In a significant ruling, the Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has dismissed an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) CIT(A), which had granted relief to Fitrite Packers, a Mumbai-based partnership firm engaged in manufacturing biscuit and confectionery wrappers for the Parle Group.
The dispute pertained to the Assessment Year ( AY ) 2020-21, where the Revenue challenged the CIT(A)’s decision to allow the assessee’s appeal against disallowances made during the processing of its income tax return.
The case arose when the Central Processing Centre (CPC), Bengaluru, processed the assessee’s return under Section 143(1) of the Income Tax Act, 1961, and made two adjustments to the total income. The first adjustment was a disallowance of Rs. 1,000 under Section 37 for penalties or fines, and the second was an addition of Rs. 4.10 crore for a contingent liability reported in the tax audit report.
879-Day Delay in Appeal Filing: ITAT Dismisses Appeal for Lack of Sufficient Cause
The assessee contested these adjustments before the CIT(A), arguing that the Rs. 1,000 disallowance had already been added back in the return and that the contingent liability was merely a disclosure in the financial statements, not claimed as a deduction.
The CIT(A) ruled in favor of the assessee, noting that the Rs. 1,000 disallowance amounted to a double addition, as it had already been accounted for in the return. Regarding the contingent liability, the CIT(A) found that it was an inadvertent error in the tax audit report and had no bearing on the profit and loss account or the computation of income.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The Revenue appealed this decision, contending that the CIT(A) had admitted additional evidence without giving the Assessing Officer (AO) an opportunity to examine it, in violation of Rule 46A of the Income Tax Rules, 1962.
Lack of Knowledge of E-Filing System: ITAT Condones 1030-Day Delay
The ITAT, comprising Judicial Member Shri Rahul Chaudhary and Accountant Member Shri Girish Agrawal, upheld the CIT(A)’s order. The tribunal observed that the documents relied upon by the CIT(A) were already part of the records uploaded by the assessee during the filing of the return and could not be classified as additional evidence.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The ITAT found no infirmity in the CIT(A)’s findings and dismissed the Revenue’s appeal, emphasizing that the disallowances lacked merit.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
