Introduction:
In the ever-evolving landscape of tax regulations, businesses often find themselves trapped in disputes with tax authorities. One such interesting case is the appeal filed by Clove Garden Food & Beverages against the order dated 14.03.2023 of the Ld. Commissioner of Income Tax (Appeals) NFAC Delhi (“CIT(A)”) for the Assessment Year (“AY”) 2018-19. As we delve into the intricate details of the grounds raised by the assessee and the subsequent proceedings, it is crucial to recognize the complexities that businesses face in navigating the intricacies of tax laws.
Grounds of Appeal:
Clove Garden Food & Beverages, a restaurant business situated in Ghaziabad, has raised several compelling grounds in its appeal against the CIT(A)’s decision. At the heart of the matter is the alleged difference in rental expenses amounting to Rs. 23,63,965. The appellant contends that the CIT(A)’s order was not only legally flawed but also arbitrary and incorrect. The grounds of appeal shed light on critical issues such as the disallowance of rental expenses, perceived errors in acknowledging genuine rental expenditures, and the CIT(A)’s purported oversight in considering rental agreements submitted during the assessment.
Background:
The case originated from the scrutiny of Clove Garden Food & Beverages’ business expenses for the AY 2018-19. The Assessing Officer (“AO”) identified a significant discrepancy of Rs. 23,63,965 in the claimed rental expenses, leading to a subsequent disallowance. The AO specifically questioned the TDS deduction of Rs. 5,94,695 against rental payments of Rs. 72,05,145. Despite the appellant’s timely submission of rental agreements as supporting documents, the AO proceeded to disallow the contested amount.
CIT(A)’s Decision:
The Ld. CIT(A) upheld the AO’s decision, finding no infirmity in the disallowance. The CIT(A)’s decision to dismiss the appeal indicates a level of agreement with the AO’s stance. However, it also raises concerns about whether all relevant evidence was considered during the appellate process.
Tribunal’s Verdict:
The Tribunal conducted a review, hearing arguments from both parties. The appellant’s representative emphasized a critical timing discrepancy in TDS deposition. They highlighted that the tax audit report and ITR were filed before TDS returns could be revised, resulting in the depiction of only those amounts in the tax audit report that matched the TDS returns at that specific point in time. The Tribunal found merit in the appellant’s submissions and deemed it fair to remand the matter back to the AO for verification purposes.
Clove Garden Food & Beverages P. Ltd. Vs ITO, Ward 2(2)(2) Ghaziabad. ITA No. 968/Del/2023 Asstt. Year: 2018-19
