Judgment Summary for Viraj Exports Pvt. Ltd. vs Circle – 26(2) Delhi – ITA No. 857/Del/2022

Date of hearing: 07.09.2022
Date of Pronouncement: 13.09.2022

Introduction

This detailed judgment summary concerns an appeal filed by Viraj Exports Pvt. Ltd., the appellant, against an order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2018-19.

Background

The core of the dispute lies in the intimation under section 143(1) of the Income Tax Act sent by CPC, Bangalore, determining the appellant’s total income significantly higher than declared, due to a disallowance made under section 43B of the Act.

Appeal Grounds

The appellant challenged the CIT(A)’s order, primarily contending that the disallowance of ‘Unpaid Leave Encashment’ was erroneous and resulted in a double disallowance under sections 40A and 43B of the Act. These actions, they argued, were both legally and factually incorrect.

Arguments Presented

The appellant’s representative highlighted that the initial disallowance had been self-imposed by the assessee under a mistaken section and that the subsequent intimation repeated the disallowance under the correct provision, leading to an unjust double penalty.

Conversely, the Departmental representative suggested remanding the matter to the Jurisdictional CIT(A) for verification of these claims.

Tribunal’s Decision

The Tribunal, led by Sh. Anil Chaturvedi, sided with the appellant on the need for reevaluation of the claimed double disallowance. It was decided that the issue would be sent back to the CIT(A) for thorough reexamination and confirmation of the appellant’s claims. The order specified that if the claim of double disallowance by the assessee was found legitimate, rectification was warranted.

Conclusion and Impact

The Tribunal’s directive to revisit the case opens a pathway for correcting potential errors in the assessment process. It underscores the importance of precise application of tax laws and the right of appellants to seek redressal against procedural oversights. This decision may influence future cases where double disallowance is contested, ensuring a more accurate enforcement of tax provisions.

Final Order

Ultimately, the appeal was allowed for statistical purposes, indicating a positive outcome for Viraj Exports Pvt. Ltd. This judgment reinforces the appellate process as a critical mechanism for taxpayers to challenge and rectify assessment errors.

Judgment Summary for Viraj Exports Pvt. Ltd. vs Circle – 26(2) Delhi – ITA No. 857/Del/2022