2024 (6) TMI 1552

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....nt years 2020-21 & 2022-23 ['AY'] which in turn arisen out of separate orders of intimation passed u/s 143(1) of the Act. 2. Since the facts and solitary issue involved in this bunch of appeals are identical, on the request of rival parties, for the sake of brevity these appeals are heard together for a common and consolidated order. 3. Tersely stated facts of the case are that; the assessee company was in receipt of refund of Goods & Service Tax ['GST'] Rs.2,01,95,946/- for AY 2020-21 and Rs.1,61,65,450/- for AY 2022-23. These receipts/refunds according to the Tax Audit Report ['TAR'] were not routed through profit & loss account ['P&L']. The return of income ['ITR'] filed by the assessee company u/s 139(1) of the Act was summarily p....

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....ons of section 28(iiic) of the Act by the Ld. CIT(E) without putting assessee to notice suffered from principle of natural justice. In asserting reversal of aforestated addition on former three contentions the Ld. AR further for the sake of clarity reiterated that; the assessee is engaged in the business of exporting IT/ITeS services. The assessee's exports are not liable for GST payment ['Output-GST-liability'], therefore the amount of GST paid ['Input-GST-credit'] on procurement of services like rent, travel, and communication etc., were remained to offset in absence of output GST liability. In the event of NIL output GST liability, the assessee was entitled to refund of entire Input GST credit which was allowed by the GST Department. Sin....

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....utrality or not. Insofar as the merit of the case is concerned, the assessee company not only failed to comply with the mandate of section 145 of the Act but also defaulted in computing the taxable income in accordance with the applicable ICDS-II, IV & V. The assessee however faulted the same by it adopting exclusive method, which in turn triggered the impugned addition. It is a trite law as laid down by Hon'ble Supreme Court in case 'Chandra Kishore Jha Vs Mahavir Prasad' reported in 8 SCC 266 (SC), that 'if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner'. It is also contended that, the certificate from chartered accountant placed to showcase the application of....

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....he Act prescribes that, the assessee maintaining books of accounts on accrual or mercantile system of accounting in relation to any income taxable under the head 'PGBP or IOS or both' is required to compute its taxable income in accordance with notified ICDS. 9. For the purpose the Central Board of Direct Taxes ['CBDT'] has notified ten ICDS initially in the year 2015 which are then revised vide notification no. 87/2016 dt 29/09/2016 whereby these ICDS are made applicable from AY 2017-18 to all assessee (other than Individual or HUF who is not covered by the provisions of tax audit u/s 44AB of the Act) following mercantile system of accounting, for the purposes of computation of income chargeable to income-tax under the head 'PGBP or IOS....

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.... company for the year under consideration has (a) maintained its books of account following mercantile system of accounting (b) followed exclusive method of accounting in recording all the transactions that is to say all transactions are recorded on net basis i.e. net of indirect taxes/levies etc., as against the mandate of s/s (2) of section 145 of the Act i.e. sidestepping from applicable ICDS (c) was receipt of GST refund which was not routed through or credit to P&L (d) and the tax auditor of the assessee has certified the aforestated facts in the Tax Audit Report ['TAR'] u/c 16A of Form 3CD on the basis of which the tax authorities below made/sustained the addition while assessing taxable income in the hands of the assessee. 12. The....

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....rinciple of natural justice by the first appellate authority for not according an opportunity before treating the impugned item as falling u/c (iiic) of section 28 of the Act could hardly displaced/dismantled by the Ld. DR. In result we see no cogent reason in not treating the impugned order as irregular on very terms, thus deserving to be set-aside. 14. The appellant's argument that difference of income arisen followed through consistent incorrect method of accounting/valuation etc., is tax-neutral cannot in view of Hon'ble Apex Court in CIT Vs British Paint India Ltd. [1991, 188 ITR 44 (SC)] pass the test of acceptability as it violates the clear provision of section 145(2) of the Act. However this per-se in our considered view cannot ....