The Income Tax Appellate Tribunal (ITAT) Pune Bench has ruled in favor of the assessee, holding that the delay in filing the audit report was reasonable and should not have led to the disallowance of the deduction under Section 80IAC of the Income Tax Act, 1961.
The tribunal directed the deletion of the addition made by the Assessing Officer (AO), bringing significant relief to the legal heir of the deceased assessee, Roshan A. Kudalkar.
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The appeal was filed by Swaroop R. Kudalkar, the legal heir of the deceased assessee, challenging the order of the Commissioner of Income Tax (Appeals)-NFAC for Assessment Year 2015-16. The main grievance was the CIT(A)’s dismissal of the appeal due to a 46-day delay in filing Form 35, without granting an opportunity to explain the delay. Additionally, the AO had made an addition of Rs. 28.57 lakhs, alleging a discrepancy in the closing stock, which was upheld by the CIT(A) without properly examining the facts.
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The assessee’s counsel, Bhuvanesh Kankani, argued that the delay in filing the appeal occurred due to the assessee’s death in 2021 and his prior illness. Despite submitting a condonation request, the CIT(A) dismissed the appeal without considering the genuine hardship faced by the assessee’s family. Furthermore, the AO had arbitrarily added the difference in closing stock between two assessment years without providing a valid basis for the addition. The counsel contended that the assessee’s business a petrol pump was under strict monitoring by the supplying company, making any manipulation in stock valuation highly improbable.
The Revenue, represented by Shraddha Nichai, defended the order of the CIT(A) and AO, arguing that the delay was procedural and that the assessee had failed to provide necessary evidence regarding the stock discrepancy.
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After reviewing the case, the bench comprising Astha Chandra (Judicial Member) and Dr. Dipak P. Ripote (Accountant Member) found that the CIT(A) erred in dismissing the appeal without granting an opportunity to the legal heir to explain the delay. The ITAT also observed that the AO had not considered the audit report while making the stock addition, nor had he cited any provision of the Act to justify the addition. As a result, the tribunal deleted the Rs. 28.57 lakh addition and directed the AO to allow the assessee’s claim under Section 80IAC.
In conclusion, the appeal was partly allowed.
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