ITAT Directs Submission of Sales Tax Challan for Payment Proof

Jay Polychem India Ltd Vs ACIT (ITAT Delhi)

Introduction: The case of Jay Polychem India Ltd. vs. ACIT (Assistant Commissioner of Income Tax) involves an appeal by the assessee against an order issued by the Commissioner of Income Tax (Appeals) [CIT(A)] in New Delhi. The appeal concerns the disallowance of a portion of sales tax and other financial matters. This article provides a detailed analysis of the case and the directives issued by the Income Tax Appellate Tribunal (ITAT) in Delhi.

Detailed Analysis:

1. Background: Jay Polychem India Ltd., the assessee, filed an appeal against the CIT(A)’s order dated 30.08.2017. The grounds of appeal relate to various aspects, including the disallowance of a portion of sales tax, the disallowance of employee’s provident fund (EPF), the sustaining of interest levied under Section 234B of the Income Tax Act, and the continuation of penalty proceedings under Section 271(1)(c) of the Act.

2. Disallowed Sales Tax: The CIT(A) had sustained the addition of Rs. 24,00,000 out of Rs. 26,60,480, which represented an additional demand of sales tax paid by the assessee. The disallowance was primarily due to the non-submission of essential documents, such as challans, the VAT assessment order, and the demand notice before the revenue authorities.

3. ITAT’s Directive: The ITAT issued a directive granting the assessee liberty to submit the challan as evidence of the payment of sales tax, along with the relevant VAT assessment order and the demand notice. The submission deadline was set at six months from the date of the ITAT’s order. It was emphasized that failure to provide this documentation would allow the revenue authorities to initiate recovery proceedings in accordance with the provisions of the Income Tax Act.

4. EPF Disallowance: The ground related to the disallowance of employee’s provident fund (EPF) was dismissed, following the judgment of the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. vs. Commissioner Of Income Tax-I.

5. Conclusion: The ITAT’s directive to submit sales tax documentation within the specified timeframe is a crucial aspect of the case, as it offers the assessee an opportunity to substantiate its claims regarding the payment of sales tax. The case’s dismissal of the EPF disallowance ground aligns with relevant legal precedents. This case underscores the importance of maintaining comprehensive records and adhering to regulatory requirements to support tax-related claims and appeals.

In conclusion, the case of Jay Polychem India Ltd. vs. ACIT demonstrates the significance of proper documentation in income tax matters and the role of tribunals in providing opportunities for taxpayers to substantiate their claims.

Please note that the case involves multiple grounds and may necessitate further proceedings and submissions, which were not fully addressed in this summary.

FULL TEXT OF THE ORDER OF ITAT DELHI 

The present appeal has been filed by the assessee against the order of ld. CIT(A)-23, New Delhi dated 30.08.2017.

2. Following grounds have been raised by the assessee:

“1. That the order of the commissioner of the Income Tax (Appeals) (hereinafter refer to “Ld. CIT (A)”) dated 30.08.2017 is bad in law and on facts.

2. That the Ld. CIT (A) has erred in law in sustaining the amount of Rs. 24,00,000/- out of Rs. 26,60,480/- being additional demand of sales tax paid by the assessee during the year under appeal.

3.1 That the addition was sustained despite sufficient evidences in form of challans, ledgers and statement have been furnished in respect of the addition.

3.2 That the expenditure was genuine business expenditure and allowable u/s 37(1) as well as section u/s 43B of the Income Tax Act.

4. That the Ld. CIT (A) has erred in law in sustaining the disallowance of employee’s provident fund amounting to Rs. 34,823/-

4.1 That the Id. CIT(A) sustained the addition on the ground that change of assessee’s stand regarding addition means raising an additional ground which is not admissible in assessee’s case.

4.2 That the Id. CIT (A) has erred in law in rejecting the explanation of assessee and Tax Audit Report for AY 2013-14 on the ground that same was not furnished before Id. AO nor an application under Rule 46A of the Income Tax Rules was filed by the assessee company.

5. That the Id. CIT (A) has erred in sustaining the Interest levied u/s 234B of the Income Tax Act.

6. That the ld. CIT(A) has erred in sustaining the penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961.”

3. The ld. CIT (A) sustained addition made on the amount of Rs. 24,00,000/- out of Rs. 26,60,480/- being additional demand of sales tax paid by the assessee during the year under appeal owing to the reason of non-submission of challans, order of VAT assessment and the demand notice before the revenue authorities. Liberty is granted to the assessee to submit the challan proving the payment of sales tax and the relevant order of the VAT assessment along with the demand notice before the JAO within 6 months from the date of this order, failing which the revenue would at liberty to initiate the recovery proceedings as the provisions of the Act.

4. Respectfully following the judgment of Hon’ble Supreme Court in the case Checkmate Services P. Ltd. vs. Commissioner Of Income Tax-I in CA No. 2833/2016 vide order dated 10.2022, the ground no. 3 relating to disallowance of EPF is hereby dismissed.

5. In the result, the appeal of the assessee is partly allowed for statistical purpose.

Order Pronounced in the Open Court on 31/08/2023.