2020 (8) TMI 723 - AT - Income Tax

ITAT Reverses CIT's Decision, Emphasizes Reasoned Order & Fair Assessment

The ITAT overturned the dismissal of the appeal by the Ld. CIT (A) for not filing electronically, emphasizing the requirement for a reasoned order. It ... Dismissal of appeal as not filling appeal in electronic form - assessee before the Ld. CIT (A) had to be filed manually on 29.04.2016 by the assessee because, as per the assessee, e-portal for filing the appeals was not functioning properly - HELD THAT:- Contention of the assessee is supported by the Circular issued by the CBDT dated 26th May, 2016 (Circular No. 20/2016) wherein it has been stated that EVC functionality of verification of eITA appeals was made operational from 12.05.2016 for individuals and from 19.05.2016 for other persons. Thus, undisputedly, the e-filing portal was not functioning on the date of filing of appeal by the assessee before the Ld. CIT (A) manually i.e. 29.04.2016. CIT (A) chose to dismiss the appeal of the assessee for the sole reason that the appeal before him was not filed in the electronic form although even Circular No. 20/2016 of the CBDT fairly acknowledges that the functionality was operative only from 19.05.2016 in the assessee’s case - we fail to understand as to how the Ld. First Appellate Authority could have dismissed the assessee’s appeal for no fault on the part of the assessee. Assessee’s appeal filed electronically later on i.e. on 10.05.2017 is still pending before the Ld. CIT (A) - thus restore this appeal to the file of the CIT (A) and direct that this appeal be tagged along with the appeal filed electronically on 10.05.2017 and be considered as one appeal for passing a reasoned order on merits as per law after giving proper opportunity to the assessee to present its case. Appeal of the assessee stands allowed for statistical purposes. Issues involved:1. Dismissal of appeal by Ld. CIT (A) for not filing electronically2. Disallowance under section 80IC of the Act3. Reimbursement of expenses disallowed under section 40(a) of the Act4. Disallowance of royalty payments5. Charge of interest under section 234B of the ActDismissal of appeal by Ld. CIT (A) for not filing electronically:The appellant filed an appeal manually before the Ld. CIT (A) due to technical glitches in the e-portal for electronic filing. Despite the CBDT circular acknowledging the portal's malfunction, the Ld. CIT (A) dismissed the appeal solely for not being filed electronically. The ITAT found the dismissal unjustified and restored the appeal to be considered along with a later electronically filed appeal, emphasizing the need for a reasoned order on merits.Disallowance under section 80IC of the Act:The assessing officer disallowed the deduction under section 80IC, alleging a facade in the amalgamation process to claim benefits. The ITAT noted discrepancies in the officer's findings and directed a reevaluation, emphasizing the need for a proper justification for disallowances related to other income and the manufacturing unit's operations.Reimbursement of expenses disallowed under section 40(a) of the Act:The assessing officer disallowed payments made for reimbursement, treating them as fees for technical services. The ITAT disagreed, stating the payments were mere reimbursements without income elements, not warranting tax deduction at the source under section 195 of the Act.Disallowance of royalty payments:The assessing officer disallowed a portion of royalty payments, deeming them capital expenditure for intangible assets. The ITAT disagreed, asserting the payments were for technology licenses, qualifying as revenue expenditure and thus allowable deductions.Charge of interest under section 234B of the Act:The assessing officer levied interest under section 234B, which the ITAT found erroneous. The ITAT directed a reevaluation of the interest charge, emphasizing the need for a proper justification under the law.In conclusion, the ITAT allowed the appeal for statistical purposes, highlighting the need for a fair assessment based on merits and proper opportunities for the appellant to present their case.