2022 (6) TMI 393 - AT - Income Tax

Tribunal orders compliance with CIT(A) directions on deduction claims under Income Tax Act

The Tribunal allowed the assessee's appeal against the Assessing Officer's failure to comply with the CIT(A)'s directions regarding deduction claims under ... Failure to comply with directions given to the AO by the appellate authority - Claim of deduction u/s 43B - Assessee offered suo moto disallowance of service tax, bonus and leave encashment respectively on provision basis - As argued CIT-A Rejected the claim of the assessee in mechanical manner and on flimsy grounds observing that the Assessing Officer has mentioned in the appeal effect order that the same has been passed after necessary verifications - HELD THAT:- We, with a heavy heart, note that the case is a perfect example of a case where the assessee has been a victim of error in the system and apathy on the part of the concerned Income Tax authorities. It is a simple case where the assessee had pleaded that while giving appeal effect to the order of the ld. CIT(A) dated 25.07.2014, the ld. Assessing Officer failed to give effect to the directions given by the ld. CIT(A) in respect of aforesaid claim of deduction u/s 43B of the Act raised vide Ground nos.5,6 & 7 in the appeal before him. A perusal of the order dated 05.09.2014 of the Assessing Officer giving appeal effect shows that the Assessing Officer has given relief/complied the directions in respect of Ground nos.1 to 4 of appeal order. However, there is no mention or discussion about the directions given by the ld. CIT(A) in respect of the aforesaid claim raised vide Ground nos.5,6 & 7 before him. It was a clear-cut case of mistake apparent on record as the Assessing Officer has failed to give full effect to the order of the CIT(A) and failed to comply with the directions given by the ld. CIT(A) in respect of Ground no.5,6 & 7 of the appeal order. Assessing Officer, in a most negligent and mechanical manner, rejected the application of the assessee. Even the CIT(A)/National Faceless Appeal Centre has miserably failed to consider the simple prayer of the assessee and rejected the appeal in a mechanical manner. The assessee thus, has been left to the mercy of the system and has to approach this Tribunal for the simple case that the Assessing Officer may be directed to give appeal effect to the order of the ld. CIT(A). The action of the Assessing Officer, in our view, is not only negligent but contemptuous in nature as he has failed to comply with the directions given by his appellate authority. In view of the above discussion, the appeal of the assessee is hereby allowed. Issues:Appeal against order of National Faceless Appeal Centre under section 250 of the Income Tax Act - Disallowance and deduction under section 43B - Failure to give effect to directions of CIT(A) - Rejection of application under section 154 for rectification - Mechanical rejection of claim by CIT(A) - Negligence and contemptuous behavior of Assessing Officer.Analysis:The appeal was filed by the assessee against the order of the National Faceless Appeal Centre under section 250 of the Income Tax Act. The assessee had initially offered suo motu disallowance under section 43B of the Act but later realized certain mistakes and sought additional claims during assessment proceedings under section 143(3) of the Act. The Assessing Officer did not allow these additional claims and did not provide reasons for rejection. The CIT(A) admitted and decided in favor of the assessee's claims, directing the Assessing Officer to allow the claims as per law and verification. No appeal was filed by the Department against this order. However, the Assessing Officer failed to give effect to the CIT(A)'s directions in subsequent orders, leading to a series of requests for relief by the assessee which were rejected on flimsy grounds.The Assessing Officer rejected the assessee's application under section 154 for rectification, stating that the alleged mistake did not constitute a mistake apparent on record. The assessee appealed against this rejection, but the CIT(A) also mechanically rejected the claim without proper consideration. The Tribunal observed that the case highlighted errors in the system and apathy on the part of the Income Tax authorities. It noted that the Assessing Officer failed to comply with the directions of the CIT(A) regarding the deduction claims under section 43B raised by the assessee. The Tribunal criticized the negligent and contemptuous behavior of the Assessing Officer and the CIT(A) for not addressing the simple prayer of the assessee.Ultimately, the Tribunal allowed the appeal of the assessee and directed the Assessing Officer to give full appeal effect to the CIT(A)'s order and comply with the directions regarding the deduction claims under section 43B. The Tribunal emphasized the need for a speaking order in this regard to ensure proper compliance. The decision highlighted the importance of following appellate authorities' directions and the consequences of negligent behavior on the part of Income Tax authorities.In conclusion, the Tribunal's decision rectified the failure of the Assessing Officer to give effect to the CIT(A)'s directions and provided relief to the assessee in the matter of deduction claims under section 43B. The judgment underscored the necessity of proper compliance with appellate orders and the repercussions of negligent conduct by tax authorities.