The Income Tax Appellate Tribunal (ITAT) in Mumbai has directed a reassessment of a disputed tax deduction claimed by the assessee under the Direct Taxes Vivad Se Vishwas (VSV) Scheme.
The revenue has appealed against the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment year (AY) 2020-21.
The assessee filed its income tax return for AY 2020-21, declaring an income of Rs. 30.86 crores and claiming a deduction of Rs. 2.74 crores under the VSV Scheme. The deduction was related to tax arrears for AY 2013-14 and AY 2014-15, which were settled under the VSV Scheme in AY 2020-21.
The Assessing Officer (AO) disallowed the deduction, arguing that the amounts pertained to earlier assessment years and could not be claimed in AY 2020-21. The AO also noted that the issue should be decided by the Commissioner of Income Tax (Appeals) [CIT(A)].
Step by Step Guidance for Tax Audit & E-filing, Click Here
The assessee, who was aggrieved by the impugned order, appealed before the CIT(A), which yielded favorable results, and held that since the income related to AY 2013-14 and AY 2014-15 had already been voluntarily offered as income in AY 2015-16, allowing the deduction in AY 2020-21 would amount to double taxation.
The counsel on behalf of the department contended that there was no evidence on record to show that the disputed incomes for AY 2013-14 and AY 2014-15 had been voluntarily offered as income in AY 2015-16. The department also contended that deductions for earlier assessment years could not be claimed in AY 2020-21.
The ITAT noted that several critical issues had not been adequately addressed by either the AO or the CIT(A) such as whether the disputed incomes for AY 2013-14 and AY 2014-15 had indeed been offered as income in AY 2015-16, whether the profits from these incomes were taxed in AY 2015-16, and whether the audit report for AY 2015-16 mentioned the admission of prior-year incomes.
ITAT observed that the status of appeals filed before the CIT(A) for AY 2013-14 and AY 2014-15 was not clear from the orders.
Step by Step Guidance for Tax Audit & E-filing, Click Here
The ITAT remitted the case back to the AO for a fresh hearing and adjudication.
The ITAT, comprising Kavitha Rajagopal (Judicial Member) and Omkaraeshwar Chidara (Accountant Member), allowed the department’s appeal for statistical purposes.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
