Power of ITAT in case of an expense which has attained finality in earlier assessment.

[Akash Chawla]

I had the following situation

The assessee filed a return of income for AY 2013-14 declaring income of ₹ 20 lakhs . the A.O u/s 143(3) made on 31/12/2015 disallowed expense ‘A’ of ₹ 15 lakhs, although the supreme court has held in some other case that expense ‘A’ is allowable. The A.O assessed the income at 35 lakhs u/s 143(3). The assessee does not file for any appeal/revision application u/s 264/ rectification (i.e availed no remedies) and the time for filing the appeal/revision/ rectification have all expired.

Later A.O finds an income escaping assessment of ₹ 25 lakhs for assessment year 2013-14 based on new evidence as on 31/12/2020 and issued notice u/s 148 to the assess the escaped income of ₹ 25 Lakhs. The A.O assessed income of ₹ 60 lakhs u/s 147. The assessee filed the appeal against the order in CIT(appeals) and subsequently to ITAT.

During the proceeding in ITAT against the order u/s 147 can the assessee also claimed the deduction in respect the certain expense which were wrongly disallowed earlier in assessment u/s 143(3) which has attained finality?

Sir, Does the ITAT has the power to admit such claim?

[DR.MARIAPPAN GOVINDARAJAN]

As you rightly told that since you have not filed appeal the order has attained finality. However you may put your submissions before ITAT. It it is allowed it will be your lock. Try for the same.

AI Summary

Reopening assessments: assessee may seek belated allowance of previously disallowed expense before ITAT despite earlier finality. An expense disallowed in an earlier assessment became final where no appeal or rectification was filed; upon reassessment based on new evidence, the assessee may nonetheless present submissions before the tribunal to claim that previously disallowed expense, and if the ITAT admits and allows it the allowance will benefit the assessee.