SHRI VIKAS GANGADHAR JAGTAP,AHMEDNAGAR vs. INCOME-TAX OFFICER, WARD -1, AHMEDNAGAR

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ITA 93/PUN/2022Status: DisposedITAT Pune17 August 2022AY 2016-173 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that disallowance under Section 40A(ia) is not sustainable if books of accounts are not produced or are rejected. Therefore, the impugned disallowance was directed to be deleted.

What were the facts?

The assessee challenged a disallowance of sub-contract expenses under Section 40A(ia) of the Income Tax Act. The Assessing Officer noted that the assessee's books of accounts were not produced and remained unaudited.

What were the issues?

Whether disallowance under Section 40A(ia) is permissible when the assessee's books of accounts are not produced or are rejected.

Which sections of the Income-tax Act were involved?

Section 40A(ia)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, PUNE

For Appellant: Shri Prasad S. Bhandari (through virtual)
For Respondent: Shri M.G. Jasnani

This assessee’s appeal for A.Y. 2016-17 arises against the CIT(A)-2, Pune’s order dated 22-01-2020 passed in case No. PN/CIT(A)-2/ITO Wd- 1/AN/1254/2018-19 involving proceedings u/s 143(3) of the Income-tax Act, 1961, in short “the Act”.

Heard both the parties. Case file perused.

2.

The assessee’s sole substantive grievance raised herein challenges correctness of both the learned lower authorities’ action invoking section 40a(ia) disallowance of sub-contract expenses @ 30%, coming to Rs. 32,64,066/- as upheld in the lower appellate order.

3. Suffice to say, it transpires during the course of hearing that the Assessing Officer had himself concluded in para 8 of the assessment order that the assessee had never even produced his books of accounts coupled with fact that the same remained un-audited as well. That being the case, I quote Indwell Constructions Vs. CIT (1978) 232 ITR 771 (AP) that the impugned disallowance is not sustainable in case of non-availability of books of accounts or rejection thereof. The impugned disallowance is directed to be deleted for ITA 93/PUN/2022 Vikas G. Jagtap A.Y. 2016-17 this precise reason alone. The Revenue’s vehement contentions supporting the impugned disallowance are rejected accordingly.

3.

Delay of 683 days in filing of the instant appeal instituted on 3-02-2022 is condoned since falling in Covid 19 pandemic outbreak period.

4.

This assessee’s appeal is allowed.

Order pronounced in the open Court on this 17th August 2022.

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