JIVARAM B. SUTAR, MUMBAI V. DCIT , CPC, BENGALURU

ITA 493/MUM/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6900 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Appeal Filed On: 16-03-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITA NAIR
• Assessee Lawyers: RADHA HALBE
• Keywords: Revised return; TDS; Set aside
• Section: 40(a)(ia); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI SANDEEP SINGH KARHAIL (JUDICIAL MEMBER) ITA No. 493/MUM/2022 Assessment Year: 2019-20 Jivaram B. Suthar, 7, Safalya Jeevan CHS Ltd., R. Narkar Road, Ghatkopar East, Mumbai-400077. Vs. Deputy Commission of Income Tax, CPC, Mumbai. PAN No. ASNPB 4238 J Appellant Respondent Assessee by : Ms. Radha Halbe, Adv. Revenue by : Mrs. Smita Nair, DR Date of Hearing : 20/06/2022 Date of pronouncement : 15/07/2022 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against the order dated 13.12.2021 passed by the National Faceless Appeal Centre (NFAC), Delhi [herein after referred as ‘the Ld. CIT(A)] for assessment year 2019-20, raising following grounds: 1. On the facts and in the circumstances of the case, the Ld. DCIT, CPC erred in adding rent of 40(a)(i). 2. The order passed by the Ld. DCIT, CPC is against the equity of principles of jurisprudence. 2. Briefly stated, the facts of the case are that the assessee filed its return of income on 12.10.2019 declaring total income of ₹10,36,870/-, however, 143(1) of the Income Tax Act, 1961 (in short ‘the Act’) Commissioner of Income Tax, Central Processing Centre (hereinafter referred as ‘the Assessing Officer’) made adjustment of ₹2,91,500/- and assessed the total income a 3. Aggrieved, the assessee filed appeal before the Ld. CIT(A) but could not succeed and therefore, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. 4. We have rival submissions of the parties on the iss dispute and perused the relevant material on record. We find that the assessee before the Ld. CIT(A) contended that while filing audit ITA NO. 493/M/2022 On the facts and in the circumstances of the case, the Ld. DCIT, CPC erred in adding rent of ₹2,91,500/- as disallowance u/s 40(a)(i). The order passed by the Ld. DCIT, CPC is against the equity of principles of jurisprudence. Briefly stated, the facts of the case are that the assessee filed its return of income on 12.10.2019 declaring total income of , however, while processing the return of income u/s 143(1) of the Income Tax Act, 1961 (in short ‘the Act’) Commissioner of Income Tax, Central Processing Centre (hereinafter referred as ‘the Assessing Officer’) made adjustment of and assessed the total income at ₹13,28,370/ Aggrieved, the assessee filed appeal before the Ld. CIT(A) but could not succeed and therefore, the assessee is in appeal before the Tribunal raising the grounds as reproduced above. We have rival submissions of the parties on the iss dispute and perused the relevant material on record. We find that the assessee before the Ld. CIT(A) contended that while filing audit Jivaram B. Suthar ITA NO. 493/M/2022 2 On the facts and in the circumstances of the case, the Ld. DCIT, as disallowance u/s The order passed by the Ld. DCIT, CPC is against the cannons of Briefly stated, the facts of the case are that the assessee filed its return of income on 12.10.2019 declaring total income of return of income u/s 143(1) of the Income Tax Act, 1961 (in short ‘the Act’), the Deputy Commissioner of Income Tax, Central Processing Centre (hereinafter referred as ‘the Assessing Officer’) made adjustment of 13,28,370/-. Aggrieved, the assessee filed appeal before the Ld. CIT(A) but could not succeed and therefore, the assessee is in appeal before the We have rival submissions of the parties on the issue-in- dispute and perused the relevant material on record. We find that the assessee before the Ld. CIT(A) contended that while filing audit report in Form No. 3CD disallowance of rent of not deducted mistakenly entered in of 40(a)(ia) of the Act has been disallowed by the Assessing Officer instead of 30% was already disallowed by the assessee. It was further submitted that rent of ₹2,91,500/ resident. It is paid for workshop of Alibag to a resident only. Therefore, while filing Form 3CD it was mistakenly entered section 40(a)(i) instead of 40(a)(ia) of the Act. The Ld. CIT(A) however, held that this was a mistake rectifiable by the assessee and therefore, it was the onus of the assessee to income and there was no error in the order of the Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as und “4.2 The 143(1)(a) has been passed by CPC based upon details filed by the appellant. A mistake on the part of the appellant while filing its return of income has to be rectified by the appellant itself. The CPC cannot be held responsible for processing ITA NO. 493/M/2022 report in Form No. 3CD disallowance of rent of ₹2,91,500/ not deducted mistakenly entered in column section 40(a)(i) instead of the Act and therefore entire amount of has been disallowed by the Assessing Officer instead of 30% was already disallowed by the assessee. It was further submitted 2,91,500/- was not paid outside India nor paid to non resident. It is paid for workshop of Alibag to a resident only. Therefore, while filing Form 3CD it was mistakenly entered section 40(a)(i) instead of 40(a)(ia) of the Act. The Ld. CIT(A) ld that this was a mistake rectifiable by the assessee and therefore, it was the onus of the assessee to file revised return of income and there was no error in the order of the Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as und The 143(1)(a) has been passed by CPC based upon details filed by the appellant. A mistake on the part of the appellant while filing its return of income has to be rectified by the appellant itself. The CPC cannot be held responsible for processing a return based Jivaram B. Suthar ITA NO. 493/M/2022 3 2,91,500/- for TDS n 40(a)(i) instead and therefore entire amount of ₹2,91,500/- has been disallowed by the Assessing Officer instead of 30% which was already disallowed by the assessee. It was further submitted was not paid outside India nor paid to non- resident. It is paid for workshop of Alibag to a resident only. Therefore, while filing Form 3CD it was mistakenly entered in section 40(a)(i) instead of 40(a)(ia) of the Act. The Ld. CIT(A) ld that this was a mistake rectifiable by the assessee and revised return of income and there was no error in the order of the Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as under: The 143(1)(a) has been passed by CPC based upon details filed by the appellant. A mistake on the part of the appellant while filing its return of income has to be rectified by the appellant itself. a return based upon the appellant's return. The appeal on the grounds that the "ITO has erred" is incorrect. 4.3 Having discovered the error it is the appellant's responsibility to file a revised return correcting the mistake. The intimation u/s 143(1) da Bengaluru has been correctly made based upon the return and accompanying documents. This ground is accordingly dismissed. 4.1 Before us, the Ld. counsel of the assessee drawn out attention to the computation of the income Book. The total income as per this computation is the order u/s 143(1) row No. 15 also same amount has been reported as total income. Further, on perusal of the computation of income under the head ‘profit we find that the assessee has added amount of ₹2,91,500/- amount disallowable u/s 40 of the Act. Thus it is evident that assessee has duly added 30% the returned income. Regarding the payment of rent to the Indian Resident, the assessee has filed rent agreement with M/s ITA NO. 493/M/2022 upon the appellant's return. The appeal on the grounds that the "ITO has erred" is incorrect. Having discovered the error it is the appellant's responsibility to file a revised return correcting the mistake. The intimation u/s 143(1) dated 10.12.2019 issued by the PC, Bengaluru has been correctly made based upon the return and accompanying documents. This ground is accordingly dismissed.” Before us, the Ld. counsel of the assessee drawn out attention to the computation of the income available on page 25 of the Paper Book. The total income as per this computation is ₹ the order u/s 143(1) row No. 15 also same amount has been reported as total income. Further, on perusal of the computation of income under the head ‘profit and gains of business or profession’ we find that the assessee has added amount of ₹87,450/ amount disallowable u/s 40 of the Act. Thus it is evident that assessee has duly added 30% of the amount of the returned income. Regarding the payment of rent to the Indian Resident, the assessee has filed rent agreement with M/s Jivaram B. Suthar ITA NO. 493/M/2022 4 upon the appellant's return. The appeal on the grounds that the Having discovered the error it is the appellant's responsibility to file a revised return correcting the mistake. The ted 10.12.2019 issued by the PC, Bengaluru has been correctly made based upon the return and Before us, the Ld. counsel of the assessee drawn out attention available on page 25 of the Paper ₹10,36,870/-. In the order u/s 143(1) row No. 15 also same amount has been reported as total income. Further, on perusal of the computation of and gains of business or profession’ 87,450/- i.e. 30% of amount disallowable u/s 40 of the Act. Thus it is evident of the amount of ₹2,91,500/- to the returned income. Regarding the payment of rent to the Indian Resident, the assessee has filed rent agreement with M/s Nityanand Engineers through owner Mr. Prabakar Pandurang Patil available of page 17 to 20 of the Paper Book. of any interest, royalty, fee for technical services or other sum chargeable under the Act, which is payable outside India or in India to non-resident and tax is not deducted, then said entire amount is non-deductible. Under seciton deducted on any sum payable to a resident in India, which was laible for deduction of tax at asource, 30% of such sum would only be deudctible. The section 40(a)(i) is allowance in respect of non deduction of payment to no provision is not applicable in the case of the assessee. evident that disallowance was falling u/s 40(a)(ia) rather than 40(a)(i) of the Act. Evidently, this was a mistake on the part of tax auditor is reporting in Form No. 3CD of the Act. The Ld. CIT(A) has not examined the prayer of the assessee on merit and simply rejected the appeal on the ground that the assessee has not rectified ITA NO. 493/M/2022 Engineers through owner Mr. Prabakar Pandurang Patil available of page 17 to 20 of the Paper Book. Under section 40(a)(i), the amount of any interest, royalty, fee for technical services or other sum chargeable under the Act, which is payable outside India or in India resident and tax is not deducted, then said entire amount is deductible. Under seciton 40(a)(ia) where tax has not been deducted on any sum payable to a resident in India, which was laible for deduction of tax at asource, 30% of such sum would only be The section 40(a)(i) is allowance in respect of non deduction of payment to non-resident and therefore, the said provision is not applicable in the case of the assessee. evident that disallowance was falling u/s 40(a)(ia) rather than Evidently, this was a mistake on the part of tax g in Form No. 3CD of the Act. The Ld. CIT(A) has not examined the prayer of the assessee on merit and simply rejected the appeal on the ground that the assessee has not rectified Jivaram B. Suthar ITA NO. 493/M/2022 5 Engineers through owner Mr. Prabakar Pandurang Patil available of on 40(a)(i), the amount of any interest, royalty, fee for technical services or other sum chargeable under the Act, which is payable outside India or in India resident and tax is not deducted, then said entire amount is 40(a)(ia) where tax has not been deducted on any sum payable to a resident in India, which was laible for deduction of tax at asource, 30% of such sum would only be The section 40(a)(i) is allowance in respect of non- resident and therefore, the said provision is not applicable in the case of the assessee. Thus it is evident that disallowance was falling u/s 40(a)(ia) rather than Evidently, this was a mistake on the part of tax g in Form No. 3CD of the Act. The Ld. CIT(A) has not examined the prayer of the assessee on merit and simply rejected the appeal on the ground that the assessee has not rectified the return of income. In our opinion, in the interest of justice, the Ld. CIT(A) was required to examine the issue on merit on the grounds raised before him. Therefore, we set aside the order of the Ld. CIT(A) on the issue-in the basis of the records which were made available before the lo authorities. We find that disallowance made by the AO is not justified in the case of the assessee and accordingly, we delete the same. The grounds raised by the assessee are allowed. 5. In the result, the appeal filed by the assessee is allowed. Order pronounced in the Court on Sd/- (SANDEEP SINGH KARHAIL JUDICIAL MEMBER Mumbai; Dated: 15/07/2022 Rahul Sharma, Sr. P.S. ITA NO. 493/M/2022 the return of income. In our opinion, in the interest of justice, the Ld. (A) was required to examine the issue on merit on the grounds raised before him. Therefore, we set aside the order of the Ld. in-dispute in view of discussion above and the basis of the records which were made available before the lo authorities. We find that disallowance made by the AO is not justified in the case of the assessee and accordingly, we delete the same. The grounds raised by the assessee are allowed. In the result, the appeal filed by the assessee is allowed. ounced in the Court on 15/07/2022. Sd/- SANDEEP SINGH KARHAIL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT Jivaram B. Suthar ITA NO. 493/M/2022 6 the return of income. In our opinion, in the interest of justice, the Ld. (A) was required to examine the issue on merit on the grounds raised before him. Therefore, we set aside the order of the Ld. in view of discussion above and on the basis of the records which were made available before the lower authorities. We find that disallowance made by the AO is not justified in the case of the assessee and accordingly, we delete the same. The grounds raised by the assessee are allowed. In the result, the appeal filed by the assessee is allowed. OM PRAKASH KANT) MEMBER Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// ITA NO. 493/M/2022 Copy of the Order forwarded to : DR, ITAT, Mumbai BY ORDER, (Sr. Private Secretary) ITAT, Mumbai Jivaram B. Suthar ITA NO. 493/M/2022 7 BY ORDER, (Sr. Private Secretary) ITAT, Mumbai