2022 (12) TMI 940 - AT - Income Tax

Excess deduction claimed u/s 80U - unexplained money u/s 69A - A.O. was silent about the section under which the addition was made - AO has calculated tax u/s 115BBE - HELD THAT - Assessee has not challenged the additions made by the AO u/s 80U and 80G of the Act, but has only challenged the computation of tax liability by the AO u/s 115BBE - With respect to the first contention of the assessee that unless there is a specific finding that addition under section 80U is made u/s 68 or 69 then tax cannot be imposed under section 115BBE of the Act, we are in agreement with the contention of the assessee that once the AO has not invoked the provisions of section 68 to 69 tax cannot be imposed under a deeming provisions of section 115BBE - In the instant case, AO made disallowance of deduction claimed u/s. 80U (permanent disability) of the Act but did not do any discussion as to how the case of the assessee is covered by the provisions of section 68 or 69 of the Act so as as to compute tax liability u/s. 155BBE. Non production of receipt as Unexplained money u/s 69A - Whether ncorrect claim of donation under section 80G cannot be made under section 69A? - HELD THAT - As we observe that section 69A of the Act can be invoked only in case where the assessee is found to be the owner of any money, bullion, jewellery or other valuable article which is not recorded in the books of account and the assessee offers no explanation about the nature and source of acquisition of such money, bullion, jewellery or other valuable articles. Therefore, AO has erred in facts and in law in invoking the provisions of section 69A in respect of incorrect claim of deduction under section 80G - Accordingly, since provisions of section 69A cannot be invoked in respect of disallowance made under section 80G and without a specific finding that the assessee is in possession of any unexplained money, bullion, jewellery or other valuable article in his possession, accordingly, AO cannot compute tax liability under section 115BBE with respect to disallowance for incorrect claim u/s 80G. Appeal of the assessee is allowed.

Issues:
1. Disallowance of deduction claimed under section 80U
2. Disallowance of deduction claimed under section 80G
3. Computation of tax liability under section 115BBE

Issue 1: Disallowance of deduction claimed under section 80U

The Assessing Officer (AO) disallowed the excess deduction claimed under section 80U by the assessee due to a clerical mistake in the claim amount. The AO observed that the assessee's permanent disability was only 55%, not meeting the threshold for the full deduction. The AO restricted the deduction to Rs. 75,000 and disallowed Rs. 50,000. The CIT(A) upheld this disallowance, stating that since the appellant admitted the clerical mistake, the disallowance was justified. The appellant's argument that the tax was incorrectly computed under section 115BBE was dismissed. However, the ITAT found that without invoking sections 68 or 69 of the Act, tax cannot be imposed under section 115BBE. As the AO did not discuss how the case fell under those sections, the ITAT allowed the appeal on this ground.

Issue 2: Disallowance of deduction claimed under section 80G

The AO disallowed the deduction claimed under section 80G as the appellant failed to provide proof or details for the claimed amount. The AO added this amount back to the income under section 69A as unexplained money. The CIT(A) confirmed this disallowance, stating that the appellant did not produce evidence to substantiate the claim. The ITAT disagreed with the invocation of section 69A for incorrect claim under section 80G. Section 69A applies when unexplained money is not recorded in the books of accounts, which was not the case here. As no specific finding indicated the appellant possessed unexplained money, the ITAT allowed the appeal on this ground.

Issue 3: Computation of tax liability under section 115BBE

The appellant contested the computation of tax liability under section 115BBE by the AO for the disallowed deductions under sections 80U and 80G. The AO imposed tax under section 115BBE without invoking sections 68 to 69 of the Act. The CIT(A) upheld this decision. However, the ITAT ruled that tax under section 115BBE can only be imposed if the AO invokes sections 68 to 69. As the AO did not do so, the ITAT allowed the appeal on this ground, concluding that the tax liability under section 115BBE was incorrectly computed.

In conclusion, the ITAT allowed the appeal of the assessee, overturning the disallowances made under sections 80U and 80G, and ruling that the tax liability computed under section 115BBE was not valid due to the absence of specific findings invoking relevant sections of the Act.

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