Hotel Kohinoor, Allahabad V. DCIT (CPC), Bangalore

ITA 7/ALLD/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5501 (ITAT-ALLAHABAD)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 03-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Rectification of order; Set aside
• Section: 154; 40(b); 143(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD ‘SMC’ BENCH, ALLAHABAD BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER ITA No.7/ALLD/2022 Assessment Year: 2015-16 Hotel Kohinoor, Noorullah Road, Allahabad PAN-AAFFH3231H vs. DCIT (CPC), Bangalore (Appellant) (Respondent) Appellant by: Mr. Praveen Godbole, CA Respondent by: Mr. A.K. Singh, Sr. DR Date of hearing: 14.07.2022 Date of pronouncement: 20.07.2022 O R D E R VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 28.12.2021 of CIT(A) (National Faceless Appeal Centre, Delhi) for the assessment year 2015-16. The assessee has raised the following grounds:- “ 1. That in any view of the matter income as determined at Rs.800,440/- as per column 15 of the order under section 154 of the I.T. Act, dated 05.05.2018 is bad both on the facts and in law. 2. That in any view of the matter income from business as determined at Rs.8,00,44,0/- is not correct and the assessing officer was wrong in not allowing genuine claim regarding remuneration paid to partner under section 40(b) of the I.T. Act amounting to Rs.7,20,000/- when the same was duly claimed in the return and in past the same was allowed by the department hence genuine claim as disallowed by assessing officer and confirmed by CIT appeal is highly unjustified. 3. Thai in any view of the matter both the two lower authorities failed to allow genuine claim of the assessee towards remuneration paid to partner which was as per partnership deed, and claim in the return, in earlier years remuneration claimed was accepted by the department.,, hence the addition made and-confirmed by CIT appeal is highly unjustified. 4. That in any view of the matter the assessee reserves his rights to take any fresh ground of appeal before hearing of appeal.” ITA No. 7/Alld/ 2022 Hotel Kohinoor 2 2. The assessee is a partnership firm and filed its return of income for the year under consideration on 25.8.2015 which was processed under section 143(1) by CPC, Bangaluru and made adjustment on account of disallowance of claim of remuneration to interest to partners and depreciation. The assessee moved an application under section 154 of the Act for rectifying the mistake apparent from record. The said application was disposed of vide order dated 5.5.2018 and the adjustment was reduced from 14,38,430/- to Rs. 8,00,436/- against which the assessee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee for want of any appearance and prosecution despite several notices and thereby the adjustment made by the CPC while processing the return of income under section 143(1) and subsequently passing the rectification order under section 154 was confirmed. 3. It is pertinent to note that after the order passed under section 154 of the Act on 5.5.2018, the only grievance of the assessee is regarding the disallowing the remuneration paid to the partners. The learned AR of the assessee has submitted that the CIT(A) has not considered the relevant provisions of the Act as well as the partnership deed for allowing the claim of remuneration to the partners but the appeal of the assessee was dismissed summarily. Thus he has pleaded that the matter may be remanded to the record of the CIT(A) for deciding the matter on merits after consideration the relevant facts and details. 4. On the other hand, learned DR has submitted that despite opportunities granted by the CIT(A), the assessee has not appeared in the proceedings before the CIT(A) as well as not filed any details in support of the claim. He has relied upon the impugned orders of the CIT(A). 5. I have considered the rival submissions as well as relevant material on record. The CIT(A) has given the details of the notices issued to the assessee on four occasions and thereafter dismissed the appeals in para 4.1.1 to 4.1.2 as under:- ITA No. 7/Alld/ 2022 Hotel Kohinoor 3 “4.1.1Initially, the CPC made certain adjustments in the intimation u/s. 143(1) and it appears that the appellant has not filed appeal against the intimation u/s 143(1) of the CPC. Therefore, the appellant made rectification request vide rectification application dated 09.03.2018 before the CPC. The CPC vide its order u/s 154 dated 05.05.2018, rejected the request of the appellant has specified reasons beneath the rectification order and has also sent detailed notes as Annexure to the e-mail ID of the appellant which is seen from the order u/s 154 itself and it is also stated that the appellant has not furnished a copy of the Annexure along with the From No. 35 or during the appellate proceedings. 4.1.2 On perusal of these facts, it appears that the appellant is trying to take backdoor entry by filing an appeal against order u/s. 154 itself. As per the provisions of the Act, the appellant could have filed an appeal against the intimation u/s. 143(1) of the CPC. However, the appellant has not filed an appeal against the intimation u/s. 143(1). Thereafter, the appellant has filed a rectification application u/s 154 before the CPC. The CPC rejected the request of the appellant for rectification and has specified the reasons by way of Annexure sent by e-mail ID of the appellant, which was not furnished by the appellant during the appellate proceedings. In any case, it is stated that the original cause of action in the case under consideration had arisen at the stage of 143(1). There is no mistake apparent from record at the stage of proceedings u/s 154 on account of disallowance of claim of remuneration paid to partners. If at all, there is a grievance for the appellant, the same had arisen at the stage of intimation u/s 143(1) and not at the stage of 154. Therefore, the issue is not adjudicated herein. Accordingly, the grounds of appeal are dismissed.” 6. Thus it is clear that the CIT(A) has dismissed the appeal of the assessee on technical ground that this appeal is not maintainable against the processing of the return under section 143(1) and the assessee is trying to take the backdoor entry by filing an appeal against the order under section 154 of the Act. This observation of the CIT(A) is contrary to the record and facts because while passing the rectification order under section 154 of the Act on 5.5.2018, the CPC has reduced the adjustment from 14 Lac to 8 Lac. In the original adjustment, the CPC made disallowance of interests paid to the partners, remuneration to the partners and depreciation whereas in the order passed under section 154, the remuneration paid to the partners has been disallowed. Hence, the appeal filed by the assessee against the order passed under section 154 alongwith the intimation under section 143(1) is a valid appeal and ought to have been decided on merits. Accordingly, in the facts and circumstances of the case and in the interest of justice, the impugned order of the CIT(A) is set aside ITA No. 7/Alld/ 2022 Hotel Kohinoor 4 and the matter is remanded to the record of the CIT(A) for deciding the appeal afresh on merits after giving one more opportunity of hearing to the assessee to produce the relevant record in support of the claim of remuneration to the partners. 7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 20.07.2022. Sd/- [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 20/07/2022 Sh Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT(A) , Allahabad 4. CIT 5. DR - By order Sr. P.S.