KARIA REALTY,PUNE V. ITO CIRCLE 7, PUNE, PUNE

ITA 1367/PUN/2025

AI Insights

The case involves Karia Realty, a partnership firm, appealing against an order from the National Faceless Appeal Centre, which confirmed an addition of Rs. 30,00,000 to the assessee's income. This addition was initially made by the Centralized Processing Center, Bangalore, treating the remuneration paid to partners as inadmissible under section 40(b) of the Income-tax Act, 1961. The assessee contended that the remuneration was mistakenly reported under an inadmissible head in the Tax Audit Report, whereas it was actually admissible. The Tribunal, after considering the submissions and the lack of representation from the assessee, decided to restore the matter to the JAO for a thorough re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708429 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2021-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK KUMAR KEDIA
• Section: 40(b)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1367/PUN/2025 Assessment Year : 2021-22 Karia Realty, 205 GERA 77, Kalyani Nagar, Near Bishops School, Pune 411 006, Maharashtra PAN : AAKFK1359C Vs. Income Tax Officer, Circle-7, Pune Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : This appeal at the instance of assessee pertaining to the Assessment Year 2021-22 is directed against the order dated 04.03.2025 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Intimation Order dated 02.11.2022 passed u/s.143(1)(a) of the Act. 2. When the case was called for, none appeared on behalf of the assessee despite service of notice of hearing. With the assistance of ld. Departmental Representative, I proceed to adjudicate the appeal. Assessee by : None Revenue by : Shri Deepak Kumar Kedia Date of hearing : 08.07.2025 Date of pronouncement : 14.07.2025 ITA No.1367/PUN/2025 Karia Realty 2 3. Assessee has raised following grounds of appeal : “1) On the facts and in the circumstances of the case and in law the honorable CIT (A) erred and is not justified in confirming addition made by Centralized Processing Center, Bangalore (CPC) of Rs.30,00,000/- while processing the Return of Income u/s 143(1) of the I. T. Act by treating the remuneration paid to partners as inadmissible u/s 40(b) of the IT Act without considering the fact that a) While uploading the Tax Audit Report, the amount of remuneration paid was mistakenly reported in the column of inadmissible head in clause no 21 whereas the same is admissible as per the provision of section 40(b) of the I. T. Act. b) The remuneration paid was within the limits prescribed under section 40(b) of the IT Act. The appellant hereby prays that the addition may please be deleted. 2) The appellant hereby reserves the right to add, amend, alter, delete, or raise any additional ground/s on or before the date of hearing.” 4. From perusal of the above grounds, I observe that the sole grievance of the assessee is that deduction for remuneration to partners at Rs.30.00 lakh has been denied for mentioning the amount under wrong head in the Tax Audit report which was for Inadmissible items rather than mentioning under Admissible Expenditure head for remuneration paid to partners allowable u/s.40(b) of the Act. I also observe that the order of ld.CIT(A) is exparte and has not dealt with merits of the case. Ld. Departmental Representative raised no objection if the matter is restored to the file of lower authorities for necessary adjudication. ITA No.1367/PUN/2025 Karia Realty 3 5. I have heard the ld. Departmental Representative and perused the record placed before me. Assessee is a partnership firm and return of income for A.Y. 2021-22 e- filed on 14.03.2022 and the same has been processed u/s.143(1)(a) of the Act on 02.11.2022. In the order processed u/s.143(1)(a) of the Act, claim of the assessee for remuneration paid to partners at Rs.30.00 lakh has been denied. On perusal of the grounds as well as the statement of facts, it is stated that the Tax Auditor is required to report about the remuneration paid to partners whether the same is ‘admissible’ or ‘inadmissible’ as per the provisions of section 40(b) or 40(b)(a) in clause 21 of Tax Audit report. It is further claimed that while uploading the Tax Audit, the amount of admissible and allowable remuneration paid has been mistakenly reported in the column of ‘Inadmissible head’ in clause 22 whereas the same is ‘admissible’ as per provisions of section 40(b). Under the given facts and circumstances, in my considered view, issues raised in the instant appeal regarding allowability of expenditure for remuneration paid to partners deserves to be restored to the file of ld. Jurisdictional Assessing Officer before whom assessee shall furnish copy of partnership deed, copy of corrected Audit Report and also other details required for verifying the claim of remuneration paid to partners allowable u/s.40(b) of the Act and after duly considering the same ld. JAO shall decide the issue in accordance with law. Needless to mention that ld. JAO shall afford reasonable opportunity of hearing to the assessee. Grounds of appeal raised by the assessee are allowed for statistical purposes. ITA No.1367/PUN/2025 Karia Realty 4 6. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced on this 14th day of July, 2025. Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 14th July, 2025. Satish आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब\u0014च, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune "