TMI Blog2016 (12) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... te declared by the assessee. Hence, the trading addition made on this account is deleted. Addition on account of service tax - AO made the addition invoked the provisions of section 43B given that the service tax has not been deposited before the due date of filing of return of income - Held that:- Undisputedly, the service tax has been collected by the assessee from its customers during the year and the same has not been paid before the due date of filing of return of income. The ratio of the Hon’ble Supreme Court decision in the case of Chowringhee Sales Bureau [1972 (10) TMI 4 - SUPREME Court] that the Sales tax collected 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 instant 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 Bureau, such contention will not hold good and irrespective of method of accounting followed by the assessee, service tax collected and not deposited will be considered as part of prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant to these companies in relation to the claim or service tax as discussed earlier in this order. From these details, it has been observed that: The Appellant raised invoice No. 20110330 on 23.05.2011 for ₹ 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, the appellant raised invoice No. 20111059 on 02.11.2011 in the name of M/s Aircel 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 difficult to understand how it is possible to make entries in advance in the books of accounts before raising the invoice. The above instances revealed that the books of accounts of the appellant are manipulated one and they do not reflect the true state of affairs of the appellant. (V) In view of these facts coupled with the discrepancies observed by the AO as stated earlier, it is held that the books of accounts of assessee are liable to be rejected u/s 145(3) of the Act. (VI) It was the contention of the appellant that its net profit rate is bette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e expenses claimed by the appellant are excessive or bogus. Thus, rejecting books 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 and 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 ₹ 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 the best guide for estimating the profits. In case of the appellant results of the earlier three years is as under:- PARTICULARS Assessment Year 2010-11 Assessment Year 2011-12 Assessment Year 2012-13 Turnover 29327924 73564911 86084239 Net Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per P L account filed by the assessee. It was submitted by the appellant before the AO that the difference was on a/c of service tax receipts by the assessee and the same has not been passed through P L account. It was further submitted that the assessee has claimed Cenvat Credit of Rs., 78,84,332/- on account of service tax collected by the vendors from him and as such the difference of ₹ 9,95,381/- was reflected as service tax by the appellant in its balance sheet as on 31.03.2012. The appellant submitted before the AO that its claim of input Cenvat Credit of ₹ 78,84,332/- for the service tax charged by vendors from the assessee stands rejected by the service tax Department and thus the appellant paid service tax of ₹ 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 deliberating the issue in detail, it was held by the AO that the assessee made false claim of ₹ 78, 84,332/- on account of Cenvat Credit and this expenditure was never incurred by the assessee. It was also observed by the AO that though the assessee claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear that any tax by whatever name called is covered u/s 43B of the Act. It may be mentioned that in the case of Chowranghee Sales Bureau, the Hon ble Supreme Court held that the Sales tax collected and not deposited with the treasury would form part of the assessee s trading receipt. In the instant case under consideration, 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. Therefore , the ratio in the case of Chowringhee Sales Bureau is clearly applicable to the facts of the instant case under consideration. It may be mentioned that the Hon ble ITAT, Bangalore Bench in the case of Jain Christopher (2013) 36 CCH 0011 held that the assssee s plea that sales tax was different from service tax cannot be accepted in the present circumstances as what the assessee was a firm or Chartered Accountants is selling is services and not goods, so the tax applicable is service tax which stands on the same bracket as sales 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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, cess, or fee, by whatever name called, under any law for the time being in force, or] . It is submitted that sec 43B starts with a non-obstante clause, and specifies that a deduction otherwise allowable under the Act, shall not be allowed unless it is actually paid. This means that the claim has to be firstly preferred by the assessee, and the same could be disallowed only for the reason of failure to make the actual payment, before the filing 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 question of disallowing the same u/s 43B. The Appellant places reliance on the following decision: Srikaollu Subarao Co Vs. Union of India [ 173 ITR 708] CIT vs. Noble And Hewitt (I) P. Ltd. [2008] 305 ITR 324 (Delhi) Shri Ravi Kan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actual owner of the goods auctioned because the statutory 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 sales tax in the State exchequer because it took the position that the statutory provision creating that liability upon it was not valid. As the amount 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 business 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 , would not, in our opinion, make any material difference. It is the true nature 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 receipt, the fact that it is not so shown in the account books of the assessee would not prevent the assessing authority from treating it as trading receipt. Therefore, the ratio of the Hon ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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