No Evidence for HRA Claim and Full School Fee Payment: ITAT rejects Claims u/s 10(13A) and 80C [Read Order]

The Hyderabad Bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the appeals of a taxpayer who failed to furnish evidence for House Rent Allowance (HRA) exemption claim and Section 80C deductions of Income Tax Act, 1961.

The income tax department conducted a search and seizure operation at the Ira Group for 2020-21 Assessment Year. This triggered reassessment proceedings where the Assessing Officer scrutinized the taxpayer's original claims of ₹1.5 lakh under Section 80C and an HRA exemption of ₹1.08 lakh.

The taxpayer-appellant-assessee, Veera Reddy Posham only produced school fee receipts totaling ₹1.15 lakh. Therefore, the AO restricted the Section 80C deduction to the verified amount and disallowed the excess ₹35,000.

However, it is to be noted that the entire HRA claim was disallowed because the assessee failed to submit a single rent receipt or any other document to prove that rent was actually paid.

Thus, the taxpayer approached the Commissioner of Income Tax (Appeals), asserting that the tuition fees and rent were genuine expenses that the department failed to verify properly.

However, this argument lost steam as he failed to appear for hearings or provide the necessary paperwork despite receiving multiple notices.

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The CIT(A) upheld the original assessment, observing that a taxpayer cannot expect tax relief if they fail to discharge their legal duty to provide credible evidence for their claims.

When the matter reached the ITAT, it was observed that the assessee again failed to appear or present any material to demonstrate that the disallowed amounts were legitimate.

The Bench of Madhusudan Sawdia (Accountant member) and Vijay Pal Rao (Vice President) noted that the Officer had been fair in allowing the Section 80C deduction to the extent of the receipts actually provided.

Regarding the HRA, the Tribunal found no reason to interfere, as claiming an exemption for rent without producing single evidence is legally unsustainable.

Therefore, the ITAT upheld the disallowances of ₹35,000 under Section 80C and ₹1.08 lakh under Section 10(13A).

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