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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
This captioned appeal has been filed by the assessee against the order of the learned Commissioner of Income Tax (Appeals)-NFAC, Delhi [‘CIT(A)’ in short] dated 11.09.2025 arising from the assessment order dated 23.02.2021 passed by the NFAC, Delhi under Section 143(3) r.w.s 143(3A) & 143(3B) of the Income Tax Act, 1961 (‘the Act’) concerning Assessment Year (A.Y.) 2018-19.
The grounds raised by the assessee are as under :
1.“That the order of the Learned CIT(A) is bad in law and on facts in as much as it upholds the addition of 62,82,405/- made by the Assessing Officer by erroneously treating the Goods and Services Tax (GST) component collected on behalf of the Government as part of the appellant's business income. The impugned addition is contrary to settled accounting principles, statutory provisions, and judicial precedents.
2.That Ld. CIT(A) has failed to appreciate that the appellant had regularly filed monthly GST returns (GSTR-1 and GSTR-3B) reflecting the output tax liability, input credit, and tax payments, and that the annual return filed on 02.12.2022 is a mere statutory compilation under Section 44 of the CGST Act.
3.That the Ld. CIT(A) grossly erred in relying on the date of filing of the annual GST return (02.12.2022) to conclude that GST was unpaid at the time of assessment, ignoring the monthly returns and challans evidencing actual payment of output tax.
4.That the addition violates the concept of "real income", since the appellant neither retained nor derived any profit from the GST collected. The doctrine of real income requires actual accrual or receipt of income in the hands of the assessee - which is absent in this case.
5.That any alleged delay or mismatch under the GST regime may attract penal consequences under the GST Act, but cannot convert a statutory collection into taxable business income under the Income-tax Act.
6.That the Ld. CIT(A) failed to consider the comprehensive evidence filed -including GSTR-1, GSTR-3B and GSTR-9- conclusively proving that the GST liability had been discharged and duly accounted for.
7.That the Ld. CIT(A) ignored the binding principle of consistency and accounting treatment, as the appellant consistently follows the mercantile system of accounting, recording GST separately as liability and never treating it as part of sales or income.
8.That the impugned order suffers from non-application of mind and is based on erroneous factual findings and misappreciation of law, rendering the addition unsustainable in the eyes of law.
9.That the appellant has now also placed on record a certified copy of the jurisdictional GST Officer's assessment order for FY 2017-18, wherein it has been categorically confirmed that all GST dues have been duly discharged by the appellant. Further, wherever any variance or difference was noticed, the corresponding demand has already been paid and settled. This conclusive statutory verification under the GST law establishes that the GST component collected from customers has been fully remitted to the Government exchequer and, therefore, cannot under any circumstances be treated as part of the appellant's income under the Income-tax Act, 1961.
10.The appellant craves leave to add, amend, alter, or withdraw any of the above grounds of appeal before or during the course of hearing.”
Brief facts of the case are that assessee is a partnership firm and is engaged in construction activities in the name and style of M/s MILLENNIUM BUILDCON. Assessee filed its return of income on 26.10.2018 u/s 139(1) of the Act for A.Y. 2018-19. Thereafter, the case was selected for Complete Scrutiny assessment under the E-assessment Scheme, 2019 with the issue of Contract Receipts or Fees. Subsequently, the assessment is completed at income of Rs.83,93,495/- for 2018-19 u/s 143(3) of Act.
At the outset, learned Counsel of the assessee stated that the assessee has now placed on record a certified copy of Jurisdictional GST Officer assessment order for A.Y. 2017-18 wherein it has been categorically confirmed that all GST dues have been duly discharged by the assessee.
Per contra, learned DR relied on the order of authorities below.
We have heard the rival submissions and perused the material available on record. We find that the Assessing Officer has treated the Goods & Services Tax amounting to Rs.62,82,405/- collected on behalf of the Govt. as part of the assessee’s business income. We further note that the assessee has now placed on record Jurisdictional GST Officer order for F.Y. 2017-18. We therefore, consider it appropriate that the issue be set aside to the file of the AO for making necessary verification of the assessee’s claim and adjudicate afresh on the issue after due verification. The appeal is allowed for statistical purposes.
In the result, appeal filed by the assessee is allowed for statistical purposes.