ADARSH MACHINERY AND TOOLS,VADODARA vs. THE ITO, WARD-1(3)(1), VADODARA

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ] ] Before Shri Sanjay Garg, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member आयकर अपील सं /ITA No.98/Ahd/2026 िनधा�रण वष� /Assessment Year : 2015-16 Adarsh Machinery And Tools, ITO 109-B, Manjusar GIDC, बनाम/ Ward-1(3)(1), v/s. Savli Road, Shivam Plaza, Vadodara Vadodara-391770 �थायी लेखा सं./PAN: AAXFA5953H (अपीलाथ�/ Appellant) (�� यथ�/ Respondent) Assessee by : Shri Mayur Thakkar, AR Revenue by : Smt. Ananya Kulshresth, Sr. DR सुनवाई की तारीख/Date of Hearing : 09/04/2026 घोषणा की तारीख /Date of Pronouncement: 06/07/2026 आदेश/O R D E R Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘Ld. CIT(A)’] dated 20/11/2025 passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Year (AY) 2015- 16.

ITA No.98/Ahd/2026 Adarsh Machinery And Tools vs. ITO Asst.Year 2015-16 2 2. The Learned Assessing Officer failed to consider that the remuneration amount of Rs. 6,41,548/- was correctly disclosed in the Profit & Loss A/c (point 38 of ITR) and the audit report, and merely left blank in the Schedule of Partners due to unintentional omission, which does not invalidate the claim. 3. The Learned Assessing Officer failed to consider that Schedule E (Partnership Details) of the ITR is an informative disclosure section, and data therein is not determinative of tax liability. The failure to duplicate the remuneration amount in this field, which was already present in the P&L, does not justify disallowance. 4. The Learned Assessing Officer further erred in holding that the application is barred by limitation under Section 154(7), without considering that the delay was caused due to non-receipt of the original intimation and that the assessee moved for rectification immediately upon knowledge of the demand. 5. The appellant craves leave to add, alter, amend or withdraw any of the above grounds at the time of hearing.” 3. The short issue involved in this appeal is pertain to disallowance of the remuneration paid to partners of Rs. 6,41,549/-.

ITA No.98/Ahd/2026 Adarsh Machinery And Tools vs. ITO Asst.Year 2015-16 3 while processing the return of the assesseee u/s 143(1) of the Act finding that in the Schedule-E attached with the ITR, the amount of remuneration paid to the partners was mentioned as ‘0’, hence, disallowed the said remuneration of Rs. 6,41,548/- claimed by the assessee. The assessee claimed that the said intimation order passed by the CPC u/s 143(1) of the Act was sent on email. However, the same, somehow, escaped the attention of the assessee. The assessee for the first time got the knowledge of such order making of disallowance of remuneration paid to the partners when, the notice for recovery of outstanding tax was received in the year 2024. The assessee immediately filed a rectification application u/s 154 of the Act to the AO. However, the AO dismissed the said application observing that the assessee had not disclosed the said remuneration paid to the partners in Schedule-E attached with the ITR, further that the application filed by the assessee was time barred. 5. The Ld. CIT(A) also dismissed the appeal of the assessee. 6. We have heard the rival contentions and gone through the material on record. In this case, the disallowance of the remuneration paid to the partners has been made by the CPC due to some clerical mistake in mentioning the said amount in the relevant Schedule. However, the same was duly claimed by the assessee in the ITR which was supported with Audit Report. The assessee duly explained the reasons for delay in filing the rectification application before the AO. It has been held time and again by various courts of law that Income Tax Authorities should not punishes the assessees for their bona fide

ITA No.98/Ahd/2026 Adarsh Machinery And Tools vs. ITO Asst.Year 2015-16 4 mistake and they should charge the assessees only legitimate taxes payable by them. Hence, considering the interests of justice, the impugned order of the CIT(A) is set-aside and the matter is restored to the file of the AO with a direction to verify the claim of remuneration paid to the partners and if admissible, allow the same to the assessee irrespective of any delay in filing the rectification application.

Order pronounced in the Open Court on 06/07/2026.

Sd/- Sd/- (Narendra Prasad Sinha) (Sanjay Garg) Accountant Member Judicial Member

अहमदाबाद/Ahmedabad, िदनांक/Dated 06/07/2025 Tanmay, Sr. P.S. TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु� अपील ( ) / The CIT(A)-(NFAC) 5. िवभागीय �ितिनिध आयकर अपीलीय अिधकरण अहमदाबाद /DR,ITAT, Ahmedabad. , , 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (dictation pad is attached with the file)) : 03.07 2026 2. Date on which the typed draft is placed before the : 03.07.2026 Dictating Member. 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating : Member for pronouncement. 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the : 06.07.2026 Sr.P.S./P.S. 7. Date on which the file goes to the Bench Clerk. : 06.07.2026 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar : for signature on the order. 10. Date of Despatch of the Order :