ITO Vs Svadeshi Enterprises (ITAT Mumbai)
The appeals filed by the Revenue and the Cross Objection filed by the assessee arose from the order of the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre for Assessment Year 2014-15, relating to an assessment framed under Section 143(3) of the Income-tax Act, 1961.
In the Revenue’s appeal, the issue was whether the CIT(A) was justified in allowing deduction of ₹3 crore claimed by the assessee as liability towards payment for vacating occupants/tenants. The Assessing Officer had disallowed the claim, treating it as a contingent liability and observing that the assessee had provided an additional amount of ₹3 crore in FY 2013-14 and that the matter was under litigation, thereby not constituting an ascertained or accrued liability. The CIT(A), however, deleted the addition, holding that the liability to incur the expense was established during the relevant previous year and that the deduction was rightly claimed.
Before addressing the Revenue’s grounds, the Tribunal considered the assessee’s Cross Objection challenging the validity of the assessment on jurisdictional grounds. The Cross Objection was delayed by 174 days. The assessee explained that the delay occurred due to an inadvertent oversight by its accountant and was not intentional. Relying on the Supreme Court decision in Collector, Land Acquisition v. Mst. Katiji, the Tribunal condoned the delay, observing that a litigant should not suffer for a bona fide mistake.
