Disallowance of Excess Deductions and House Property Loss in Revised Returns: ITAT Sets Aside Order FAA’s Order [Read Order]
Before the tribunal, the assessee counsel argued that the original return should be considered and relied on the tribunal’s earlier decision in Ramesh Venkateswamy vs. ITO, where similar relief was granted
Deductions - House Property - ITAT - FAA - taxscan
Deductions - House Property - ITAT - FAA - taxscan
The Chennai Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the order of the First Appellate Authority (FAA) and directed the Assessing Officer (AO) to consider the original return while deciding the case involving disallowance of excess deductions and house property loss claimed in revised returns for Assessment Year (AY) 2020-21.
Gunapalan Mallinathan,appellant-assessee,was an ex-employee of Bharat Heavy Electrical Limited (BHEL). For the assessment year 2020-21, he filed his return on 26.06.2020, declaring an income of ₹20,86,760 after claiming deductions and house property loss. On 22.05.2021, he filed two revised returns on the same day, showing lower incomes by increasing deductions and house property loss, which resulted in refund claims.
The case was taken up for scrutiny, and the AO asked for proof of the claims. The assessee failed to submit any documents and later requested to ignore the revised returns. The AO disallowed the excess deductions and house property loss and assessed the income at ₹25,57,969.
The assessee appealed before the FAA, which dismissed the appeal on 15.10.2024. The FAA upheld the AO’s findings, enhanced the disallowances, and observed that the revised claims were inflated and unsupported by evidence.
Aggrieved by the FAA’s order, the assessee filed the present appeal before the tribunal.
The assessee counsel argued that the FAA had wrongly confirmed the additions for excess deductions under Chapter VI-A and disallowed the house property loss. The counsel requested that the original return be considered instead of the revised returns and stated that the issue was already covered in favour of the assessee by the tribunal’s order in Ramesh Venkateswamy vs. ITO (ITA No.1068/CHNY/2024) dated 26.07.2024.
The departmental representative contended that the FAA’s order was correct, well-reasoned, and supported by facts and law, and argued that the appeal should be dismissed.
The two member bench comprising George George K (Vice President ) and Amitabh Shukla (Accountant Member) heard both sides and reviewed the records. It noted that the assessee, an ex-employee of BHEL, had filed the original return based on Form 16 but later filed revised returns on wrong advice, increasing deductions and house property loss.
During scrutiny, the assessee requested the AO to consider the original return, but the AO rejected the request and completed the assessment based on the first revised return. The FAA further enhanced the additions using the second revised return.
Before the appellate tribunal, the assessee counsel again requested consideration of the original return. The ITAT observed that, in a similar case of Ramesh Venkateswamy vs. ITO, it had directed the AO to accept the original return and recompute the income.
Following the same view, the tribunal set aside the FAA’s order and restored the matter to the AO to decide as per law.
Accordingly the appeal is allowed for statistical purposes.
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