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

ITA 512/LKW/2026Status: DisposedITAT Jaipur25 September 2026AY 2013-1410 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay of 96 days in filing the appeal, noting the assessee's explanation that the firm had ceased operations and communications were missed. While the Revenue opposed condonation, the Tribunal found the reasons genuine and admitted the appeal. The Tribunal noted the lack of compliance from the assessee during assessment and the NFAC's dismissal based on failure to produce documentary evidence. However, considering the peculiar facts, the Tribunal decided to provide the assessee one more opportunity to present its case. The order of the NFAC was set aside, and the file was restored to the Assessing Officer with a direction to grant one more opportunity. The assessee was cautioned to fully comply with the AO's directions, failing which the AO could proceed ex-parte. The appeal was allowed for statistical purposes. The specific issues regarding the validity of reassessment, the applicability of section 40(a)(ia), and the principles of natural justice were not adjudicated on merits due to the remand.

What were the facts?

The assessee, a firm dealing in liquors, 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 assessee contended that TDS was not deducted as the landlord assured to declare the income and pay taxes, and later claimed the premises were rented by partners individually, with payments to each partner below the TDS threshold. The Assessing Officer disallowed the rent under section 40(a)(ia) and added it to the 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.

What were the issues?

1. Whether the reassessment proceedings initiated under section 147 of the Income Tax Act, 1961, were valid, considering they were based on an audit objection and the issue was previously examined in the original scrutiny assessment under section 143(3), thus constituting a change of opinion and being without jurisdiction. - Assessee's contention: Reassessment is bad in law, without jurisdiction, and a mere change of opinion, as the issue was already examined and accepted in the original assessment. The reassessment was mechanically triggered by an audit objection without independent application of mind. - Revenue's contention: Not recorded. 2. Whether the addition of Rs. 4,39,200/- under section 40(a)(ia) of the Act was justified, considering the assessee's claim that rent was paid to individual partners below the TDS threshold and the applicability of the proviso to section 194-1. - Assessee's contention: The rent paid to each payee did not exceed the threshold limit under the proviso to section 194-1 for AY 2013-14, hence no TDS obligation arose. The disallowance under section 40(a)(ia) is therefore unsustainable. The amendment by Finance Act, 2014, restricting disallowance to 30% is curative and retrospective, thus disallowance should be 30% or deleted entirely. Relied on CIT v. Calcutta Export Company and CIT v. Ansal Land Mark Township (P.) Ltd. - Revenue's contention: Not recorded. 3. Whether the disallowance was made in violation of the principles of natural justice due to the denial of a reasonable opportunity of being heard. - Assessee's contention: The CIT(A) erred in confirming the disallowance without providing a reasonable opportunity of being heard. - 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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