Abhay Kumar Jha vs DCIT, Bengaluru (ITA 767/DEL/2021) – Case Filed on Grounds of Depreciation and Interest Disallowance

Abhay Kumar Jha vs DCIT, Bengaluru (ITA 767/DEL/2021)

Background

The case of Abhay Kumar Jha, New Delhi, against the DCIT, Bengaluru, pertains to the assessment year 2017-18. The appeal was filed on June 21, 2021, under case number ITA 767/DEL/2021. The final tribunal order was pronounced on September 30, 2022.

Facts of the Case

The appellant, Abhay Kumar Jha, filed appeals against the orders dated April 22, 2021, and April 24, 2021, by the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi, relating to the assessment years 2018-19 and 2017-18, respectively.

In the case for the assessment year 2017-18 (ITA No. 767/Del/2021), the appellant, as the proprietor of Elkosta Security System India and Millennium Meritech, had filed his return of income on October 26, 2017, declaring an income of Rs. 1,49,32,600/-. However, the Central Processing Centre (CPC) in Bengaluru determined the total income at Rs. 2,46,36,090/-, disallowing Rs. 96,41,926/- under section 43B of the Income-tax Act and an interest disallowance of Rs. 61,562/- on TDS.

Proceedings

The hearing for this case was conducted on September 26, 2022, before the Delhi ‘A’ Bench of the Income Tax Appellate Tribunal, with the order being pronounced on September 30, 2022. The case was presented by Shri Amit Goel, C.A., and Shri Pranav Yadav, Adv., representing the assessee, and Shri Kanav Bali, Sr. D.R., representing the revenue.

Legal Principles

The key legal principles in this case revolved around the provisions of sections 143(1) and 43B of the Income-tax Act. The primary contention was whether the disallowances made by the CPC in the intimation issued under section 143(1) were justified, especially concerning the amounts claimed under section 43B.

Judgment for Assessment Year 2017-18 (ITA No. 767/Del/2021)

The tribunal addressed the following major points in this case:

• The disallowance of Rs. 96,41,926/- under section 43B was primarily due to the CPC’s claim of delay in depositing statutory dues. However, the appellant contended that all dues were paid before the due date of filing the return of income. The tribunal found that the amounts were indeed paid on time, but were inadvertently reported under the wrong clause in the tax audit report due to an auditor’s error. Therefore, the disallowance was directed to be deleted.
• Regarding the disallowance of Rs. 61,562/- for interest on TDS, the tribunal upheld that no such disallowance was warranted as the interest was indeed paid.

Judgment for Assessment Year 2018-19 (ITA No. 766/Del/2021)

For the assessment year 2018-19, the appellant had filed the return of income on October 25, 2018, declaring a total income of Rs. 1,65,52,800/-. The CPC, in its intimation issued under section 143(1), determined the total income at Rs. 1,81,07,300/- with the following key points:

• The disallowance of Rs. 14,92,677/- under section 36(1)(va) for delay in depositing employee contributions towards PF/ESIC, which were actually paid before the due date of filing the return of income. The tribunal, referencing judicial precedents, directed the deletion of this disallowance.
• The addition of Rs. 61,818/- related to exempt income. The tribunal remanded the issue back to the Assessing Officer (AO) for verification and correction of any errors in reporting.
• The short credit of TDS amounting to Rs. 3,10,000/- was to be re-examined by the AO for appropriate credit.

Conclusion

In conclusion, the tribunal allowed both appeals (ITA Nos. 766 & 767/Del/2021) filed by Abhay Kumar Jha, directing the deletion of unwarranted disallowances and corrections in the income assessments as per the factual records and judicial principles.

The detailed judgment highlights the importance of accurate reporting in tax audits and the necessity of substantiating any disallowances with concrete evidence. The tribunal’s decision serves as a critical reference for similar cases involving statutory dues and procedural errors in tax filings.

Abhay Kumar Jha vs DCIT, Bengaluru (ITA 767/DEL/2021) – Case Filed on Grounds of Depreciation and Interest Disallowance