ITAT Ahmedabad Allows HRA Claim and Condonation of Delay

Nikhil Vinodchandra Shah Vs DCIT (ITAT Ahmedabad)

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, in the case of Nikhil Vinodchandra Shah versus the Deputy Commissioner of Income Tax (DCIT), has ruled in favor of the assessee, allowing the appeal and condoning a significant delay in filing. The primary contention revolved around the disallowance of House Rent Allowance (HRA) exemption by the Centralized Processing Centre (CPC) and the subsequent dismissal of the assessee’s appeal by the National Faceless Appeal Centre (NFAC) on grounds of limitation.

The case originated from an intimation issued under Section 143(1) of the Income Tax Act, 1961, for the assessment year 2020-21, which included an adjustment of Rs. 7,79,840/- by disallowing the claim for house rent allowance under Section 10(13A). The assessee, a salaried individual, contested this disallowance, asserting that the claim was well within the parameters of Rule 2A of the Income Tax Rules.

Following the intimation dated October 18, 2021, the assessee engaged in a series of attempts to seek redressal from the revenue authorities. These efforts included filing a grievance petition on July 4, 2022, and subsequent rectification and further grievance petitions dated April 15, 2024, April 12, 2024, May 8, 2024, and May 15, 2024. Despite these multiple applications, the assessee reported no satisfactory resolution to the issue. Consequently, an appeal was filed before the Joint Commissioner of Income Tax (Appeals)-1, Jaipur, National Faceless Appeal Centre, on August 29, 2024.