MR MIHIR CHANDRAKANT MEHTA, MUMBAI V. ASSESSING OFFICER, MUMBAI

ITA 1633/MUM/2023

AI Insights

The case involves Shri Mihir Chandrakant Mehta, who appealed against the order of the National Faceless Assessment Centre (NFAC), Delhi, concerning the assessment for the year 2018-19. The primary contention was the non-consideration of business losses and unabsorbed depreciation in the assessment order under section 143(3) of the Income Tax Act. The assessee had declared a loss of Rs. 17,72,582 in his return, which included unabsorbed depreciation. However, the AO's assessment did not reflect this, leading to the appeal. The CIT(A) upheld the AO's decision, noting the absence of objections during the assessment proceedings. The Tribunal, however, found discrepancies in the AO's reference to the filing date and acknowledged the assessee's declared losses, thus allowing the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302347 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 10-05-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: YASH K SHAH
• Keywords: Depreciation; Earning of tax free income; Unabsorbed depreciation; TDS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D‘ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.1633/Mum/2023 (Assessment Year :2018-19) Shri Mihir Chandrakant Mehta 6, Dev Park Apartment East West Road Juhu Vileparle (W) Mumbai – 400 049 Vs. Additional/Joint/Deputy/ Assistant Commissioner of Income tax / Income- Tax Officer National Faceless Assessment Centre-Delhi PAN/GIR No.AGMPM0655M (Appellant) .. (Respondent) आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 14/03/2023 passed by NFAC, Delhi for the quantum of assessment passed u/s. 143(3) for the A.Y.2018-19. 2. Assessee in various grounds of appeal has changed non- consideration of losses as per the income tax return filed by the assessee without providing any reasons. Assessee by Shri Yash K Shah Revenue by Smt. Mahita Nair Date of Hearing 19/07/2023 Date of Pronouncement 31/07/2023 ITA No.1633/Mum/2023 Shri Mihir Chandrakant Mehta 2 3. The brief facts are that the assessee is an individual and had filed the return of income for A.Y.2018-19 on 03/10/2018 declaring loss of Rs. (-) 17,72,582/-. However, the ld. AO in the assessment order passed u/s.143(3) has added Rs.1,25,001/- under the head ‘income from other sources’ by adding LIC pension received of Rs.1,19,001/- and interest income tax refund of Rs.6,100/-.On this issue there is no dispute by the assessee. However, before the ld. CIT (A) the only ground which was taken that the ld. AO has not taken into account the business loss and the unabsorbed depreciation loss of Rs. 34,05,153/- while preparing the computation sheet for A.Y.2018-19, however, the ld. CIT(A) despite noting the fact that assessee has claimed loss and ld. AO has not stated any reason and held that assessee has not raised any objection before the ld.AO. The relevant observation and finding are as under:- “I have considered the written submission of the appellant and the order of AO. Regarding the issue of claim of total loss of Rs.48,78,598/- as business loss and unabsorbed depreciation, the AO has allowed loss of Rs.14,82,445 The AO has not stated any reason in the assessment order about not allowing such losses. The appellant has stated as under- Computation of Profits and Gain from Business & Profession Net Profit as per Profit & Loss At -14.97,674 (Refer Profit & Loss Alt-Annexure 1) Add Inadmissible Expense & Income to be excluded ITA No.1633/Mum/2023 Shri Mihir Chandrakant Mehta 3 Depreciation debited to P & L A/c. 643,978 Disallowance u's 37 -Expenditure relating to exempt Income 1% of PPF Investment 2,687 -Penalty or Fine Profession Tax Penalty 1,464 Interest on Krishi Kalyan Cess 1,395 Interest on Swachh Bharat Cess 1,734 Interest on Profession Tax 2,084 Interest on TDS 750 GST Late Fee 2,490 12,604 Disallowance u/s 438 Profession Tax 2,625 6,59,207 -8,38,467 Less: Deductible expenditure & income to be excluded Incomes considered separately Rent received 8,22,000 Interest received 25,83,153 -34,05,153 Less Depreciation as per IT Act -6,43,978 Less under the head Business & Profession -48,87,59 Out of the total Business Loss of INR -48,87,598, Loss of INR 31,65,016 got adjusted against House property Income of INR 5,75,400/- and Income from Other Sources of INR 25,89,616 Remaining Loss of INR 17,22,582 which includes Unabsorbed Depreciation loss of INR 6,43,978/- has been carried forward to next year. Copy of Computation of Income is attached herewith as Annexure 2. ITA No.1633/Mum/2023 Shri Mihir Chandrakant Mehta 4 B/F losses Asstt. Year 1 2017-18 2 2016- 17 3 2015-16 4 2014- 15 5 2013-14 6 20 12- 13 7 20 11- 12 8 2010 -11 >8 Total losses B/F Date on which return filed 20.10.2017 24.09.2014 Depreciation 2,29,680 2,29,680 Ordinary business loss 15,01,103 15,49,163 30,50,266 Losses setoff and C/F Salaries Property Speculative business Specified business Ordinary business LTCG STCG Other sources Total loss set off Unabsorb ed B/F loss C/F Depreciation 0 2,29,680 Ordinary business loss 0 30,50,266 Total 32,79,946 10. The appellant has given a copy of ITR for A.Y. 2018-19 as original filed on 03.10.2018 at nil income claiming a loss of Rs.17,72,582/-. However, AO has clearly mentioned in assessment order that ITR was filed on 14.^6.2018. Even appellant in reply dated 20.02.2023 has stated that ITR was filed on 14.06.2018 in which he had claimed business loss of (- 48,87,598/-). However, keeping in view of the fact that AO had passed the order w.r.t. ITR filed declaring NIL income and not loss, and the appellant has not raised any objection before the AO, the Ground of appeal is dismissed. 4. First of all it is an undisputed fact that assessee in the return of income had shown loss of Rs. (-) 17,22,582/- under the head ‘profits and gains’ on business or profession. Assessee had shown loss of Rs. 48,87,598/- and out of said loss of Rs. 31,65,016/- has been adjusted against income from ‘house property’ and ‘income from other sources’. The remaining loss of Rs. 17,22,582/- which included unabsorbed depreciation loss of Rs.6,43,978/- has been carried forward to the next year. Despite all these facts on record, the ld. CIT (A) observed that the ld. AO had passed the order with respect to ITR filed declaring ‘Nil’ ITA No.1633/Mum/2023 Shri Mihir Chandrakant Mehta 5 income and not as loss, whereas the ld. AO in the computation sheet annexed with the assessment order has taken income from business or profession at ‘Nil’ without even considering that assessee had declared losses in the return of income and even in the statement of income filed on 03/10/2018. 5. However, from the perusal of the assessment order it is seen that the ld. AO was mentioning same return of income filed for A.Y.2018-19 on 14/06/2018, whereas the return which has been filed before us is on 03/10/2018 wherein the current year loss have been declared at Rs.17,22,582/-. It is surprising that e- filing acknowledgement number mentioned by the ld. AO as well as mentioned in the said return of income is same. Once there is only one e-filing acknowledgement number, then how can there be two returns one filed on 14/06/2018 and another on 03/10/2018. The scan copy of acknowledgement of income tax return for the sake of ready reference is reproduced herein below:- ITA No.1633/Mum/2023 Shri Mihir Chandrakant Mehta 6 ITA No.1633/Mum/2023 Shri Mihir Chandrakant Mehta 7 6. Thus, the very premise of the ld.AO appears to be erroneous or some error which despite pointing out before the ld. CIT(A) has not been examined by him. Accordingly, we direct the ld.AO to allow the current year loss claimed in the income tax return. Accordingly, appeal of the assessee is allowed. 7. In the result, appeal of the assessee is allowed. Order pronounced on 31 st July, 2023. Sd/- (AMARJIT SINGH) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 31/07/2023 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy//