TBO TEK LIMITED,CORPORATE OFFICE V. ASSESSMENT UNIT INCOME TAX DEPARTMENT, NEW DELHI

ITA 4222/DEL/2024

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TBO Tek Ltd. appealed against the order of the CIT(A)/NFAC, which upheld the adjustments made by the Income Tax Department's Assessment Unit. The adjustments pertained to a disallowance of Rs. 44,92,782, which was alleged to be the unpaid GST at the time of filing the Return of Income for the Assessment Year 2020-21. The appellant argued that the GST collected was not included in the turnover and was reported as a current liability in the audited financial statements. The Tribunal examined the submissions, the tax audit report, and relevant legal provisions, ultimately deciding in favor of the appellant by allowing the appeal and deleting the tax demand arising from the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31506 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2020-2021
• Other Referred Cases: ITA No. 319/Asr./2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL YADAV
• Assessee Lawyers: A. K. SRIVASTAV
• Keywords: Revenue expenditure; Non-deduction of tax
• Section: 143(3); 143(1); 43B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’, NEW DELHI Before Sh. Satbeer Singh Godara, Judicial Member & Sh. Amitabh Shukla, Accountant Member ITA No. 4222/Del/2024 : Asstt. Year: 2020-21 TBO Tek Ltd., 728, Phase-V, Udyog Vihar, Gurgaon-122016, Haryana Vs Addl./Joint/Deputy/ACIT, Circle-25(1), New Delhi-110095 (APPELLANT) (RESPONDENT) PAN No. AACCT6259K Assessee by : Sh. A. K. Srivastav, CA Revenue by : Sh. Sunil Yadav, CIT-DR Date of Hearing: 18.03.2025 Date of Pronouncement: 18.03.2025 ORDER Per Satbeer Singh Godara, Judicial Member: This assessee’s appeal for Assessment Year 2020-21, arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2024-25/1066734761(1) dated 16.07.2024, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”). 2. Heard both the parties at length. Case file perused. 3. The assessee raises the following substantive grounds in the instant appeal: ITA No. 4222/Del/2024 TBO Tek Ltd. 2 “a) The Ld. CIT(A), National Faceless Appeal Centre (NFCA) - has erred in law and in facts and circumstances on the case , in not deleting the adjustments made by the Assessment unit of the Income Tax Department. The submissions of the Assessee company were not appreciated and acknowledged, and the assessment order was passed without disposing the submissions, and contrary to the provisions as laid in second proviso of section 143(1)(a) of the IT Act. CIT(A)- National Faceless Appeal Centre -NFCA ought to have deleted the adjustment under section 143(1). (b) The Assessment Unit of the Income Tax Department, has erred in law and facts in not considering the response of the Assessee company to the notice under section 143(1)(a) of the IT Act while processing the return of income under section 143(3) of the IT Act and by not giving the Assessee Company a further opportunity for hearing, before making the additions of Rs 44,92,782. c) The Ld. Director of Income Tax - CPC under section 143(1)(a) of the IT Act has erred in law and failed to appreciate and consider the submission of Assessee Company while processing the return of income, under section 143(1) of the Act. The Authorities failed to appreciate that process of making adjustments under section 143(1) of the Act is an interactive and cerebral process and objections of the appellant has to be disposed of before proceeding further in the matter and such disposal of objections is a quasi- judicial function. 2(a) The additions of Rs 44,92,782 regarding GST amount unpaid at time of filing the Return of Income, was not routed through the Profit & Loss Account by the Assessee Company / the Appellant. The Appellant had disagreed with the proposed disallowance, as the GST collected from the customers was not included in its turnover in the profit and Loss Statement for the said year under consideration as per the Revenue Recognition Policy followed by the Appellant / Assessee Company. Further, there was no obligation on part of the Appellant / Assessee company to report the GST collected under the turnover in the Profit and Loss Account. (b) The outstanding GST Payable by the Appellant of Rs 44,92,782 was reported in the tax audit report under Clause 26(i)(B)(b) pertaining to section 43B of the IT Act ITA No. 4222/Del/2024 TBO Tek Ltd. 3 for GST amount not paid on or before the due date of filing the income tax return by the Appellant. The GST collected from Customers has been reported as current liability in the audited financial statements of the Appellant. Therefore, there was no tax deduction claimed by the Appellant in the income tax Return filed by the Appellant for the said year AY 2020-21 and neither any tax deduction was claimed by the Appellant at the time of actual payment of the GST tax by the Appellant into the Government Treasury. b) It is submitted by the Appellant that section 438 of the IT Act does not apply to the facts of the case, and therefore this amount was not liable for any disallowance. 3. It is prayed before your Honour to delete the consequent tax demand arising from the additions of the GST payable of Rs.44,92,782.” 4. We are taken to the assessee’s paper book running into 80 pages at the outset. A perusal thereof at page 71 indicates in the “CPC” had proposed the impugned adjustment of Rs.44,92,782/- in the course of section 143(1)(a)(iv) “processing” alleging inconsistency in the amount to be disallowed in section 43B which admittedly gets invoked wherein a revenue expenditure item is not allowable as a deduction, for want of actual payment thereof. 5. Faced with this situation, learned counsel further refers to the assessee’s tax audit report at page 50 wherein the relevant item of “tax collected” at source under GST “could neither be held as it’s income or expenditure”, as the case may be, so as to come u/s 43B of the Act. Learned counsel has further ITA No. 4222/Del/2024 TBO Tek Ltd. 4 referred to the tribunal’s recent order in ITA No. 319/Asr./2023 dated 04.06.2024 ruling out such an inclusion of TCS payable, liable to be added in the concerned assessee’s hands, in very terms. 6. We thus reject the Revenue’s vehement contentions supporting the learned lower authorities’ respective findings making the impugned disallowance/addition in very terms. Ordered accordingly. 7. This assessee’s appeal is allowed. Order Pronounced in the Open Court on 18/03/2025. Sd/- Sd/- (Amitabh Shukla) (Satbeer Singh Godara) Accountant Member Judicial Member Dated: 18/03/2025 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR "