Tax Audit Challenge Succeeds: Petitioner Granted Three-Week Window to Submit Evidence and Seek Revised Assessment The HC allowed the petitioner's challenge to a tax demand arising from audit observations for 2017-2018. The court set aside the original tax order, ...
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Tax Audit Challenge Succeeds: Petitioner Granted Three-Week Window to Submit Evidence and Seek Revised Assessment
The HC allowed the petitioner's challenge to a tax demand arising from audit observations for 2017-2018. The court set aside the original tax order, granting the petitioner three weeks to submit supporting documents and providing respondents the right to appropriate specified tax percentages. A fresh order was mandated within two months, with no costs awarded. The decision offered the petitioner an opportunity to contest the tax demand effectively.
Issues involved: Challenge to tax demand based on audit observations and report, failure to provide necessary documents, confirmation of tax demand, duplication in tax demand heads, opportunity to contest tax demand.
Issue 1: Challenge to tax demand based on audit observations and report
The petitioner, engaged in engineering and construction services, received audit observations for the assessment period 2017-2018. After receiving an intimation and a show cause notice, the impugned order confirming the tax demand was issued. The petitioner contended that the turnover reconciliation and differences between GSTR 3B return and Form 26AS were major components of the tax demand, requesting an opportunity to contest it effectively.
Issue 2: Failure to provide necessary documents
The Additional Government Pleader pointed out that the petitioner did not reply to the show cause notice or provide essential documents regarding turnover from Tamil Nadu. It was argued that the petitioner had multiple opportunities to contest the tax demand but failed to do so adequately, and that there exists a statutory remedy for such cases.
Issue 3: Confirmation of tax demand and duplication in tax demand heads
The petitioner challenged the tax demand related to turnover and differences between GSTR 3B return and Form 26AS, stating that turnover included all states' turnovers. The impugned order noted the absence of documents regarding turnover from Tamil Nadu and highlighted potential duplication between turnover and differences in returns. It was deemed appropriate to provide the petitioner with another opportunity to contest the tax demand, subject to certain terms.
Opportunity to contest tax demand
The petitioner agreed to remit percentages of the disputed tax demand under different heads. The impugned order was set aside, allowing the respondents to appropriate specified percentages from the petitioner's bank account. The petitioner was granted three weeks to file a reply with supporting documents, following which a fresh order was to be issued within two months. The case was disposed of with no order as to costs, and connected miscellaneous petitions were closed accordingly.
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