GREEN PROVISION AND GENERAL STORE ,NEW DELHI V. INCOME TAX OFFICER, CIVIC CENTER

ITA 2117/DEL/2024

AI Insights

The case involves Green Provision and General Store, a partnership firm engaged in retail trading, which appealed against the order of the Ld. National Faceless Appeal Centre concerning the assessment year 2018-19. The firm contested the total income assessed at Rs. 29,94,270 and the corresponding tax and interest liabilities. The primary contention revolved around the disallowances made under sections 40A(3) and 43B of the Income Tax Act, which the appellant argued were incorrectly applied following a revised return filed under section 44AD. The Ld. CIT(A) had dismissed the appeal without a personal hearing, leading to the current appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471565 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: RUCHESH SINHA
• Keywords: Set aside; Opportunity of being heard; Revised return; Depreciation; Principle of natural justice; Presumptive income
• Section: 154; 143(1); 44AD; 28; 40A(3); 43B; 139(5)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA NO. 2117/Del/2024 A.YR. : 2018-19 GREEN PROVISION AND GENERAL STORE, C/O KRISHAN KUMAR & SONS, S-39, GREEN PARK MAIN MARKET, NEW DELHI – 16 (PAN: AALFG5933F) VS. INCOME TAX OFFICER, WARD 2991), CIVIC CENTRE, NEW DELHI (APPELLANT) (RESPONDENT) Appellant by : Shri Ruchesh Sinha, Adv. Respondent by : Shri Rajesh Kumar Dhanesta, Sr. D.R. Date of hearing : 12.03.2025 Date of pronouncement : 12.03.2025 ORDER PER SHAMIM YAHYA, AM : The Assessee has filed the instant Appeal against the Order of the Ld. National Faceless Appeal Centre, dated 06.03.2024, relating to assessment year 2018-19 on the following grounds:- 1. That the appellant denies its liability to be assessed at total income of Rs. 29,94,270/- and accordingly denies its liability to Pay tax, interest demanded thereon. 2 | P a g e 2. That having regards to the facts and circumstances of the case the order passed by the Ld. Commissioner of Income Tax (Appeals) herein after refereed as 'Ld. CIT(A) erred in law and ignoring the facts on the records and passed the order on the basis of the surmises and conjecture and need to be set aside. 3. That having regard to the facts and circumstances of the case Ld. CIT(A) has erred in law and on facts in confirming disallowance of Rs. 20,60,574/-u/s 40A(3) of the act, which was made by Ld. AO ignoring the fact that the appellant had revised its return of income u/s 139(5) of the Act by adopting the presumptive taxation u/s 44AD of the act, which has a non-obstante clause and thus by overrides section 28 to 43C of the act. 4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the disallowance of Rs.18,213/- u/s 43B of the Act ignorance of the fact that the appellant had revised its return of income u/s 139(5) by adopting the presumptive taxation u/s 44AD of the act, which has a non-obstante clause and thus by overrides section 28 to 43C of the net. 5. That in any view of the matter and in any case, provision of section 40A(3) and 43B cannot be invoked as 44AD has the non- obstante clause and thus provision of 40A(3) and 43B are beyond the ambit of section 44AD of the act. 6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the disallowances of Rs 20,60574 u/s 40A(3) and Rs 18,214 u/s 43B as made by Ld. A O, rejecting the request for personal hearing of the Appellant which is in gross violation of principle of natural justice. 3 | P a g e 7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not appreciating that the Ld. AO has treated the revised return filed u/s 139(5) of the Act as original return by his own action and imposing late fees of Rs 234F and the original return filed by the Appellant was not processed accordingly 8. That having regard to the facts and circumstances of the case, Ld. CIT(A) erred in law and on facts by issuing contradictory findings, failing to declare the revised return invalid or provide direction to reinstate the original return, and thus not directing assessment of the Appellant's income based on the original return after confirming disallowances under sections 40A(3) and 43B of the Act. 9. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on fact by failing to recognize that the revised return, considered as original by the Ld. AO, did not contain any specific figures regarding the disallowances under sections 40A(3) and 43B. These omissions trigger the provisions of section 143(1), and the applicability of the 3CD report does not extend to returns filed under section 44AD. 10. That having regard to the facts and circumstances of the case and without prejudice to the above grounds, Ld. CIT(A) has erred in law and fact by failing to acknowledge that the income declared in the revised return was accepted as original by the Ld. AO and was filed under section 44AD, exceeded the income declared in the original return by Rs 20,16552. This adjustment had already been accounted for while filing the revised return. 11. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the 4 | P a g e action of Ld. AO in charging interest u/s 234A, 234B, 234C and 234F of Income Tax Act, 1961. 12. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 2. Brief facts of the case are that the assessee, a partnership firm, engaged in the business of retail trading of Kiryana items, had filed of income on 30.10.2018, declaring an income of Rs. 3,41,540/-. While processing, the AO- CPC by a notice dated 12.2.2019 intimated the assesee about disallowances of Rs. 12,18,403/- u/s. 40A(3) of the Act and Rs. 18,213/- u/s. 43B of the Act. In order to avoid such additions, the assessee had filed a revised return on 25.2.2019 disclosing a total income of Rs. 9,15,480/- u/s. 44AD of the Act. Thereafter, another communication dated 17.03.2019 in respect of processing of the case was sent by the AO-CPC to the appellant, proposing additions of Rs. 20,60,574/-u/s. 40A(3) of the Act and Rs. 18,213/- u/s. 43B of the Act. The revised return was finally processed on 31.5.2019 at an income of Rs. 29,94,270/-. In the meanwhile, the firm got dissolved with effect from 19.03.2019. However, being aggrieved by this order u/s. 143(1) of the Act, the assessee preferred a rectification u/s. 154 of the Act by a petition dated 18.6.2019. The AO-CPC rejected the same by an order of dated 28.6.2019, stating, Reasons for Rectification 5 | P a g e As seen from the e-filed return of income and the rectification filed by you, it is found you have not correctly filed Sch. PartA-P&L/BPPARTB-TV CYLA/Dep/DPM/OOA/ Nature of Business Part-A-O) - The system has computed the income from business from the details entered by you in the above schedule. - If the application is for non allowance of depreciation then, it is seen from the data uploaded that, you have claimed it depreciation at serial no. 12 (ii) in Sch.BP, u/s. 32(1)(i) the depreciation under this section is allowable only to specific types of business and you does not fall in this category. Further, there is no claim of depreciation in Sch. BP, at serial no. 12(1), to which you are entitled as also no corresponding entries in the Sch. DEP, Sch. DPM and Sch. DOA, which is required to allow the claim of depreciation. Hence, the same has correctly not been allowed. - The assessee should then tick the appropriate box therein, for selecting the rectification reason, and then upload the rectification XML, after making the necessary corrections in the requisite Schedules. - It is suggested that assesse may use department utility for filing corrected XML. 3. Against the above order, assessee filed the appeal before the Ld. CIT(A) and requested that an opportunity of personal hearing may be provided, however, the Ld. CIT(A) rejected the same and dismissed the appeal of the assessee. Aggrieved with the aforesaid, assessee is in appeal before the Tribunal. 4. We have heard both the parties and perused the records. Ld. Counsel for the assessee prayed that only one opportunity may be granted before the Ld. CIT(A) to canvass the case properly. Ld. DR has no objection to this proposition. Hence, in the interest of justice, we remit back the issues in dispute to the file of the Ld. CIT(A) with the directions to 6 | P a g e grant an opportunity of being heard to the assessee and pass speaking order, afresh, in accordance with law. 5. In the result, the Assessee’s appeal is allowed for statistical purposes. Order pronounced on 12/03/2025 in the Open Court. Sd/- (VIMAL KUMAR) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "