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Income Tax Appellate Tribunal, DELHI B BENCH: NEW DELHI
Before: SHRI YOGESH KUMAR U.S & SHRI MANISH AGARWAL
The present appeal is filed by the assessee against the order dated 25.11.2024 by Ld. Commissioner of Income Tax (A)/ADDL/JCIT(A)-7, Mumbai [“Ld.CIT(A)”] in Appeal No. ADDL/JCIT(A)-7, Mumbai/10008/2019-20 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] pertaining to assessment year 2017-18.
Brief facts of the case are that the assessee has filed his return of income on 28.11.2020, declaring total income of INR 59,10,280/. The return was processed u/s 143(1) at INR 67,22,300/- vide order dated 24.12.2021 wherein CPC, Bengaluru has made two disallowances of INR 3,82,734/- u/s 40(a)(ia) and INR 3,82,726/- u/s 40A(2)(b) of the Act.
Against the said order, assessee filed an appeal before Ld. CIT(A) who vide order dated 25.11.2024 deleted the addition of INR 3,82,726/- made u/s 40A(2)(b) of the Act and confirmed the disallowance of INR 3,82,734/- made u/s 40(a)(ia) of the Act.
Aggrieved by the order of Ld.CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:-
1. “That the Ld. A.O. as well as Ld. Addl. CIT(A) has failed to appreciate the facts of the case and has upheld the addition of Rs.4,29,286/-, representing exempt income. The Ld. Addl. CIT(A) has not even considered these facts and the relevant grounds of appeal
2. That the Ld. Addl. CIT(A) has failed to appreciate the facts of the case specifically the disallowance of Rs.3,82,734/- (added/surrender by the assessee in its return of income) represent the disallowance U/s 40(a)(ia) and not disallowance U/s 40A(2)(b). There is no addition U/s 40A(2)(b) either made by the assessee or by the Ld. Assessing Officer.
3. That the disputed income before the Ld. Addl. CIT(A) is Rs.8,12,020/- consisting (i) Exempt Income of Rs.4,29,286/-, (ii) Disallowance U/s 40(a)(ia) of Rs.3,82,734/-. Thus the total addition of Rs.8,12,020/- has not been dealt with by the Ld. Addl. CIT(A).
4. That the Ld. A.O. has made the addition under the head Income from Business or Profession. The income declared under this head is Rs.3,26,804/- as against the assessed figure of Rs.64,60,183/-. The assessed figures has been reduced under the head total inter head adjustment. The declared figure under the head inter head adjustment as adopted by the Ld. A.O. is Rs.60,91,610/- as against the computed figure of Rs.1,22,24,989/-. Thus making an addition of Rs.8,12,020/-.
5. That the Ld. A.O. has made arithmetical errors while computing the assessed income.”
5. Heard the contentions of both parties and perused the material available on record. From the perusal of the Paper Book filed wherein Tax Audit Report is attached at page 5 to 16 and on perusal of the same, it is seen that in Item No.21(b) of the Tax Audit Page | 2 Report, assessee has specified the amounts of interest on which TDS was not deducted totaling to INR 1,27,572/- and 30% of the said amount was added back to the total income which comes to INR 3,82,726/- for which further, disallowance was made by CPC & deleted by Ld.CIT(A). CPC, Bengaluru however, wrongly presumed that this amount is disallowable u/s 40A(2)(b) of the Act. It is further seen that assessee has never claimed any disallowance u/s 40(a)(ia) of the Act at INR 3,82,734/-.
6. In this regard, Ld.AR drew our attention to page 33 of the Paper Book where inadvertently the amount of INR 3,82,726/- disallowable u/s 40(a)(ia) was wrongly shown under the amount disallowable u/s 40A(2)(b) of the Act. He also drew our attention to page 67 of the paper book where details of exempt income was shown according to which assessee has claimed total exempt income of INR 2,43,377/- as dividend, interest from Provident Fund, deduction on account of clubbing of income of minor child and dividend from domestic companies totaling to INR 4,31,467/-. Ld.AR submits that said amounts were claimed as the exempt income in the return of income filed however, it appears that CPC has added back the said amount.
7. After considering the facts, we set aside this issue to the file of AO with direction to verify whether disallowance made u/s 40(a)(ia) of the Act as claimed by the assessee of INR 3,82,726/- was wrongly shown as the disallowance u/s 40A(2)(b) of the Act and further examined whether the exempt income was shown which was taken as the taxable income and if so, no disallowance is required to be Page | 3 made. With these directions, appeal filed by the assessee is partly allowed for statistical purposes.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open Court on 31.07.2025.