Deduction U/s 43B Shall Be Allowed If Assessee Has Claimed Such Deduction On Payment Basis: Rajkot ITAT

The Rajkot ITAT held that the claim of the assessee cannot be denied as it was not reported in the tax audit report, especially in the circumstances where other evidence is available on record suggesting the deduction in pursuance to the provisions of section 43B on payment basis is available. The Bench of the ITAT comprising of TR Senthil Kumar (Judicial Member) and Waseem Ahmed (Accountant Member) observed that “the tax audit report is a significant piece of evidence/ document but based on that the genuine claim of the assessee cannot be denied especially in the circumstances when other details are available on records. As such the assessee has claimed deduction u/s 43B of the Act on payment basis and therefore in our considered view, the same should have been allowed by the authorities below.” (Para 8) As per the brief facts of the case, the assessee has claimed deduction u/s 43B in the computation of income amounting to Rs. 47,83,396/- which was disallowed in the intimation generated u/s 143(1). It was disallowed on the reasoning that the claim made in the income computation did not match the tax audit report. Thus, the addition was made for the sum of Rs. 47,83,396/- to the total income of the assessee. The CIT(A) also confirmed the addition made by the AO. The Bench noted that the basis of making the disallowance is that such a deduction was not claimed in the tax audit report. The Bench stated that the income of the assessee should not be over-assessed even if the assessee makes a mistake. The Bench further stated that the legitimate deduction to which the assessee is entitled should be allowed while determining the taxable income. The Bench reiterated while referring to the decision of Gujarat High Court in the case of S.R. Koshti Vs. CIT reported in 276 ITR 165 that 'regardless of whether the revised return was filed or not, once an assessee is in a position to show that the assessee has been over-assessed under the provisions of the Act, regardless of whether the over-assessment is as a result of assessee's own mistake or otherwise, the CIT has the power to correct such an assessment under section 264(1) of the Act. If the CIT refuses to give relief to the assessee, in such circumstances, he would be acting de hors the powers under the Act and the provisions of the Act and, therefore is duty-bound to give relief to an assessee, where due, in accordance with the provisions of the Act.' Therefore, ITAT allowed the assessee's appeal. Counsel for Appellant/Taxpayer: DM Rindanil Counsel for Respondent/Department: Ashish Kumar Pandey Case Title: Maruti Enterprise verses ADIT Case Number: ITA No. 10/Rjt/2023 Click here to read/download the Order

Deduction U/s 43B Shall Be Allowed If Assessee Has Claimed Such Deduction On Payment Basis: Rajkot ITAT

Pankaj Bajpai

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