Section 43B additions invalid when VAT/GST not claimed as deductions in profit and loss account

ITAT Raipur held that additions under Section 43B for unpaid VAT and GST liabilities cannot be made when the assessee has not claimed these amounts as deductions in the profit and loss account. Following the Chhattisgarh HC precedent in Ganapati Motors case, the tribunal ruled that where the assessee follows exclusive method of accounting and does not charge VAT/GST to P&L account, no addition is warranted under Section 43B despite the liability remaining unpaid. The CIT(Appeals) order was set aside and additions made by AO were vacated.

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Issues Involved:
1. Condonation of Delay in Filing Appeals
2. Disallowance of VAT Liability under Section 43B
3. Disallowance of Employees' Contribution to ESIC & Other Welfare Funds under Section 36(1)(va)

Summary:

1. Condonation of Delay in Filing Appeals:
The assessee's appeals involved a delay of 11 days. The delay was attributed to the time taken to appoint a new counsel due to disputes with the previous counsel. The Tribunal condoned the delay, considering the reasons as bona fide and beyond the control of the assessee, and noting no objection from the Revenue.

2. Disallowance of VAT Liability under Section 43B:
The main issue was whether the VAT liability, which was not paid before the due date for filing the return, could be disallowed under Section 43B. The Tribunal referred to the judgment of the Hon'ble High Court of Chhattisgarh in the case of M/s. Ganapati Motors, which held that if VAT was not charged to the profit and loss account, it could not be added under Section 43B. The Tribunal found that the assessee had not claimed the VAT liability as a deduction in the profit and loss account. Therefore, the addition made by the AO under Section 43B was vacated for all the assessment years (2017-18, 2018-19, and 2019-20).

3. Disallowance of Employees' Contribution to ESIC & Other Welfare Funds under Section 36(1)(va):
The assessee did not press this ground of appeal. Consequently, the Tribunal dismissed this ground as not pressed for all the assessment years.

Conclusion:
The appeals of the assessee for the assessment years 2017-18, 2018-19, and 2019-20 were allowed. The Tribunal set aside the orders of the CIT(A) and vacated the additions made by the AO under Section 43B for VAT liabilities. The other grounds of appeal were dismissed as not pressed.

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