Enhancement of Disallowance u/s 43B of Income Tax Act made Voluntarily: Delhi HC confirms Penalty Order of ITAT [Read Order]

The Delhi High Court confirmed penalty of the Income Tax Appellate Tribunal (ITAT), on the ground of enhancement of disallowance under Section 43B of Income Tax Act, 1961 made voluntarily.

The Tribunal via the impugned order has set aside the penalty levied on the respondent/assessee under Section 271(1)(c) of the Income Tax Act,1961 amounting to Rs.14,31,07,613/-. The Assessing Officer (AO) had levied the said amount as penalty on account of disallowance under Section 43B of the Income Tax Act.

Aseem Chawla, senior standing counsel, who appeared on behalf of the appellant/revenue, argued that the order of the Tribunal is not sustainable, in view of the fact that the disallowance said to have been made “voluntarily” by the respondent/assessee under Section 43B of the Income Tax Act, was triggered on account of notices issued under Section 143(2) and/or Section 142(1) of the Income Tax Act.

On the other hand, Abhimanyu Jhamba, who appeared on behalf of the respondent/assessee, contended to the contrary.

Clearly the respondent/assessee had enhanced the disallowance under Section 43B of the Income Tax Act from Rs.6,08,64,813/- to Rs.48,18,93,419/- suo motu. This course-correction was carried out with the submission of a revised tax audit report, which led to a revised return being filed via online mode as well as physically.

The online revised ROI was filed on 29.08.2016 which was followed by a physical filing on 01.09.2016. The Tribunal noted that there is no dispute about the fact that a specific query with regard to the issue concerning disallowance under Section 43B of the Income Tax Act was raised by the AO for the first time via notice issued under Section 142(1) of the Income Tax Act.

A Division Bench comprising Justices Rajiv Shakdher and Girish Kathpalia noted that “Thus, given the aforesaid, it cannot be said that the enhancement of disallowance under Section 43B of the Income Tax Act carried out by the respondent/assessee was not voluntarily. Thus, for the forgoing reasons, we are not inclined to interdict the decision of the Tribunal. According to us, no substantial question of law arises for our consideration.”

To Read the full text of the Order CLICK HERE

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