The Income Tax Appellate Tribunal (ITAT), Jaipur Bench ruled that the order of AO accepting suo-moto disallowance for bonus can not be held to be erroneous.
The assessee, Ajmer Zila Dugdh Utpadak Sahkari Sangh Ltd. filed the return declaring total income of Rs. 54,47,540.00 under section 139 of Act. The assessment was completed on returned income. Later on, notice under section 148 was issued & order under section 143(3) or 147 was passed by AO on returned income itself.
Thereafter, a show-cause notice under section 263 has been issued considering the assessment orders erroneous & prejudicial to revenue on the ground that claimed provision for bonus of Rs. 13,00,000 which was paid to the employees after due date of filing of return. Such amount is not allowable as per provisions of section 43B of the Income Tax Act, 1961 as the same was paid to the employees after the due date of filing of return of income. However, the AO failed to disallow the same during the assessment proceedings which makes the assessment order erroneous insofar as it is prejudicial to the interest of the revenue.
Regarding payment of bonus Rs. 13,00,000 considered disallowable u/sec. 43B, it was submitted that as per AO’s order u/sec. 143(3) of Act, the same has already been considered “disallowed” in terms of section 43B of Act and therefore, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of Revenue.
The coram of Sandeep Gosain and Vikram Singh Yadav while going through the computation of income, found the contention so advanced by the assessee as correct as an amount of Rs 13,00,000/- towards bonus has been suo-moto disallowed by the assessee while computing its income under the head “business income”.
Therefore, the ITAT held that the order so passed by the AO accepting the suo-moto disallowance of such provision for bonus cannot by any stretch of imagination be held to be erroneous and prejudicial in nature and hence, the findings of the CIT to this extent are set-aside.
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