Deductions should not be disallowed merely for bona fide mistake or error of taxpayer

Deductions should not be disallowed merely for any bona fide mistake or error of the taxpayer – ITAT allows Deduction u/s 80IA

ABCAUS Case Law Citation:
ABCAUS 3659 (2023) (02) ITAT

Important Case Laws covered:
CIT vs. G. M. Knitting Industries (P) Ltd. & Others
M/s Aks Alloys (P) Ltd. 2013

In the instant case, the assessee had challenged the order passed by the against the order of the National Faceless Appeal Centre (NFAC)/CIT(A) in upholding the additions/ disallowances of deduction u/s 80-IA made by CPC in the order under section 143(1) of the Income Tax Act, 1961 (‘Act’).

The return of the assessee was processed u/s 143(1) of the Act. However, the claim of the assessee u/s 80IA was denied stating that “in Schedule VI-A under Part-C deduction in respect of certain incomes, in Sl No. 2.e deduction is claimed under section 80IA/Form 10CCB or Form 10CCB has not been e-filed within the due date”.

The CIT(A) rejected the appeal on the reason that the assessee might not have filled the columns of corresponding schedule u/s 80IA or might not have e-filed the Form 10CCB within the due date.

The CIT(A) went on to hold that the filing of Form 10CCB only will not help the assessee, if the deduction had not been claimed by properly filling up required schedule in the return of income.

The Tribunal observed that CIT(A) did not point out as to what was the error in filling up the schedule etc. The Tribunal opined that the reasons pointed out by the CPC as well as reasons given by the CIT(A) were vague and ambiguous.

The Tribunal stated that it has been held time and again by the courts of law that the Income Tax Authorities must charge the legitimate taxes from the taxpayers. If an assessee is entitled to certain deductions under the provisions of the Income Tax Act, the same should not be disallowed, merely because of any bona fide  mistake or error on the part of the taxpayer, rather, the Income Tax Authorities should assist the concerned assessees in filing their correct returns of income.

The Tribunal observed that it was neither the case of the Assessing Officer nor of the CIT(A) that the assessee was not entitled to claim deduction u/s 80IA of the Act.

The Tribunal observed that the Hon’ble Supreme Court has held that even though, necessary certificate in Form 10CCB along with the return of income has not been filed, but, if the same was filed before the final order of assessment, the assessee, even in such  circumstances, would be entitled for claim of deduction u/s 80IB of the Act.

The Tribunal observed that the facts of the assessee’s case were on much better footing. The assessee had duly filed the audit report before the due date of filing of the return of income which was very much part of the return of income as on the due date of filing of the return of income.

The Tribunal held that the action of the lower authorities in denying the deduction  u/s  80IA of the Act to the assessee could not be held  to be justified.

Accordingly, the impugned order of the CIT(A) was set aside and the Assessing Officer was directed to allow the deduction claimed by the assessee u/s 80IA of the Act.

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