Depreciation Claim Disallowed Due to Error: ITAT Remands Matter to AO [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) remanded matter to the Assessing Officer ( AO ) after observing that a depreciation claim, disallowed due to an error, had been allowed in both preceding and succeeding years.

Safikahmed Mehamudali Ansari, appellant-assessee, challenged the order dated 30.07.2024 passed under Section 250 of the Act by Commissioner of Income Tax (Appeals)[CIT(A)],National Faceless Appeal Centre [NFAC], for Assessment Year (AY) 2018-19.

The assessee raised grounds of appeal, arguing that the assessment order issued under Section 154 of the Income-tax Act and upheld by the first appellate authority under Section 250 was invalid and unjustified. Additionally, it was claimed that the addition of ₹20,63,673, arising from the disallowance of the depreciation claim, was erroneous and should have been reversed.

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Section 154 of the Act, allows the rectification of clerical, arithmetical, or factual errors in orders passed under the Act. The Assessing Officer (AO) or Commissioner of Income-tax (CIT) can correct such mistakes on their own or upon the taxpayer's application, within four years from the end of the financial year in which the order was passed. The taxpayer is given a chance to present their case before the rectification. However, this section does not cover errors requiring detailed investigation or debatable issues, which are dealt with through the appeal process.

The two member bench comprisingDr.BRR Kumar(Vice President) and  Suchitra Kamble(Judicial Member) observed that the assessee's counsel submitted that the depreciation claim, which was allowed in both the preceding and succeeding years, had been disallowed in the relevant year due to an error.

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The tribunal remanded the matter to the Assessing Officer (AO) to reassess the depreciation claim in light of its allowance in other years and to issue a fresh order under Section 154 in accordance with the Income-tax Act.

In short,the appeal filed by the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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