Tax additions under sections 43B and 69A deleted due to proper interest servicing and jurisdictional overreach in limited scrutiny

ITAT Visakhapatnam allowed the appeal, deleting additions made under sections 43B and 69A. The tribunal held that the assessee had serviced interest payments to Bank of Baroda as evidenced by bank statements and certificate. Regarding section 69A addition for cash deposits, the tribunal ruled that the AO exceeded jurisdiction by making additions beyond the scope of limited scrutiny without converting it to complete scrutiny with proper approval from Pr. CIT/CIT, rendering the addition invalid.

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Issues Involved:
1. Condonation of delay in filing appeal before the Tribunal due to ill health of the assessee.
2. Disallowance of interest expenditure and cash deposits by the Assessing Officer leading to appeal before the Tribunal.

Summary:
Issue 1: Condonation of delay
The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) with a delay of 24 days. The assessee explained the delay was due to the ill health of a senior citizen partner and other reasons. The Tribunal considered the reasons as a 'reasonable and sufficient cause' and condoned the delay, proceeding to adjudicate the appeal on merits.

Issue 2: Disallowance of interest expenditure and cash deposits
The assessee, a partnership firm, filed its return showing a loss. During limited scrutiny assessment, the Assessing Officer disallowed interest expenditure and treated cash deposits as unexplained income. The first appellate authority upheld part of the disallowances, leading to the appeal before the Tribunal. The issues raised were disallowance of interest paid to Bank of Baroda and addition under section 69A of the Income Tax Act.

The Tribunal observed that the interest payment to Bank of Baroda was serviced by the assessee, as evidenced by bank statements and certificates. Therefore, the disallowance of interest expenditure was deleted. Regarding the addition under section 69A, the Tribunal noted that it was beyond the jurisdiction of the Assessing Officer in a limited scrutiny case. As no approval was granted to convert it into a complete scrutiny case, the addition was deemed invalid in law and was deleted.

In conclusion, the Tribunal allowed the appeal of the assessee, pronouncing the judgment on 22nd December 2023.

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