Roopa Rana Vs DCIT (ITAT Delhi)
In a notable ruling, the Income Tax Appellate Tribunal (ITAT) Delhi Bench has sided with the assessee, Roopa Rana, against the Deputy Commissioner of Income Tax (DCIT) regarding a disallowance of business expenditure. The ITAT’s decision underscores that the lack of GST registration of payees alone is not a sufficient ground for disallowing business expenses under Section 37(1) of the Income Tax Act, 1961, especially when genuineness and Tax Deducted at Source (TDS) compliance are established.
The appeal was filed by Roopa Rana against an order dated November 3, 2023, from the National Faceless Appeal Centre (NFAC), which upheld an addition of Rs. 49,48,880/- made by the Assessing Officer (AO) for the assessment year 2018-19. The assessee, engaged in construction, maintenance, improvement, and development of civil and constructional works, had declared a total income of Rs. 60,340/- in her return.
The core of the dispute originated during the e-assessment scrutiny, where the AO flagged “Expenses Relating to entities not Registered under GST.” Despite the assessee submitting replies to notices under Sections 143(2) and 142(1) of the Income Tax Act, the AO proceeded to disallow the aforementioned amount. The NFAC, relying on a decision by the Kerala High Court in Ram Bahadur Limited vs. CIT, upheld the AO’s addition, leading to the current appeal before the ITAT.
