Plea for Deduction of Professional and Salary Expenses u/s 201 of Income Tax Act: ITAT Condones Delay of 85 Days [Read Order]

The Surat Bench of Income Tax Appellate Tribunal (ITAT) in the absence of deliberate or intentional or gross negligence and hence condoned the delay of 85 days and allowed the plea for deduction of professional and salary expenses under proviso to Section 201 of the Income Tax Act,1961.

The Central Processing Centre (CPC), Bangalore while processing the return of assessee Nimesh Kanubhai Topiwala, made disallowance under Section 40(a)(ia) of the Income Tax Act at the rate of 30% of professional fees and salary expenses, reported in audit report for want of deduction of tax at source (TDS).

The assessee filed application under Section 154 of the Income Tax Act for rectification of such mistakes. The application of assessee was rejected but was not communicated to the assessee by way of SMS alert. The assessee has not seen their e-mail,while filing return of income for subsequent assessment year, the assessee and his Chartered Accountant came to know about rejection of application under Section 154 of Income Tax Act by the CPC.

The appeal of assessee was dismissed by the CIT (A) without giving any show cause notice to explain the cause of delay in filing appeal. Aggrieved by the order, the assessee filed an appeal before the ITAT.

The Authorised Representative (AR) of the assessee Unmesh Dalal, stated that the delay in filing appeal before the CIT(A) was neither intentional nor deliberate rather due to the fact that such order never came to the notice of assessee. Furthermore the assessee submitted that the expenses of salary and professional fees, 30% should be allowed as the assessee is eligible for benefit of Proviso to Section 201 of the Income Tax Act and the assessee fulfilled all four conditions that;

• the recipient has furnished return of income within due date,
• the recipient has taken into account such sum for computing income in such return of income and
• has paid due tax on the income declared by him in such return of income and
• Furnished a certificate to this effect in prescribed format.

Thus, the assessee is entitled for such deduction of professional and salary expenses.

The Departmental Representative for the revenue Vinod Kumar, submitted that the assessee is taking lame excuse that no SMS alert was received or that the assessee was not aware about passing of rectification order by CPC. The affidavit of assessee does not disclose such fact. The DR relied on the decision of the Apex Court in the case of Majji Sannemma Vs Reddy Sridevi & Ors.

The Single member Bench of Pawan Singh, Judicial Member observed that there was only delay of about 85 days in filing appeal before CIT (A) and is not deliberate or intentional or gross negligence on part of assessee, therefore, considering the principle that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred, therefore, delay in filing appeal before the CIT (A) is condoned.

Hence the appeal was restored back to CIT (A) for readjudicating the plea of benefits of proviso to Section 201 of the Income Tax Act and the assessee was directed to furnish complete details, explanation, evidence and submission before the CIT (A) to substantiate the grounds of appeal.

To Read the full text of the Order CLICK HERE

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