ITAT allows relief for Chartered Accountant firm's service tax liability under SVLDRS scheme section 43B

The ITAT ruled in favor of the assessee, a Chartered Accountant firm, regarding service tax liability addition under section 43B. The assessee had availed SVLDRS scheme requiring only 40% payment of service tax liability, which was verified through challan evidence. The AO was directed to verify and allow relief for the 40% paid amount. For the remaining 60% liability, which the assessee claimed was already offered in A.Y. 2020-21 audited accounts under SVLDRS scheme, the AO was directed to verify and grant appropriate relief. The appeal was allowed for statistical purposes.

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Issues Involved:
1. Disallowance of unpaid Service Tax Liability under Section 43B of the Income Tax Act.
2. Taxing the same amount twice and unjust enrichment.
3. Application of Sabka Vishwas Legacy Dispute Resolution Scheme.

Summary:
1. The appeal was against the order disallowing Rs. 6,17,424/- being unpaid Service Tax Liability for the Assessment Year 2017-18. The assessee, a Chartered Accountant Firm, filed its return of income showing NIL income after set off of brought forward losses. The Central Processing Centre (CPC) made an adjustment disallowing service tax payable, resulting in a tax demand. The assessee contended that they follow an exclusive method of accounting for service tax and should not be disallowed under Section 43B of the Act.
2. The ld. CIT(A) upheld the disallowance, stating that the service tax had not been paid by the date of filing the return of income. The assessee appealed to the Tribunal, arguing that the exclusive method of accounting should prevent disallowance under Section 43B.
3. The Tribunal considered the submissions and directed the Assessing Officer to verify that the assessee had paid 40% of the service tax liability under the Sabka Vishwas Legacy Dispute Resolution Scheme. The remaining 60% was claimed to be offered in the audited accounts for the following year. Relief was allowed to the assessee for the 40% paid and directions were given to grant relief for the remaining 60% in the subsequent assessment year.

The appeal was allowed for statistical purposes only.

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