Deputy Commissioner Of Income Tax 1(1) v. M/S Ganpati Motors, G.e. Road Supela, Bhilai, District Durg (C.g

HIGH COURT OF CHHATTISGARH, BILASPUR Tax Case No. 29 of 2019 NAFR Deputy Commissioner of Income Tax 1(1), 32/32 Bungalows, Bhilai, DistrictDurg (C.G.) Durg (C.G.) ---- Appellant Versus M/s Ganpati Motors, G.E. Road Supela, Bhilai, District Durg (C.G.) ---- Respondent For Appellant :Shri Amit Chaudhari, Senior Standing Counsel. Hon'ble Shri P. R. Ramachandra Menon, Chief JusticeHon'ble Shri Justice Parth Prateem Sahu, JudgeJudgment on Board Per P. R. Ramachandra Menon, Chief Justice 25.07.2019 1.The challenge involved in this appeal preferred by the Deputy Commissioner ofIncome Tax is with regard to the correctness and sustainability of the verdictpassed by the Income Tax Appellate Tribunal, whereby the deletion of a sum ofRs. 8,71,72,350/- as ordered by the Commissioner of Income Tax (Appeal),interdicting the verdict passed by the Assessing officer, has been upheld. Thefollowing questions of law are suggested as involving substantial question oflaw: Income Tax is with regard to the correctness and sustainability of the verdictpassed by the Income Tax Appellate Tribunal, whereby the deletion of a sum ofRs. 8,71,72,350/- as ordered by the Commissioner of Income Tax (Appeal),interdicting the verdict passed by the Assessing officer, has been upheld. Thefollowing questions of law are suggested as involving substantial question oflaw: “1. Whether on the point of law and on the facts andcircumstances of the case, the ITAT was justified inconfirming the order of the ld. CIT(A) who has deleted theaddition of Rs. 8,71,72, 350/- made by the AO by applyingthe provisions of Section 43B of I.T. Act, 1961 on account ofunpaid VAT when particularly, the Hon'ble Supreme Court inthe case of Chowringhee Sales Bureau (P) Ltd., vs. CIT(1973) 87 ITR 542 has held that unpaid sales tax liability hasto be included as part of receipts of the assessee andcircumstances of the case, the ITAT was justified inconfirming the order of the ld. CIT(A) who has deleted theaddition of Rs. 8,71,72, 350/- made by the AO by applyingthe provisions of Section 43B of I.T. Act, 1961 on account ofunpaid VAT when particularly, the Hon'ble Supreme Court inthe case of Chowringhee Sales Bureau (P) Ltd., vs. CIT(1973) 87 ITR 542 has held that unpaid sales tax liability hasto be included as part of receipts of the assessee and thereby in the present case, the provisions of Section 43Bare attracted? (2) Whether in law and on facts & circumstances of the case,the ITAT was justified in allowing the assessee to route hisValue Added Tax (VAT) amount out of his regular profit andloss account in contravention of Section 145A of the IncomeTax Act, 1961? (3) Whether in law and on facts & circumstances of the case,the ITAT was justified in considering unpaid VAT as allowablein contravention of Section 43B of the Income Tax Act,1961?” 2.Heard the learned standing counsel for the Appellant. 3.The point of dispute is with reference to the applicability of Section 43B of theIncome Tax Act, 1961 and whether the amount of Sales Tax / VST, not satisfiedby the Assessee and retained at Assessee's hands could be treated as part ofthe turnover, to be reckoned for taxation. Income Tax Act, 1961 and whether the amount of Sales Tax / VST, not satisfiedby the Assessee and retained at Assessee's hands could be treated as part ofthe turnover, to be reckoned for taxation. (3) Whether in law and on facts & circumstances of the case,the ITAT was justified in considering unpaid VAT as allowablein contravention of Section 43B of the Income Tax Act,1961?” 2.Heard the learned standing counsel for the Appellant. 3.The point of dispute is with reference to the applicability of Section 43B of theIncome Tax Act, 1961 and whether the amount of Sales Tax / VST, not satisfiedby the Assessee and retained at Assessee's hands could be treated as part ofthe turnover, to be reckoned for taxation. Income Tax Act, 1961 and whether the amount of Sales Tax / VST, not satisfiedby the Assessee and retained at Assessee's hands could be treated as part ofthe turnover, to be reckoned for taxation. 4.As a matter of fact, the Assessee had filed a return on 27.03.2012 declaring thetotal turnover of Rs. 1,47,07,196/-. The matter was subject to scrutiny andassessment and later, it is stated that the proceedings were subjected toreassessment proceedings invoking the power and procedure under Section147, read with Section 148 of the Income Tax Act, 1961. Ultimately theAssessing Officer disallowed the deletion amounting to Rs. 8,71,72,350/- andthe total income was worked out, also reckoning the said amount, fixing thetotal turnover as Rs. 10,21,65,290/-, in turn, fixing the tax liability accordingly.This was sought to be challenged by filling an appeal before the Commissionerof Income Tax, where the contention of the Assessee was accepted and theamount covered towards the 'unsatisfied tax' was deleted. The said order wasupheld by the Tribunal, correctness of which is under challenge this presentappeal. total turnover of Rs. 1,47,07,196/-. The matter was subject to scrutiny andassessment and later, it is stated that the proceedings were subjected toreassessment proceedings invoking the power and procedure under Section147, read with Section 148 of the Income Tax Act, 1961. Ultimately theAssessing Officer disallowed the deletion amounting to Rs. 8,71,72,350/- andthe total income was worked out, also reckoning the said amount, fixing thetotal turnover as Rs. 10,21,65,290/-, in turn, fixing the tax liability accordingly.This was sought to be challenged by filling an appeal before the Commissionerof Income Tax, where the contention of the Assessee was accepted and theamount covered towards the 'unsatisfied tax' was deleted. The said order wasupheld by the Tribunal, correctness of which is under challenge this presentappeal. 5.The reliance sought to be placed by the Department is on the verdict passed bythe Apex Court in Chowringhee Sales Bureau (P) Ltd. vs. Commissioner ofIncome Tax, West Bengal reported in AIR 1973 SC 376. The Tribunal referredthe Apex Court in Chowringhee Sales Bureau (P) Ltd. vs. Commissioner ofIncome Tax, West Bengal reported in AIR 1973 SC 376. The Tribunal referred to the said decision as well, besides the decision rendered by the Gauhati HighCourt reported inIndia Carbon Limited v. Inspecting AssistantCommissioner and Another (1993) 200 ITR 0759, and that of the High Courtof Delhi in Commissioner of Income Tax vs. Noble & Hewitt (India) (P) Ltd.reported in 2008 305 ITR 0324,considering the applicability of the aboveprovision. In fact, the circumstances under which the law declared by the Courtin Chowringhee's case would be attracted was discussed in detail by a co-ordinate Bench of this Court and as per the verdict passed on 25.04.2017 inTax Case No. 30 of 2016, interference was declined in the said appealpreferred by the Department. It was referring to the said verdict of thejurisdictional High Court, that the matter was finalized by the Income TaxAppellate Tribunal. The learned counsel for the Appellant clearly concedes that the issue has beenconsidered and decided by this Court and a copy of said verdict is also placedfor perusal of this Court. After going through the pleadings and proceedings, therelevant provisions of law and also the verdict passed by a co-ordinate Benchof this Court as mentioned above, this Court is of the firm view that no questionof law has been raised, much less any substantial question of law, so as to callfor interference in terms of Section 260(A) of Income Tax Act, 1961 and theissue stands already decided by the Court. There is no reason to disagree. 7.The appeal stands dismissed accordingly. Sd/- Sd/- (P. R. Ramachandra Menon)(Parth Prateem Sahu) Chief Justice Judge