Section 43B Deduction Cannot Be Lost Due to Inadvertent Non-Claim in Return – ITAT Gives Fresh Opportunity to Verify Property Tax Payment

Parijat Hotels Private Limited Vs ITO (ITAT Pune)

Section 43B Deduction Cannot Be Lost Due to Inadvertent Non-Claim in Return – ITAT Gives Fresh Opportunity to Verify Property Tax Payment

The Pune ITAT held that a genuine claim under section 43B deserves verification even if it was not specifically claimed in the original return, particularly where the assessee demonstrates that the expenditure had been disallowed in earlier years and was actually paid during the relevant year.

The assessee-company sought deduction of ₹49.24 lakh towards property tax paid to the Pune Cantonment Board. The claim was made through a rectification application under section 154 on the ground that the deduction had inadvertently not been claimed in the return for AY 2021-22 despite actual payment having been made during FY 2020-21. CPC rejected the application, observing that no such claim was made in the original ITR and therefore there was no apparent mistake capable of rectification. The CIT(A) affirmed this view.

Before the Tribunal, the assessee contended that the property tax liability had been suo motu disallowed under section 43B in earlier assessment years and became allowable only upon actual payment during FY 2020-21. It was further explained that due to the disruptions caused during the COVID-19 period and inadvertence, the deduction was omitted from the return before CPC processed it. Supporting documents, including payment receipts from the Pune Cantonment Board and earlier years’ returns, were placed on record.

Considering the peculiar facts and the practical difficulties arising during the COVID period, the Tribunal deemed it appropriate to restore the matter to the Jurisdictional Assessing Officer. The AO was directed to verify whether the property tax had indeed been disallowed in AYs 2018-19 and 2019-20 and whether actual payment was made during FY 2020-21. If the claim was found to be correct, the deduction under section 43B was directed to be allowed.

FULL TEXT OF THE ORDER OF ITAT PUNE

The captioned appeal at the instance of assessee pertaining to A.Y. 2021-22 is directed against the order dated 22.08.2025 framed by Addl./JCIT(A)-1, Coimbatore arising out of Rectification Order dated 24.11.2023 passed u/s.154 of the Income Tax Act, 1961 (in short ‘the Act’).

2. The sole grievance of the assessee is that the claim of deduction u/s.43B of the Act at Rs.49,23,855/- has not been allowed by the Revenue authorities.

3. We have heard the rival contentions and perused the record placed before us. We observe that the assessee is a Private Limited and return of income for A.Y. 2021-22 has been filed on 05.02.2022 and the returned income at Rs.61,05,900/- has been accepted by the CPC. Subsequently, assessee filed application u/s.154 of the Act claiming that valid claim of deduction u/s.43B of the Act for the property tax payment made to Pune Cantonment Board totalling to Rs.49,23,855/- has not been allowed. However, Ld. Assessing Officer rejected his application stating that there is no apparent mistake in the order of CPC as no such claim has been made in ITR. Before ld.CIT(A) also assessee failed to succeed as ld. CIT(A) has also observed that there is no apparent mistake in the intimation order u/s.143(1)(a) of the Act and further, assessee has not filed revised return making such claim.

4. So far as merits of the case are concerned, it has been admitted by the Revenue authorities that certain disallowances u/s.43B of the Act were suo motu made by the assessee during A.Y. 2018-19 and 2019-20 and thereafter when the assessee had made the payment during F.Y. 2020- 21. Due to covid-19 pandemic restrictions period and due to mere ignorance valid claim could not be made and prior to revising the return CPC has already processed the original return. Assessee has filed copy of receipt issued by Pune Cantonment Board placed at pages 30 to 35 of the paper book. Copy of Income-tax returns for A.Y. 2018-19 and 2019-20 are also placed before us. Books of account of the assessee are duly audited.

5. Under these given facts and circumstances and in the larger interest of justice and considering the practical problems faced by the assessee during covid-19 pandemic period, we deem it proper to afford one more opportunity to the assessee by remitting the issues raised in the instant appeal to the file of ld. Jurisdictional Assessing Officer for the limited purpose of verifying the assessee’s claim of deduction u/s.43B of the Act for the payment made to Pune Cantonment Board during F.Y.2020-21 and also to verify whether assessee had made disallowance in the computation of income for A.Y. 2018-19 and A.Y. 2019-20 as claimed before us. Further after due verification, if the claim of the assessee is found to be correct, then ld. JAO shall allow the same. Effective grounds of appeal raised by the assessee are allowed for statistical purposes.

6. In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on this 16th day of February, 2026.