2023 (6) TMI 116 - AT - Income Tax

Disallowances made u/s 143(1) - disallowance u/s 37, disallowance u/s 40(a)(ia) and disallowance u/s 43B - suo motu disallowances made by the assessee - HELD THAT - The impugned order does not spell out how the ratio of the decisions referred to in the order were applicable to the facts of the case. The assessee is not disputing the nature of such expenditure - whether to be allowed or disallowed. The assessee itself says that such items of expenditure are inadmissible items and while computing the total income, they themselves disallowed the same. But there is no whisper as to the fact in the impugned order. We accept the contention of the assessee that these disallowances have to be deleted, after verification at the end of the jurisdictional AO - We, therefore, set aside the orders of the lower authorities and restore the issue to AO to verify the suo motu disallowances made by the assessee and if it is found that the assessee itself disallowed such items of expenditure, the fresh disallowance made by the CPC, Bangalore under section 143(1)(a) of the Act are not warranted and shall be deleted. In the result, this appeal of assessee is allowed.

Summary

Issues involved: Appeal against order passed by Commissioner of Income Tax (Appeals) for assessment years 2017-18 & 2020-21; Disallowances made by Centralized Processing Centre (CPC) under various sections of the Income Tax Act, 1961; Delay in filing appeal for assessment year 2017-18 due to Covid Pandemic.

For Assessment Year 2020-21:
The assessee, engaged in manufacturing steel doors, appealed against disallowances made by CPC under different sections of the Income Tax Act. The first appellate authority's order lacked reasoning and discussion on the additions made. The Tribunal found the order unsatisfactory and noted that the assessee had already self-disallowed the amounts in question. The Tribunal directed the Assessing Officer to verify the self-disallowances and delete the fresh disallowances made by CPC, concluding in favor of the assessee.

For Assessment Year 2017-18:
The delay in filing the appeal was attributed to the Covid Pandemic causing disruption in the assessee's activities. The Commissioner refused to condone the delay, citing the assessee's ability to appeal before the pandemic. However, the Tribunal observed that the assessee had actively pursued correction of demand before the pandemic, which was evident from a rectification request submitted in 2019. Considering the circumstances and pursuit of remedy, the Tribunal decided to condone the delay and remanded the appeal back to the Commissioner for a decision on merits.

Conclusion:
The Tribunal allowed the appeal for the assessment year 2020-21 and treated the appeal for the assessment year 2017-18 as allowed for statistical purposes. The decision was made to delete the disallowances for the assessment year 2020-21 and to remand the appeal for the assessment year 2017-18 back to the Commissioner for further consideration.