This article examines the Income Tax Appellate Tribunal’s decision in the case of Harvansh Chawla vs. ACIT, Central Circle-5, New Delhi, concerning the assessment year 2011-12. The decision, pronounced on September 9, 2021, addresses significant disallowances including depreciation and interest expenses which were contested by the appellant.
The case arose from disallowances made during assessments following a search and seizure operation. The tribunal’s decision revolves around the application of legal precedents and the interpretation of statutory provisions concerning the linkage of disallowances with incriminating material discovered during the search.
The tribunal referenced key judgments, including the landmark Kabul Chawla case, to conclude that disallowances made by the assessing officer must have a direct nexus with incriminating materials found during the search to be sustainable under the law. This principle guided the tribunal’s decision to delete the additions made in the absence of such a connection.
The ITAT’s decision in ITA 763/DEL/2021 sets a precedent on handling similar cases where additions are made without direct incriminating evidence. This article explores the implications of this decision for taxpayers and practitioners dealing with related legal frameworks.
Harvansh Chawla vs. ACIT, Central Circle-5: Tribunal’s Decision on Disallowances in ITA 763/DEL/2021
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