Revenue appeal allowed by ITAT due to procedural error in CIT(A) decision under Income Tax Act.

The appeal of the revenue regarding the deletion of the addition under section 40(a)(ia) of the Income Tax Act, 1961, for the assessment year 2009-10 was allowed by the ITAT. The CIT(A) had erred in not following proper procedure, leading to a remand of all issues to the Assessing Officer for fresh examination. The appeal of the revenue was allowed for statistical purposes, and the cross objection filed by the assessee was dismissed as not pressed.

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Issues:
Deletion of addition under section 40(a)(ia) of the Income Tax Act, 1961.

Analysis:
The appeal and cross objection in this case pertain to the assessment year 2009-10 and arise from an order of the CIT(A) in proceedings under section 144 r.w.s. 147 of the Income Tax Act, 1961. The main issue in the appeal of the revenue is the deletion of the addition of Rs. 2,11,88,730 on account of disallowance under section 40(a)(ia) of the Act.

The facts of the case reveal that the return of income was filed declaring Rs. 4,64,630, and the assessment under section 143(3) was made resulting in a total income of Rs. 4,99,950. Subsequently, the case was reopened on the ground that tax was not deducted under section 194I of the Act in respect of transport rent expenses amounting to Rs. 2,11,88,780. The Assessing Officer completed the assessment under section 144 r.w.s. 147, disallowing the rent expenses and adding it to the total income due to the assessee's non-compliance.

The assessee appealed before the CIT(A) who allowed the appeal, stating that no truck was taken on rent and all payees had PAN. The Departmental Representative contended that the CIT(A) erred in not admitting evidence or calling for a remand report. Upon hearing both sides, the ITAT observed that the CIT(A) had not followed proper procedure and remitted all issues to the Assessing Officer for fresh examination and verification of relevant material, allowing the revenue's appeal for statistical purposes.

The cross objection filed by the assessee was dismissed as not pressed. Therefore, the appeal of the revenue was allowed for statistical purposes, and the cross objection was dismissed. The order was pronounced on 05-05-2021.

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