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Facts
The assessee's case for AY 2020-21 was selected for scrutiny, and the Assessing Officer made an addition of Rs.1,88,80,489/- by disallowing depreciation under Section 32 due to a discrepancy between the depreciation claimed in the ITR and that reported in Form 3CD. The CIT(A) sustained this addition, rejecting the assessee's explanation.
Held
The Tribunal noted the undisputed difference in depreciation but observed that the assessee had furnished evidence regarding additions to fixed assets, which the CIT(A) ignored. It held that the matter required fresh verification by the Assessing Officer, considering the ITR, Form 3CD, and the bills for fixed asset additions.
Key Issues
Whether the disallowance of depreciation under Section 32 was justified due to the discrepancy between the ITR and tax audit report, and whether the CIT(A) erred in sustaining the addition without considering the assessee's evidences regarding additions to fixed assets.
Sections Cited
143(2), 142(1), 32
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD “B” BENCH : HYDERABAD
Before: SHRI MANJUNATHA G & SHRI RAVISH SOOD
1 ITA.No.1404/Hyd./2024 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD “B” BENCH : HYDERABAD BEFORE SHRI MANJUNATHA G, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA.No.1404/Hyd/2024 Assessment Year 2020-2021 R. Vidyasagar Rao The DCIT, Circle-3(1), vs. Hyderabad – 500 032 Hyderabad. PAN AAGFR6627L Telangana. PIN – 500 084. (Appellant) (Respondent) For Assessee : CA T Rajendra Prasad And Shri P. Rosi Reddy, Advocate For Revenue : Dr. Sachin Kumar, Sr AR Date of Hearing : 12.03.2025 Date of Pronouncement : 19.03.2025 ORDER PER MANJUNATHA G, A.M. :
This appeal has been filed by the Assessee against the Order dated 25.10.2024 of the learned CIT(A)-National Faceless Appeal Centre [in short “NFAC”], Delhi, relating to the assessment year 2020-2021.
Facts of the case, in brief, are that the assessee filed his return of income on 17.12.2020 declaring total income of Rs.10,20,62,080/-. The case of the assessee has 2 ITA.No.1404/Hyd./2024 been selected for complete scrutiny and during the course of assessment proceedings, the Assessing Officer issued notices u/sec.143(2) and 142(1) of the Income Tax Act, 1961 [in short “the Act”] on various dates. In response to the said notices, the assessee has filed partial information, however, failed to respond to the notice issued u/sec.142(1) on 31.08.2022 and show cause notice dated 12.09.2022. Therefore, the Assessing Officer passed the assessment order on the basis of the material available on record and determined the total income of the assessee at Rs.12,09,42,564/- by making addition of Rs.1,88,80,489/- towards disallowance of depreciation u/sec.32 of the Act on the ground that there is difference between depreciation as claimed by the assessee in the ITR for the year under consideration and depreciation reported by the tax auditor in Form No.3CD.
On appeal, the learned CIT(A) rejected the explanation of the assessee and sustained the addition made by the Assessing Officer towards disallowance of depreciation.
3 ITA.No.1404/Hyd./2024 4. Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal.
Learned Counsel for the Assessee submitted that although, the assessee could not file relevant evidences in respect of notice issued by the Assessing Officer and show cause notice issued on 12.09.2022, but, the fact remains that the assessee has explained reasons for difference in depreciation when compared to ITR filed for the year under consideration and tax audit report in Form 3CD and explained that by an inadvertent error, the tax auditor has missed to report the additions to fixed assets for the year under consideration. The assessee had also filed bills in support of additions to fixed assets. The learned CIT(A) without considering the evidences, simply sustained the additions made by the Assessing Officer. Therefore, he submitted that the issue may be set aside to the file of Assessing Officer for afresh verification.
The Learned DR, on the other hand, supporting the order of the learned CIT(A) submitted that the assessee could not file relevant evidences and also failed to explain
4 ITA.No.1404/Hyd./2024 the difference between the depreciation as per ITR and Form 3CD. The learned CIT(A) after considering the relevant facts has rightly sustained the addition made by the Assessing Officer and, therefore, the order of the learned CIT(A) should be upheld.
We have heard both the parties, perused the material on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that there is difference of Rs.1,88,80,484/- towards depreciation claimed in the ITR for the year under consideration and depreciation as per tax audit report in Form 3CD. The Counsel for the Assessee submitted that, by an inadvertent error the tax auditor failed to report the additions to fixed assets, even though relevant bills has been furnished for his verification. Otherwise, there is no difference as computed by the Assessing Officer. We find that the assessee has filed relevant ITR for the year under consideration and as per the ITR the depreciation claimed by the assessee for the year under consideration was at Rs.6,68,57,620/-, whereas the tax auditor reported the 5 ITA.No.1404/Hyd./2024 depreciation allowable u/sec.32 of the Act at Rs.4,79,77,136/-. Upon careful consideration of the relevant Form 3CD issued by the tax auditor, the tax auditor reported zero additions, [zero values], in addition to fixed assets for the year under consideration. The assessee has explained the additions to fixed assets by filing relevant evidences. Although, these evidences has been furnished to the learned CIT(A), but, the learned CIT(A) ignored the evidences filed by the assessee and sustained the additions made by the Assessing Officer. Therefore, we are of the considered view that the matter needs to be go back to the file of Assessing Officer for verification of the claim of the assessee in light of relevant ITR filed for the year under consideration along with Form 3CD and also bills for additions to fixed assets. Thus, we set aside the order of the learned CIT(A) and restore the issue back to the file of Assessing Officer for fresh verification of facts in light of various evidences filed by the assessee including relevant bills in support of additions to fixed assets. The Assessing
6 ITA.No.1404/Hyd./2024 Officer may verify the claim of assessee and decide the issue in accordance with fact and law.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 19.03.2025.