2024 (2) TMI 48 - AT - Income Tax

Assessment of income of the assessee society - Quantification of claim for deduction of expenses - as per CIT(A) assessee s claim for deduction of expenses could safely be taken @20% of its miscellaneous income - HELD THAT - As is discernible from the record, the assessee society had neither in the course of the assessment proceedings nor in the proceedings before the CIT(Appeals) placed on record any submission/material to substantiate its claim for deduction of expenditure @ 53.88% of the total miscellaneous income. As nothing has been brought on record which would point out any perversity in the view taken by the lower authorities, therefore, find no infirmity in the view taken by the CIT(Appeals) who had in all fairness restricted the addition/disallowance of the assessee s claim for deduction of expenditure. Assessee appeal dismissed.

Summary

Issues involved:
The judgment involves the following issues: Appeal against Commissioner of Income-Tax (Appeals) order, Time-barred appeal, Scrutiny assessment u/s. 143(2) of the Income-tax Act, 1961, Claim for deduction of expenses, Disallowance of expenditure, Relief allowed by CIT(Appeals).

Appeal against Commissioner of Income-Tax (Appeals) order:
The present appeal was filed by the assessee society against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 31.01.2023, arising from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 for the assessment year 2017-18. The grounds of appeal included issues related to the computation of income, proportionate expenses claimed, and reference to a specific case for justifying an addition.

Time-barred appeal:
The Ld. Authorized Representative for the assessee submitted that the appeal was time-barred by 5 days due to a change in the executive body of the society and prevailing holidays. The delay was condoned considering the reasons provided for the delay.

Scrutiny assessment u/s. 143(2) of the Income-tax Act, 1961:
The assessee, a cooperative society registered under the Chhattisgarh Co-operative Societies Act, 1960, e-filed its return of income for A.Y.2017-18, declaring an income of Rs.90,960. The case was selected for scrutiny assessment u/s. 143(2) of the Act.

Claim for deduction of expenses:
During the assessment proceedings, the A.O observed that the assessee society had miscellaneous income of Rs.3,05,402 and claimed deduction of proportionate expenses at 53.88% of Rs.1,64,676. As the assessee failed to provide supporting evidence for the claim, the A.O ad-hoc restricted the deduction to 10% and made an addition of Rs.1,34,136 to the assessed income.

Disallowance of expenditure:
The CIT(Appeals) concurred with the A.O's view but allowed a deduction of expenses at 20% of the miscellaneous income, reducing the disallowance to Rs.1,03,596. The CIT(Appeals) reasoned that the appellant failed to justify the expenditure and distinguished the case cited by the appellant.

Relief allowed by CIT(Appeals):
The CIT(Appeals) confirmed the addition of Rs.1,03,596 but allowed relief of Rs.30,540. The appellant, being aggrieved, appealed against the CIT(Appeals) order.

Judgment:
The ITAT Raipur dismissed the appeal of the assessee after considering submissions from both parties and reviewing the orders of the lower authorities. The ITAT found no infirmity in the CIT(Appeals) decision to restrict the addition/disallowance of the claim for deduction of expenditure to Rs.1,03,596. The appeal was dismissed based on the lack of substantiating evidence for the deduction claimed by the assessee.