ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 9 CIT VS. NOBLE AND HEWITT (I) P. LTD. [2008] 305 ITR 324 (DELHI) SHRI RAVI KANT CHADDA VS. DEPUTY COMMISSIONER OF IN COME TAX [ITA NO. 516/LKW/2011 DATED 25.04.2013 REAL IMAGE MEDIA TECHNOLOGIES (P) LTD. ( 114 ITD 57 3 CHENNAI) NAFE SINGH GAHLAWAT VS. ACIT, I.T.A. NO.1028/DEL/20 11 DATED 29/04/2011. RAJ PAL KATYAL, NEW DELHI VS DEPARTMENT OF INCOME T AX [I.T.A. NO. 2665/DEL/2012] INDIAN CARBON LTD VS. INSPECTING ASSISSTANT COMMISS IONER & ANR [200 ITR 759 (GAU)] PHARMA SEARCH VS. ASSISTANT COMMISSIONER OF INCOME TAX [82 DTR 303 ITAT MUMBAI 2013] THUS BASED ON THE FACTS OF THE APPELLANT AND THE JU DICIAL PRONOUNCEMENTS, WHERE SERVICE TAX WAS NEVER ROUTED THROUGH P/L A/C, AND ALSO NO DEDUCTION WAS CLAIMED BY IT IN THE COMPUTATION, THE APPELLANT SUBMITS THAT, THE PROVISIONS OF SEC 43B DOES NOT APPLY, AND THE ADDIT ION SO MADE DESERVES TO BE DELETED AND THE APPELLANT PRAYS ACCORDINGLY. 3.3 THE LD DR IS HEARD WHO HAS RELIED HEAVILY ON TH E ORDER OF THE HONBLE SUPREME COURT DECISION IN CASE OF CHOWRINGHEE SALES BUREAU 87 ITR 542 AND SUBMITTED THAT THE LD CIT(A) HAS RIGHTLY HELD THE S ERVICE TAX COLLECTED AS PART OF THE PROFESSIONAL RECEIPTS AND GIVEN THAT THE SAM E HAS NOT BEEN DEPOSITED BY THE DUE DATE OF FILING OF RETURN OF INCOME, THE SAME IS NOT ALLOWABLE UNDER SECTION 43B OF THE ACT. 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS MADE THE IMPU NGED ADDITION ON ACCOUNT OF SERVICE TAX FIRSTLY HOLDING THE SAME AS PART OF PROFESSIONAL RECEIPTS IN THE HANDS OF THE APPELLANT AND THEREAFTER, HE HAS INVOK ED THE PROVISIONS OF SECTION 43B OF THE ACT GIVEN THAT THE SERVICE TAX H AS NOT BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. UNDISPUTEDLY, THE SERVICE TAX HAS BEEN COLLECTED BY THE ASSESSEE FROM ITS CUS TOMERS DURING THE YEAR AND THE SAME HAS NOT BEEN PAID BEFORE THE DUE DATE OF F ILING OF RETURN OF INCOME. IN THE CASE OF CHOWRINGHEE SALES BUREAU (SUPRA), T HE HONBLE SUPREME COURT ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 10 HAS LAID DOWN THE FOLLOWING PROPOSITION OF LAW AND THE RELEVANT OBSERVATION ARE AS UNDER: 8. IT IS APPARENT FROM THE ORDER OF THE AAC AND HAS NO T BEEN DISPUTED BEFORE US IN THE PRESENT CASE THAT IN THE CASH MEMO S ISSUED BY THE APPELLANT TO THE PURCHASERS IN THE AUCTION SALE IT WAS APPE LLANT WHO WAS SHOWNAS THE SELLER. THE AMOUNT REALISED BY THE APPELLANT FROM THE PURCHASERS INCLUDED SALES TAX. THE APPELLANT, HOWEVER, DID NOT PAY THE AMOUNT OF SALES TAX TO THE ACTUAL OWNER OF THE GOODS AUCTIONED BECAUSE THE STA TUTORY LIABILITY FOR THE PAYMENT OF THAT SALES TAX WAS THAT OF THE APPELLANT . THE APPELLANT COMPANY DID NOT ALSO DEPOSIT THE AMOUNT REALISED BY IT S SA LES TAX IN THE STATE EXCHEQUER BECAUSE IT TOOK THE POSITION THAT THE STA TUTORY PROVISION CREATING THAT LIABILITY UPON IT WAS NOT VALID. AS THE AMOUN T OF SALES-TAX WAS RECEIVED BY THE APPELLANT IN ITS CHARACTER AS AN AUCTIONEER, THE AMOUNT, IN OUR VIEW, SHOULD BE HELD TO FORM PART OF ITS TRADING OR BUSIN ESS RECEIPT. THE APPELLANT WOULD, OF COURSE, BE ENTITLED TO CLAIM DEDUCTION OF THE AMOUNT AS AND WHEN IT PAYS IT TO THE STATE GOVERNMENT. 9. THE FACT THAT THE APPELLANT CREDITED THE AMOUNT RECEIVED AS SALES TAX UNDER THE HEAD SALES TAX COLLECTION AMOUNT, WOU LD NOT, IN OUR OPINION, MAKE ANY MATERIAL DIFFERENCE. IT IS THE TRUE NATUR E AND THE QUALITY OF THE RECEIPT AND NOT THE HEAD UNDER WHICH IT IS ENTERED IN THE ACCOUNT BOOKS AS WOULD PROVE DECISIVE. IF A RECEIPT IS A TRADING REC EIPT, THE FACT THAT IT IS NOT SO SHOWN IN THE ACCOUNT BOOKS OF THE ASSESSEE WOULD NO T PREVENT THE ASSESSING AUTHORITY FROM TREATING IT AS TRADING RECEIPT. THEREFORE, THE RATIO OF THE HONBLE SUPREME COURT D ECISION IN THE CASE OF CHOWRINGHEE SALES BUREAU THAT THE SALES TAX COLLECT ED AND NOT DEPOSITED WITH THE TREASURY WOULD FORM PART OF THE ASSESSEE S TRADING RECEIPT IS CLEARLY APPLICABLE TO THE FACTS OF THE CASE. IN THE INSTAN T CASE, THE ASSESSEE HAS CONTENDED THAT IT HAS FOLLOWED THE EXCLUSIVE METHOD OF ACCOUNTING WHERE THE SERVICE TAX HAS NOT BEEN ROUTED THROUGH THE PROFIT/ LOSS ACCOUNT. IN OUR VIEW, IN LIGHT OF DECISION IN CASE OF CHOWRINGHEE SALES B UREAU, SUCH CONTENTION WILL NOT HOLD GOOD AND IRRESPECTIVE OF METHOD OF ACCOUNT ING FOLLOWED BY THE ASSESSEE, SERVICE TAX COLLECTED AND NOT DEPOSITED W ILL BE CONSIDERED AS PART OF PROFESSIONAL RECEIPTS. UNLIKE THE SITUATION PREVAI LING AT THE TIME WHEN THE HONBLE SUPREME COURT DELIVERED ITS JUDGEMENT IN CA SE OF CHOWRINGHEE SALES ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 11 BUREAU WHEN THERE WERE NO CLEAR PROVISIONS PARI-MAT ERIA TO SECTION 43B OF THE ACT, NOW GIVEN THAT THERE ARE SPECIFIC PROVISIO NS IN TERMS OF SECTION 43B OF THE ACT, TO OUR MIND PRINCIPLE AND RATIO LAID DOWN IN CASE OF CHOWRINGHEE SALES BUREAU CONTINUES TO HOLD GOOD EXCEPT THAT ITS RIGOUR HAS BEEN SLIGHTLY MODIFIED TO THE EXTENT THAT THE TAXES COLLECTED CAN BE DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME AND IN CASE THERE IS A DELAY, IT WILL BE ADDED TO THE PROFESSIONAL RECEIPTS OF THE ASSESSEE AND WILL BE ALLOWED TO CLAIM DEDUCTION OF THE AMOUNT IN THE YEAR OF PAYMEN T. FURTHER, WE HAVE GONE THROUGH THE DECISION OF THE C OORDINATE BENCH IN THE CASE OF JAIN CHRISTOPHER (2013) 36 CCH 0011 WHICH H AS DISTINGUISHED THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. NOBLE AND HEWITT (I) P. LTD. [2008] 305 ITR 324 (DELHI) AND THE SAME CLE ARLY SUPPORTS THE CASE OF THE REVENUE. WE HAVE ALSO GONE THROUGH THE OTHER D ECISIONS RELIED UPON BY THE LD AR AND FIND THAT THE SAME HAVE BEEN RENDERED SOLELY IN THE CONTEXT OF CLAIM OF DEDUCTION UNDER THE PROFIT/LOSS ACCOUNT AN D DISALLOWANCE UNDER SECTION 43B OF THE ACT AND HAS NOT CONSIDERED THE I SSUE OF WHETHER THE SERVICE TAX COLLECTED AND REMAINING UNPAID WILL FOR M PART OF TOTAL INCOME OF THE ASSESSEE AND EQUALLY NOT CONSIDERED THE DECISIO N OF HONBLE SUPREME COURT IN CASE OF CHOWRINGHEE SALES BUREAU (SUPRA) A ND HENCE, DOESNT SUPPORT THE CASE OF THE APPELLANT. IN LIGHT OF ABOVE DISCUSSIONS, WE CONFIRM THE ORDER OF THE LD CIT(A) WHO HAS RIGHTLY CONFIRMED THE DISALLOWANCE OF SERVICE TAX C OLLECTED BY THE APPELLANT FROM ITS CUSTOMERS AND DIDNT DEPOSIT THE SAME BEFO RE THE DUE DATE OF FILING OF RETURN OF INCOME. THE APPELLANT SHALL BE AT LIBE RTY TO CLAIM THE SAME IN THE SUBSEQUENT YEAR OF PAYMENT AS PER PROVISIONS OF SEC TION 43B OF THE ACT. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/1 1/2016. SD/- SD/- ( A.D. JAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 17/11/2016 ITA NO. 987/JP/15 SVG EXPRESS SERVICES VS. DCIT, CIRCLE-1, JAIPUR 12 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SVG EXPRESS SERVICES, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE-1, JAIPUR 3. VK;DJ VK;QDR@ CIT I, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-I, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.987/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR
Other Referred Cases
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Laws Referred To
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1:1 Consultation on Tax Litigation
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Master The Pitch-Deck Game
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1:1 Consultation on Business Development
₹1
Memorandum Amendment Resolution
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Sales Forecasting Sheet
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