What did the Tribunal hold?

The Tribunal set aside the issue to the Assessing Officer, directing deletion of disallowances if the assessee proves payments were made within the relevant financial year. The assessee was also directed to produce necessary evidence.

The assessee's appeal concerned disallowances of professional fees paid as visiting fees, laboratory charges, and X-ray charges. The disallowances were made because the payments were allegedly made in the subsequent financial year, despite the assessee following the cash system of accounting.

What were the issues?

Whether professional fees paid after the previous year, but claimed as paid in the current year due to a typographical error, should be disallowed when the assessee follows the cash system of accounting.

Dr Ajit M. Vaze vs ACIT | ITAT Mumbai 2017

Income Tax Appellate Tribunal, MUMBAI BENCHES “H”, MUMBAI

Before: Shri P K Bansal & Shri Amarjit Singh

For Appellant: Shri Prasad A Navre

For Respondent: Shri M C Omi Ningsham

Hearing: 14.11.2017Pronounced: 27.11.2017

O R D E R Per P K Bansal, Vice-President:

This appeal has been filed by the assessee against the order of the CIT(A)-5, Mumbai, dated 08.12.2015, for A.Y. 2011-12, by taking the following effective grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in: i) Upholding the learned AO's action of disallowing an amount of Rs. 6,31,0847-being professional fees paid as visiting fees / laboratory charges / pharmacy / anesthesia charges by way of fees paid for services rendered on the ground that the payments were made in the subsequent year. ii) Upholding the learned AO's action of disallowing an amount of Rs. 2,38,4387-being professional fees paid for X-Ray and other related charges by way of fees paid for services rendered on the ground that the payments were made in the subsequent year.

The Appellant submits that there was a typographical error in their submissions handed over to the Hon'ble CIT(A) on 8th December 2015. There was an inadvertent mistake in the heading in Column E of the submissions. The words in brackets 'after April- 11' should not have been mentioned and instead the words 'paid in the current year' should have been mentioned. However, the note mentioned to Column E was correctly mentioned which I correctly stated that the fact that payments were made in the current year i.e., subsequent to the year in which they were actually received from the patients.”

We have heard the rival submissions and have carefully considered the same along with the orders of the tax authorities below. We noted that the amounts of ` 6,31,084/- and ` 2,38,438/- have been disallowed because the assessee has paid these amounts after April 2011 i.e. after the previous year relevant to the assessment year as the assessee was following cash system of accounting. The learned AR before us vehemently contended that the assessee had made payment of these amounts not after April 2011 but in the current year and this fact has been incorrectly mentioned due to typographical error. It is not denied that the assessee is following cash system of accounting. We, therefore, in the interest of justice and fair play to both the parties, set aside the issue to the file of the Assessing Officer with the direction that he shall delete both the disallowance in case the assessee produces the necessary evidence proving that the payments have been made upto 31.03.2011 i.e. within the financial year relevant to the impugned assessment year. The assessee is also directed to produce the necessary papers in this regard.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court on 27th day of November, 2017.

DR AJIT M. VAZE,MUMBAI vs. ASST CIT 11(2), MUMBAI

What did the Tribunal hold?

What were the facts?

What were the issues?

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