CHANDRA MANI TRIPATHI VIJAY PRATAP SINGH AND OTHERS,LUCKNOW vs. INCOME TAX OFFICER 4(1) LKO NEW, LUCKNOW

ITA 512/LKW/2026Status: DisposedITAT Lucknow25 September 2026AY 2013-1410 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal, noting the assessee's explanation of the delay due to cessation of business and lack of administrative setup. The Tribunal observed that there was no compliance from the assessee during assessment and the NFAC dismissed the appeal for failure to produce documentary evidence. Considering the peculiar facts, the Tribunal held that the assessee deserved one more opportunity to present its case. Accordingly, the order of the NFAC was set aside, and the file was restored to the Assessing Officer with a direction to provide one more opportunity to the assessee. The assessee was cautioned to fully comply with the AO's directions, failing which the AO could pass an ex-parte order. The issue regarding the retrospective application of the 30% disallowance under section 40(a)(ia) was not expressly decided as the matter was remanded.

What were the facts?

The assessee, a firm dealing in liquor, filed its return for AY 2013-14. Initially assessed under section 143(3) at Rs.3,80,840/-, the case was reopened under section 147 based on an audit objection regarding non-deduction of TDS on shop rent of Rs.4,39,200/- paid to Shri Ram Lakhan Yadav. The Assessing Officer (AO) disallowed the rent under section 40(a)(ia) and added it to income, assessing total income at Rs.8,20,040/-. The National Faceless Appeal Centre (NFAC), Delhi, dismissed the assessee's appeal. The assessee then appealed to the ITAT, Lucknow.

What were the issues?

1. Whether the reassessment proceedings initiated under section 147 of the Income Tax Act, 1961, were valid, considering the issue was examined in the original scrutiny assessment and the reopening was based solely on an audit objection without independent application of mind by the AO, constituting a change of opinion. - Assessee's contention: Reassessment is without jurisdiction, bad in law, and a mere change of opinion, as the issue was already examined and accepted in the original assessment. - Revenue's contention: Not recorded. 2. Whether the addition of Rs.4,39,200/- under section 40(a)(ia) was justified, given the assessee's claim that rent was paid to partners individually in amounts below the TDS threshold, and the premises were taken on rent by partners, not the firm directly from Shri Ram Lakhan Yadav. - Assessee's contention: The rent was paid to each partner separately below the threshold of section 194-1, and the firm paid rent and facility charges separately to each partner. The AO's assumption of payment to a single person was incorrect. - Revenue's contention: Not recorded. 3. Whether the disallowance under section 40(a)(ia) was legally sustainable, considering the proviso to section 194-1 and the nature of the amendment brought by the Finance Act, 2014. - Assessee's contention: Rent paid to each payee did not exceed the threshold limit under section 194-1, so no TDS obligation arose. The amendment to section 40(a)(ia) by Finance Act, 2014, restricting disallowance to 30%, is curative and retrospective. - Revenue's contention: Not recorded. 4. Whether the principles of natural justice were violated by the AO and CIT(A) in confirming the disallowance without providing a reasonable opportunity of being heard. - Assessee's contention: Violation of principles of natural justice. - Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(3),Section 147,Section 148,Section 144B,Section 40(a)(ia),Section 194-1,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW

Before: SHRI. SUDHANSHU SRIVASTAVA

For Respondent: Shri Sudhakar Shukla, D.R

This appeal has been preferred by the Assessee against the order dated 20.11.2025, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2013-14. 2.0 The brief facts of the case are that the assessee was a firm and was engaged in dealing in Foreign and Country made liquors. The assessee e-filed its return of income for the year under consideration on 30.09.2013, declaring a total income at Rs.2,96,470/- and the same was duly processed under section 143(1) of the Income Tax Act, 1961 (hereinafter called 'the Act’).

Thereafter, the case of the assessee was selected for scrutiny under Computer-Assisted Scrutiny Selection (CASS) and the ITA No.512/LKW/2026 order under section 143(3) of the Act was passed

The order continues below.

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