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Facts
The assessee's appeal against the CIT(A)'s order dismissing their appeal was considered. The CIT(A) had upheld the addition of Rs.25,14,145/- made by the Assessing Officer for unverified rent expenses.
Held
The Tribunal condoned a delay of 13 days in filing the appeal. Considering the assessee's explanation and affidavit regarding unintentional non-submission of supporting documents due to staff oversight, the Tribunal set aside the CIT(A)'s order and restored the issue to the Assessing Officer for fresh adjudication.
Key Issues
Whether the assessee's claim for expenses, initially disallowed as unverified rent, deserves to be considered afresh due to unintentional non-submission of supporting documents.
Sections Cited
143(3), 143(3A), 143(3B)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
order : 31.10.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 14/02/2025, passed by the Commissioner National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 18/03/2021, passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Income Tax Act, 1961 for the Assessment Year 2018-2019. The delay of 13 days in filing the appeal is condoned in view of the explanation furnished by the Assessee in the application seeking condonation of delay supported by sworn affidavit of sworn by the managing director of the Assessee company. In our view the Assessee had sufficient cause for Assessment Year 2018-2019 not filing appeal within the prescribed period. Accordingly, we proceed to take up the grounds raised in the present appeal which are as under:
“1. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of Rs.25,14,145/- on account of unverified rent expenses.
2. The National Faceless Appeal Centre has erred in law, facts and circumstances of the case by confirming the addition of Rs.25,14,145/- on account of unverified rent expenses by ignoring the fact that the rent expenses shown in the financial statement amounting to Rs.25,14,145/- pertains to inspection fees, inspection fee IGST, Hub town office maintenance, Property tax for F Building, Property tax and Professional Tax and all these expenses are business expenses.”
The relevant facts in brief are that the Assessee filed return of income for the Assessment Year 2018-2019 on 26/09/2018 which was selected for scrutiny. Assessment under Section 143(3) read with Sections 143(3A) and 143(3B) of the Act was framed on the Assessee vide Assessment Order, dated 18/03/2021. The Assessing Officer computed the Assessee’s income at INR.47,54,565/- after making, inter alia, addition of INR.25,14,145/- in respect of expenses held to be unverified rent expenses debited to the Profit and Loss Account of the Assessee for the relevant previous year. Being aggrieved the Assessee preferred appeal before the Learned CIT(A) which was dismissed vide Order, dated 14/02/2025, impugned by way of present appeal before the Tribunal on the grounds reproduced in paragraph 2 above.
We have heard both the sides and have perused the material on record.
4. The Learned Authorized Representative for the Assessee has placed on record documents to show that the cost of INR.25,14,145/- was 2 Assessment Year 2018-2019 incurred during the relevant previous year and the same was not in the nature of rental charges. It was submitted that disallowance was made by the Assessing Officer without appreciating the true nature of expenses disallowed. She submitted that the aforesaid supporting documents could not be filed before the authorities below on account of mistake of the employees of the Assessee. The aforesaid submissions were supported by affidavit sworn by the Managing Director of the Assessee-Company.
5. Per contra Learned Departmental Representative advanced submissions in support of the order passed by the CIT(A) and placed reliance upon orders passed by the authorities below. It was submitted that in absence of any supporting documents/details furnished by the Assessee, the authorities below were justified in making the disallowance.
We have given thoughtful consideration to the rival submission and have perused the material on record. The case set up by the Assessee is that the Assessing Officer disallowance was made by the Assessing Officer on the understanding that the amount disallowed represented rental expenses paid by the Assessee which is not the correct factual position. The Assessee could not file the supporting document on account of mistake committed by the employee of the Assessee- Company. In the affidavit filed by the managing director of the Assessee-Company is has been deposed as under:
“2. That during the course of appellate proceedings before the Hon'ble Commissioner of Income Tax (Appeals) [CIT(A)], certain original payment receipts relevant to the case could not be submitted 3. That the non-submission of these original receipts was inadvertent and occurred due to a genuine oversight on the part of our accounts staff handling the matter at that time.
3 Assessment Year 2018-2019
That subsequently, the concerned staff member responsible for maintaining and compiling the relevant accounts and documentation left our office, resulting in a temporary disruption in accessing and organizing the older records.
That the new accounts staff, being unfamiliar with the historical data and filing systems, faced significant difficulty in retrieving and compiling the necessary documents within the stipulated timeframe for submission before the CIT(A). 6. That the omission was entirely unintentional and not with any malafide intent, and we humbly request that this Hon'ble Authority take note of the circumstances that led to the lapse. 7. I further, declare that to the best of my knowledge and belief, the information given above is correct and complete and is truly stated.” 7. There is nothing on record to doubt the bonafides of the above stand taken by the Assessee. Taking into consideration the overall facts and circumstances of the present case, we deem it appropriate and in the interest of justice to grant an opportunity to the Assessee to make out a case for deduction for expenses of INR.25,14,145/- as claimed by the Assessee. Accordingly, we set aside the Order, dated 14/02/2025, passed by the CIT(A) to extent of this issue and restore the issue back to the file of the Assessing Officer with the directions to adjudicate the issue afresh. The Assessee is directed to file before the Assessing Officer all supporting document/details and the Assessing Officer is directed to consider the same before adjudicating the issue. It is clarified that the Assessing Officer shall grant reasonable opportunity of being heard to the Assessee. The Assessee is directed to be vigilant and track the assessment proceedings through Income Tax Business Application Portal. In case the Assessee fails to enter appearance and/or fails to file details/documents/submission in response to notice of hearing issued by the Assessing Officer, the Assessing Officer shall be at liberty to decide the issues on merits on the basis of material on record. In terms of the aforesaid, Ground No. 4 Assessment Year 2018-2019 1 to 2 raised by the Assessee are treated as allowed for statistical purposes.
In terms of above, the present appeal preferred by the Assessee is allowed for statistical purposes.