ITAT Kolkata Judgments — March 2025

The Tribunal held that the Ld. CIT(A) erred in rejecting the appeal solely on the ground of delay. It was noted that substantive justice should be prioritized, and delay should only be condoned in extenuating circumstances. The assessee was granted a chance to present their case before the first appellate authority.

The tribunal noted that Form No. 1, required for availing the Vivad-se-Vishwas Scheme, had been filed by the assessee. Consequently, the appeal was dismissed as withdrawn, in accordance with the scheme's provisions.

Despite the assessee's prior non-appearance before the CIT(A), the tribunal, in the interest of natural justice, granted one more opportunity. The issue was restored to the CIT(A)'s file for fresh adjudication, conditional on the assessee paying a cost of Rs. 10,000/- to the Accountants' Library within sixty days. Non-payment of this cost would result in the CIT(A)'s order being confirmed.

The ITAT held that Ind AS-20 was not applicable for AY 2015-16, being effective only from AY 2016-17, and the assessee's accounting treatment under AS-12 was correct. The tribunal distinguished the cited Steel Authority of India case, noting that the funds in the present case were specifically 'tied' to VRS liability, unlike the generic funds in the precedent. Consequently, the addition made by the AO was deleted, and the assessee's appeal was allowed.

The ITAT upheld the disallowance of Rs. 8,27,249/-, stating the assessee failed to justify these expenses under Section 37(1) and public policy. However, the ITAT granted relief for the Rs. 44,630/- disallowance under Section 40(a)(ia), finding it was an outright purchase with no TDS liability. Relief was also granted for the Rs. 87,500/- rent expenses, acknowledging a clear business nexus.

The ITAT found that the CIT(A) erred by overly relying on a procedural lapse and not deciding the case on its merits. The Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication, allowing the assessee to submit all relevant documents, provided new documents are accompanied by a Rule 46A application.