ITAT Remands Case as Fresh Claim Cannot Be Rejected Solely Due to Delay

Sunanda Polymers LLP Vs DCIT (ITAT Mumbai)

The appeal before the Income Tax Appellate Tribunal (ITAT), Mumbai concerned the assessee’s claim for deduction under Section 32AC(1A) amounting to ₹19,11,38,877, raised for the first time during appellate proceedings for Assessment Year 2015–16. The assessee had made investments in new plant and machinery aggregating to ₹127,42,59,17 during the specified period but did not claim the deduction in the original or revised return due to an asserted oversight.

During appellate proceedings, the Commissioner (Appeals) admitted the additional ground relying on judicial precedents permitting fresh claims at the appellate stage. A remand report was obtained from the Assessing Officer (AO), who, while objecting to admissibility on legal grounds, verified voluminous documents such as invoices, delivery challans, and installation details, and found them consistent with the books of account.

However, the Commissioner (Appeals) rejected the claim on merits, citing delay, difficulty in verification due to lapse of time, and an inference that the claim was deliberately raised at the appellate stage to avoid scrutiny. It was held that verification of whether assets were new, installed, and used for business purposes was not feasible after several years.

Before the Tribunal, the assessee contended that once the additional ground was admitted, it had to be adjudicated on merits based on evidence. It argued that the AO had already verified documents in the remand proceedings and that depreciation allowed on the assets supported their existence and use. The assessee also challenged the adverse observations regarding alleged “design” as unsupported.