Kishore Bhagwandas Ramnani Vs ITO (ITAT Mumbai)
In the case of Kishore Bhagwandas Ramnani Vs. ITO (ITAT Mumbai), the assessee appealed against the Dispute Resolution Panel’s (DRP) dismissal of objections regarding the disallowance of expenses claimed during scrutiny assessment. The DRP had cited the original Form 35A’s lack of signature by the authorized representative and deemed the subsequent filing of Form 35A as beyond the time limit. However, the ITAT found that the original Form 35A was filed within the stipulated time and ruled that the correction made thereafter should not be considered late. Consequently, the ITAT allowed the appeal, directing the assessing officer to verify the claimed expenses based on the provided agreement and bank statement, thereby granting relief to the assessee.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee is directed against the order passed by the ld. CIT(DRP-1), Mumbai, dated 28.06.2023 for A.Y. 202021. The assessee has raised the following grounds before us:
“1. The Dispute Resolution Panel erred in not entertaining the objections filed by the Appellant in Form No. 35A.
2. The Dispute Resolution Panel failed to appreciate that Form No. 35A filed by the Appellant (and signed by CA. Ms. Priyanka Jain) on 17. 10.2022 was in accordance with the law, and therefore, the Dispute Resolution Panel erred in issuing the notice dated 06.04.2023 to the Appellant purporting to treat the said CA. Ms. Priyanka Jain as the ‘agent of the Appellant for the purpose of section 163(1) of the Act.
3. Without prejudice to the above, the Dispute Resolution Panel erred in treating Form No. 35A filed by the Appellant (and signed by him) on 19.05.2023 as ‘not filed’/ ‘filed beyond time, and hence, dismissing the objections filed by the Appellant in limine. The Dispute Resolution Panel failed to appreciate that by the Form No. 35A filed on 19.05.2023, the Appellant only cured the defect, if any, in original Form No. 35A filed on 17.10.2022, and hence, Form No. 35A ought to be treated as filed on 17.10.2022 i.e. within time.
4. Without prejudice to the above, the Dispute Resolution Panel erred in dismissing the objections filed by the Appellant on technical grounds and without issuing any directions on the merits of the matter.
5. Rs. 17,88,000/- disallowed as per order under section 143(3) r.w.s. 144C (13) of the Income Tax Act, 1961 are stamp duty charges Rs. 17,58,000/- and Rs.30,000/- registration fees borne by the assessee and hence the same may please be allowed as expenses.
6. Rs 2,20,000/- disallowed as per order under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 are Society Transfer Fees paid by the assessee. Same are reflected in his bank account and hence may please be allowed as expenses.”
2. Fact in brief is that return of income declaring total income of Rs.58,76,500/- was filed on 28.07.2020. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 29.06.2021. During the year under consideration the assessee was having income from capital gains and income from other sources. As per the computation submitted by the assessee, the assessee has shown long term capital gain of Rs.104,07,700/- on sale of immovable property i.e flat no. 406, 4th Floor, Shimla House Cooperative Society, Malabar & Kumhala Hill Division, Mumbai on 06.08.2019 for Rs.2,93,00,000/-. Out of the capital gain of Rs.104,07,700/- the assessee has invested Rs.50,00,000/- in the capital gain bond scheme as per Sec. 54EC of the Act and offered tax on remaining capital gains of Rs.54,07,700/-. On verification of the detail filed the assessing officer noticed that assessee has claimed deduction of Rs.17,58,000/- and Rs.30,000/- pertaining to stamp duty and registration charges of Rs.2,20,000/- in respect of society transfer fees paid by the assessee out of the aforesaid capital gain amount. The assessing officer has disallowed the claim of aforesaid expenses on the ground that assessee has not furnished the supporting document regarding making payment of aforesaid expenditure claimed by the assessee.
