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2021 (11) TMI 744 - AT - Income TaxDisallowing of reimbursement of expenses and allowances under the provision of the Income Tax Act claimed against salary income - submission of the ld. Counsel that identical allowances were allowed by the AO in the order passed u/s 143(3) in the subsequent years - HELD THAT - We deem it proper to restore this issue to the file of the AO with a direction to decide the issue afresh in the light of his decisions in the subsequent years in the order passed u/s 143(3) after obtaining necessary details from the assessee on this issue. The ground raised by the assessee is accordingly allowed for statistical purposes. Disallowance on account of depreciation and interest on vehicles - AO disallowed the claim of deduction u/s 57 on the ground that the assessee did not furnish the requisite details towards claim of depreciation and interest by filing the copies of invoice in support of purchase of vehicles copies of rent agreement in respect of letting out of the vehicles and the loan certificate for claiming interest - CIT(A) upheld the action of the AO on the ground that both the vehicles were given on rent at very low rentals and the assessee in the process incurred huge loss which has been utilized to set off the income from house property - HELD THAT - The matter requires a re-visit to the file of the AO to find out as to the status in the preceding and succeeding years since the two vehicles were purchased on 27th December 2010 and 29.09.2011 respectively. The AO may find out what is the rental income of Toyota Innova and Tata Canter in other cases to ascertain as to whether the assessee is deliberately entering into an agreement with a concern just to incur losses so as to set off the same from income from house property. The AO shall decide the issue as per fact and law and after giving due opportunity of being heard to the assessee. Ground No.2 raised by the assessee is accordingly allowed for statistical purposes. Reopening of assessment u/s 147 - CIT(A) giving a direction u/s 150(1) to the AO for taking action in the hands of the assessee as per law - HELD THAT - The assessment year involved in the instant case is 2012-13. The property was purchased on 01.07.2010 for 22 lakhs. The assessee has obtained housing loan from the bank. The bank has valued the property at higher price for sanctioning the loan. Under these circumstances and in absence of any evidence with the AO or the CIT(A) that either the recipient has received any extra money or that the assessee has paid anything over and above what is stated in the sale deed merely on the basis of valuation report by the bank for sanctioning of the loan cannot be a ground for giving a direction to the AO to reopen the assessment for another assessment year which was not the subject matter of appeal before the CIT(A). Even otherwise also the CIT(A) in the instant case passed the order on 5th February 2019. On this date the time limit for reopening of assessment u/s 149 for the assessment year 2011-12 was not available as the period of reopening the assessment for preceding six assessment years as on the date of passing of order by the CIT(A) was available only upto assessment year 2012-13. The various decisions relied on by the ld. Counsel supports the proposition that the order passed by the CIT(A) issuing direction u/s 150(1) is barred by limitation.
Issues Involved:
1. Disallowance of reimbursement of expenses and allowances. 2. Disallowance of deduction under Section 57 of the Income Tax Act, 1961. 3. Direction under Section 150(1) of the Income Tax Act, 1961 for taking action in a different assessment year. 4. Jurisdictional overreach by the Commissioner of Income-Tax (Appeals) in issuing directions for an assessment year not under appeal. 5. Issuing directions barred by limitation under Section 150(2) of the Income Tax Act, 1961. 6. Issuing directions under a provision not applicable to the relevant assessment year. Issue-wise Detailed Analysis: 1. Disallowance of Reimbursement of Expenses and Allowances: The assessee claimed deductions for medical allowance (?15,000), washing allowance (?36,000), and helper allowance (?60,000), totaling ?1,11,000. The Assessing Officer (AO) disallowed these claims due to lack of justification and evidence. The CIT(A) upheld the AO's decision, stating that the assessee did not provide any evidence or explanation during the assessment or appellate proceedings. The Tribunal found that the assessee had claimed similar allowances in subsequent years, which were allowed by the AO. Therefore, the Tribunal restored the issue to the AO for a fresh decision, considering the decisions in subsequent years and obtaining necessary details from the assessee. 2. Disallowance of Deduction under Section 57 of the Income Tax Act, 1961: The assessee let out two vehicles (Tata Canter and Toyota Innova) and claimed deductions for depreciation and interest on vehicle loans, totaling ?6,07,350. The AO disallowed the claim due to lack of requisite details. The CIT(A) upheld the disallowance, noting that the rental income was insufficient to cover the financial and depreciation costs, suggesting that the transactions were not prudent. The Tribunal found that the matter required a re-examination by the AO to ascertain the rental income of similar vehicles in other cases and to determine if the assessee deliberately entered into loss-making agreements. The AO was directed to decide the issue afresh, considering the facts and the law. 3. Direction under Section 150(1) of the Income Tax Act, 1961 for Taking Action in a Different Assessment Year: The CIT(A) directed the AO to take action for the assessment year 2011-12 regarding a benefit of ?12,72,000 obtained by the assessee at the time of purchasing a property. The Tribunal found that for Section 150(1) to apply, there must be proceedings before the appropriate authority, and such proceedings must be within the period of limitation prescribed under Section 149. The Tribunal noted that the CIT(A) issued the direction based on a bank's valuation report for sanctioning a loan, without evidence of any extra money being paid or received. The Tribunal held that the direction was not justified and was barred by limitation. 4. Jurisdictional Overreach by the Commissioner of Income-Tax (Appeals): The Tribunal found that the CIT(A) exceeded his jurisdiction by issuing directions for the assessment year 2011-12, which was not under appeal. The CIT(A) based his direction on a bank's valuation report for a property purchased in 2010, without any evidence of additional payment or receipt. The Tribunal held that such directions were beyond the scope of the appeal for the assessment year 2012-13. 5. Issuing Directions Barred by Limitation under Section 150(2) of the Income Tax Act, 1961: The Tribunal noted that the CIT(A) passed the order on 5th February 2019, and the time limit for reopening the assessment for the assessment year 2011-12 under Section 149 had expired. The Tribunal held that the direction issued by the CIT(A) was barred by limitation and, therefore, invalid. 6. Issuing Directions under a Provision Not Applicable to the Relevant Assessment Year: The Tribunal observed that the CIT(A) issued directions under Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961, which was not applicable to the assessment year 2011-12. The provision became effective from the assessment year 2014-15. The Tribunal held that the direction was against the provision of law and, therefore, invalid. Conclusion: The appeal filed by the assessee was allowed for statistical purposes. The Tribunal directed the AO to re-examine the issues regarding reimbursement of expenses and allowances, and the deduction under Section 57. The Tribunal also quashed the directions issued by the CIT(A) under Section 150(1) for the assessment year 2011-12, citing jurisdictional overreach and limitation issues. The decision was pronounced in the open court on 14.10.2021.
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