TaxTMI 
TaxTMI 
2023 (11) TMI 929
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....ommissioner of Income-tax (Appeals) erred in the facts of the case, in law and in circumstances by disallowing Rs. 6,17,424/- being unpaid Service Tax Liability ignoring the fact that the assessee follows exclusive method of accounting. 2. The learned Commissioner of Income-tax (Appeals) erred in the facts of the case, in law and in circumstances by disallowing Rs. 6,17,424/- outstanding Service Tax Liability as the appellant has already discharged the liability on the same. 3. The learned Commissioner of Income-tax (Appeals) erred in the facts of the case, in law and in circumstances by taxing the same amount twice and ignoring the fact that the appellant had paid the 40% of the said amount under the Sabka Vishwas Legacy ....
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....on 143(1)(a) of the Income Tax Act, 1961 (in short, the Act) on 10/08/2018. The assessee responded to such notice disputing/disagreeing with the proposed adjustment. The C.P.C. made adjustment disregarding the contention of assessee by making addition on account of disallowance of service tax payable of Rs. 6,17,424/-. Such addition was made on the basis of entry in para 26 of Audit report wherein amount of expenses of Rs. 6,17,424/- is shown. Such addition was made on the basis of entry in para 26 of audit report wherein amount of expenses of Rs. 6,17,424/- was disallowed under Section 43B of the Act, which was not reflected in the income tax return for the year under consideration. The assessee further submitted that their firm is followi....
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....r explained that when exclusive method is followed for the purpose of accounting of service tax, the amount of service tax will not impact the profit and loss account as amount of service tax is not debited to the profit and loss account i.e. it is not claimed as expenses, hence it cannot be disallowed. The assessee also relied on the decision of Hon'ble Delhi High Court in CIT Vs Noble and Hewitt (I) (P) Ltd. in I.T. Appeal No. 839/2007 dated 10/09/2007. The assessee again vide their submission dated 17/11/2021 submitted that they are following exclusive method of accounting for the purpose of accounting of service tax, it has not claimed as expenses. So if the assessee has not claimed as expenses, it cannot be disallowed and added to ....
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.... when deduction is not claimed in the Profit and Loss Account, the provisions of Section 43B is not applicable. The ld. CIT(A) disregarded the decision to the facts of the present case and confirmed the disallowance made by way of adjustment. The ld. AR of the assessee submits that the assessee has not claimed deduction of service tax so it cannot be disallowed. 6. In alternative submissions, the ld AR for the assessee submits that even if it is assumed that the adjustment is proper, the assessee was liable to pay only 40% of demand as per "Sabka Vishwas Legacy Dispute Resolution Scheme, 2019" (in short, SVLDRS). Accordingly, the amount of Rs. 2,46,970/- being 40% of addition was payable by the assessee. The disallowance under Section 43....
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....s of the lower authorities carefully. The Assessing Officer/CPC made adjustment of Rs. 6,17,424/- on the basis of column 26 of audit report wherein amount of such expenses was disallowed, not reflected in the return for this year. As recorded above, before the ld. CIT(A), the assessee filed detailed written submission, the ld. CIT(A) concur with the action of Assessing Officer/CPC by taking a view that undisputedly, the assessee has not paid service tax till filing of return of income under Section 139(1) of the Act. Before me, the ld. AR of the assessee in alternative submissions vehemently submitted that the assessee applied for the benefit of SVLDRS and only 40% of Rs. 6,17,424/- was payable, which stand paid. The ld AR for the assessee ....