VIRAJ EXPORTS PRIVATE LIMITED,NEW DELHI vs. CIRCLE-26(2), DELHI

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ITA 857/DEL/2022Status: DisposedITAT Delhi13 September 2022AY 2018-194 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) did not address the assessee's plea of double disallowance. Therefore, the issue was restored to the CIT(A) for re-examination and decision on whether a double disallowance occurred.

What were the facts?

The assessee company declared NIL income, but the CPC determined its income at Rs. 1,23,39,540, disallowing Rs. 3,46,362 under Section 43B. The assessee claimed this amount was already disallowed suo moto under Section 40A, leading to a double disallowance.

What were the issues?

Whether the disallowance of Rs. 3,46,362 on account of unpaid leave encashment resulted in a double disallowance under Sections 40A and 43B of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 43B,Section 40A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

For Appellant: Shri Tanpreet Singh, C.A
For Respondent: Shri Om Prakash, Sr. D.R
Hearing: 07.09.2022Pronounced: 13.09.2022

ORDER

PER ANIL CHATURVEDI, AM:

1.

This appeal filed by the assessee is directed against the order dated 24.12.2021 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi relating to Assessment Year 2018-19.

2.

Brief facts of the case as culled out from the material on record are as under :-

3.

Assessee is company who filed its return of income for A.Y. 2018-19 on 16.10.2018 declaring total income at Rs.NIL. In the 2 intimation issued u/s 143(1) of the Act by CPC, Bangalore vide Identification No. CPC/1819/A6/1918831776 dated 16.10.2019, the total income was determined at Rs.1,23,39,540/- inter alia by making disallowance of Rs.3,46,362/- u/s 43B of the Act.

4.

Aggrieved by the intimation issued u/s 143(1) of the Act, assessee carried the matter before CIT(A) who vide order dated 24.12.2021 in Appeal No.CIT(A), Delhi-26/10158/2019-20 dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds: “1. That the actions of the CIT(A), in confirming the disallowance made by the Assessing Officer is erroneous, both on facts and in law, has erred. 2.a. That the CIT(A) has erred, both on facts and in law, in confirming the disallowance of Rs.3,46,362/-, made by the Assessing Officer on account of “Unpaid Leave Encashment”. b. That the disallowance so made are erroneous and bad, both in law and on facts, so much so leading to double disallowance of the same amount. 3. that the appellant craves leave to add, amend or alter any of the ground of appeal.”

5. Before me, Learned AR submitted that in the computation of income while computing the total income, the disallowance of Rs.3,46,362/- on account of leave encashment payable, was suo moto made by assessee but in the return of income it was erroneously disallowed u/s 40A of the Act. He submitted that in the intimation passed u/s 143(1) of the Act, the same disallowance of Rs.3,46,362/- was made u/s 43B of the Act

3 which has resulted into a double disallowance of the same amount under two sections namely u/s 40A & u/s 43B of the Act. He submitted that the fact of the disallowance been made twice was brought to the notice before CIT(A), but CIT(A) for different reasons has disallowed the same. He further submitted that CIT(A) has not given any finding on the plea of the assessee of the amount being disallowed twice. He therefore submitted that since the disallowance made has been twice, the double disallowance be deleted.

6.

Learned DR on the other hand submitted that to verify the factual position as stated by Learned AR, the matter may be remitted back to Jurisdictional CIT(A).

7.

I have heard the rival contentions and perused the material available on record. The issue in the present ground is with respect to the double disallowance of Rs.3,46,462/-. It is the contention of the assessee that in the return of income filed by assessee, the amount was already offered for disallowance but erroneously u/s 40A of the Act though the same should have been disallowed u/s 43B of the Act. However, in the intimation passed u/s 143(1) of the Act, the disallowance has again been made u/s 43B of the Act resulting into double disallowance of the same amount. I find that though the assessee has taken the plea of double disallowance of the expenses before CIT(A), but however there is no finding of CIT(A) to that effect. In such a situation, I

4 am of the view that the issue of double disallowance of expense needs reexamination at the end of CIT(A). I, therefore, restore the issue back to the file of Jurisdictional CIT(A) to decide the issue of double disallowance after considering the submissions made by assessee. If the plea of the assessee that the same amount has been disallowed twice is found correct, then the same be rectified. Learned AR is also directed to file necessary details called for by CIT(A). Needless to state that the CIT(A) shall grant adequate opportunity of hearing to both the sides. Thus the ground of assessee is allowed for statistical purposes.

8.

In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 13.09.2022

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