Case Law Details
Javid Bagwan Vs ITO Ward-1 & TPS (ITAT Bangalore)
CPC Cannot Ignore GST Paid Before ITR Due Date Merely Because Form 3CD Shows Outstanding Liability- Bangalore ITAT Grants Relief u/s 43B
The Bangalore ITAT held that where GST liability outstanding as on the date of the tax audit report is subsequently paid before the due date of filing the return of income, deduction under Section 43B cannot be denied merely because Form 3CD reflected the amount as payable at the time of audit. The Tribunal directed the AO to verify the actual payment dates and delete the addition if payment was indeed made before the due date for filing the return.
The assessee had originally disallowed ₹5.73 lakh towards outstanding GST while computing income. However, it simultaneously claimed deduction of ₹5.73 lakh on the ground that the GST had been paid before filing the return, leaving only ₹284 effectively disallowable. While processing the return u/s 143(1), CPC noticed that Form 3CD reflected an outstanding liability of ₹5.73 lakh and therefore treated the entire amount as inadmissible, resulting in an adjustment.
Before the Tribunal, the assessee explained that GST receipts and payments were not routed through the Profit & Loss account and that the liability shown in the audit report merely represented the position as on the date of signing the audit report. Subsequently, before filing the return on 15.02.2021, GST amounting to ₹5.73 lakh had already been paid and therefore deduction became allowable under Section 43B.
Accepting the contention, the ITAT observed that the CPC failed to appreciate that Form 3CD only reflected the liability position as on the audit report date and did not capture payments made thereafter but before the due date of filing the return. The Tribunal accordingly directed the AO to verify the GST payment evidence and delete the disallowance if payment before the due date was established.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal is filed by JAVID BAGWAN [the Assessee/Appellant] against the order of Ld. CIT(APPEALS)-1, GURUGRAM dated 25-Jun-2025 for the Assessment Year 2020-21 wherein the appeal filed by the assessee against the rectification order passed u/s. 154 of the Income-tax Act, 1961 [the Act] dated 30.12.2024 passed by the CPC was dismissed.
2. The brief facts of the case show that the assessee filed its return of income on 15.2.2021. The assessee has while preparing his return of income has already disallowed Rs.5,73,500 u/s. 43B being the GST payable outstanding as at the end of the year. The assessee filed return of income on 15.2.2021 wherein the intimation u/s. 143(1) of the Act was issued on 3.11.2021 against which the assessee preferred application u/s. 154 which was rejected on 30.1.2024.
3. As per return of income the assessee computed its business income at Rs.66,70,461 which was computed by the CPC u/s. 143(1) as well as u/s. 154 order at Rs.72,52,677. Thus there is a difference of Rs.5,73,216. This difference is arising for the reason that the CPC noted while processing the return of income u/s. 143(1) of the Act that there is an inconsistency in the amount disallowed u/s. 43B of the Act where the assessee disallowed only Rs.284, whereas in the Form3CD amount stated is Rs.5,73,500 and correspondingly the adjustment of Rs.5,73,216 was made.
4. The claim of the assessee is that assessee has already disallowed a sum of Rs.5,73,500 being GST payable as outstanding and further claim made of deduction of GST u/s. 43B of Rs.5,73,216 as it is paid before the due date of filing of return of income. Therefore, according to the assessee, the addition is already made of Rs.284 by the assessee. It was submitted that out of the disallowed sum of Rs.5,73,500 the assessee has claimed the deduction u/s. 43B of the Act of Rs.5,73,216 being the GST paid by the assessee before the due date of filing of return of income.
5. According to the provisions, the assessee should be granted deduction of GST paid on or before the due date of filing of return. It was also the claim of the assessee that GST Receipts & Payments are not routed through the Profit & Loss A/c. The rectification application filed by the assessee was also not acceded to. Therefore, the assessee preferred appeal before the ld. CIT(A). The assessee did not furnish any reply and therefore the ld. CIT(A) confirmed the observation of the AO.
6. Before us, the assessee has submitted the same facts and submitted that the claim of the assessee is that GST paid on or before the due date of filing of return of income should have been allowed as deduction to the assessee. The ld. DR supported the order of the ld. lower authorities as the assessee failed to submit any explanation.
7. We have carefully considered the rival contentions and perused the orders of the ld. lower authorities. As per the annual accounts of the assessee, GST payable in the Balance Sheet as on 31.3.2020 was Rs.6,13,468, out of which a sum of Rs.39,968 has been paid on 25.6.2020 and balance sum was payable of Rs.5,73,500 on the date of signing of tax audit report i.e., 30.12.2020. The return of income is filed by the assessee on 15.2.2021. The assessee has made the addition in the computation of total income of Rs.5,73,500 u/s. 43B. The assessee has also claimed that it has made a payment of Rs.5,73,216 before the filing of return of income and therefore the only addition should have been made of Rs.284, which the assessee has made in the return of income itself.
8. The CPC has looked at the tax audit report which is dated 31.12.2020 wherein the above sum of Rs.5,73,500 was in fact payable. However, before the due date of filing of return of income the assessee has deposited Rs.5,73,216. Therefore according to the provisions, the assessee should have been granted the deduction of amount paid before the due date of filing of return of income, but after the date of signing of the tax audit report. The ld. AO is directed to verify the same and if the assessee has deposited the above sum before the due date of filing of return of income, even if it is disallowed in Form 3CD which is prior to the due date of filing of return, the above disallowance deserves to be deleted. Accordingly, we direct the ld. AO to verify the actual date of payment of GST, if the same is found to have been paid before the due date of filing of return of income, the addition of Rs.5,73,216 deserves to be deleted. The assessee is also directed to produce the evidence of payment of taxes of GST before the due date of filing of return of income of Rs.5,73,216. Thus, the solitary issue in the appeal of the assessee is allowed as indicated above.
9. In the result, appeal filed by the Assessee is ALLOWED.
Order pronounced in the open court on 22nd May, 2026.
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