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

ITA 512/LKW/2026Status: DisposedITAT Cochin25 September 2026AY 2013-1410 pages
AI SummaryRemanded

What were the facts?

The assessee, a firm dealing in liquors, filed its return for AY 2013-14. The case was selected for scrutiny under CASS, and an assessment order was passed under section 143(3). Subsequently, based on a Board instruction and audit objection by CAG, the case was reopened under section 147. The issue was the non-deduction of TDS on shop rent of Rs.4,39,200 paid to Shri Ram Lakhan Yadav. Statutory notice under section 148 was issued. The assessee replied that TDS was not deducted as the landlord assured to declare the income and pay taxes, but no supporting documents were provided. The Assessing Officer disallowed Rs.4,39,200 under section 40(a)(ia) and added it to the total income, assessing it at Rs.8,20,040 under section 147 read with 144B. The National Faceless Appeal Centre (NFAC), Delhi, dismissed the assessee's appeal.

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. The Tribunal, while acknowledging the lack of compliance by the assessee during assessment and appeal proceedings before the NFAC, considered the peculiar facts of the case. It was held that the assessee deserved one more opportunity to present its case. Consequently, the order of the NFAC was set aside, and the file was restored to the Assessing Officer. The Assessing Officer was directed to provide the assessee with one more opportunity to present its case. The assessee was cautioned to fully comply with the directions of the Assessing Officer in the set-aside proceedings, failing which the Assessing Officer was at liberty to pass an order based on the material on record, even if ex-parte. The appeal was allowed for statistical purposes.

What were the issues?

1. Whether the reassessment proceedings initiated under section 147 of the Income Tax Act, 1961, were valid, considering they were triggered by an audit objection without independent application of mind by the Assessing Officer, and the issue was already examined in the original scrutiny assessment under section 143(3)? (Question of law and fact, concerning Section 147). - Assessee's contention: Reassessment is without jurisdiction, bad in law, and a mere change of opinion, as the issue was examined and accepted in the original assessment. Reopening for reviewing a concluded assessment is impermissible. 2. Whether the addition of Rs.4,39,200 under section 40(a)(ia) of the Income Tax Act, 1961, was justified, given the assessee's claim that rent was paid to individual partners separately, with each payment below the threshold for TDS under section 194-I, and that the premises were taken on rent by partners individually? - Assessee's contention: The CIT(A) erred in mechanically accepting the AO's assumption of payment to a single person. Rent was paid to partners individually, and each payment was below the threshold prescribed under the proviso to section 194-I for AY 2013-14, thus no TDS obligation arose. Invocation of section 40(a)(ia) is unsustainable. 3. Whether the disallowance under section 40(a)(ia) of the Income Tax Act, 1961, should be restricted to 30% retrospectively, considering the amendment brought by the Finance Act, 2014, is curative, remedial, and declaratory? - Assessee's contention: The amendment to section 40(a)(ia) by Finance Act, 2014, restricting disallowance to 30%, is retrospective. Relied on CIT v. Calcutta Export Company and CIT v. Ansal Land Mark Township (P.) Ltd. The disallowance should be deleted in toto or restricted to 30%. 4. Whether the assessee was denied a reasonable and effective opportunity of being heard, violating the principles of natural justice? - Assessee's contention: The CIT(A) erred in confirming the disallowance without providing a reasonable opportunity of being heard. Revenue's contention: The Ld. Sr. D.R. supported the orders of the authorities below and submitted that the appeal of the assessee may be dismissed.

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-I,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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