ITAT Delhi Grants Major Relief to Taxpayer, Deletes LTC Loss Disallowance and Rs 5,000 Late Fee

The ITAT Delhi recently ruled in favour of Mr Prakash Chand Agrawal by allowing appeals for assessment years 2018-19 and 2019-20. The present case mainly pertains to two key issues: disallowance of a brought-forward long-term capital loss and levy of a late filing fee under Section 234F of the Income Tax Act.

In the case belonging to the Assessment Year 2019-20, the taxpayer had not mentioned the details of the partnership firm in which he was a partner in its income tax return (ITR). However, the return was filed within the statutory due date, and also the mistake was not intentionally made. In conclusion, the Central Processing Centre (CPC) disallowed the set-off of the brought-forward long-term capital loss of Rs. 6.76 lakh and also levied a late filing fee of Rs 5,000 at the time of processing the return under Section 143(1) of the income tax act.

The assessee later furnished a rectification application under Section 154, and the CPC itself accepted the application and allowed the loss set-off. However, later when the revised return was processed, the same loss was again disallowed. When the tribunal analysed the case, it noted that this contradictory approach of the CPC was incorrect and inconsistent. Accordingly, deleted the disallowance and allowed the assessee’s appeal.

In the case belonging to the Assessment Year 2018-19, the key dispute was regarding the imposition of Rs. 5,000 as a late filing fee. When the tribunal analysed the case, it noted that the assessee, being a partner in a firm whose accounts were subject to audit, had filed the return within the prescribed due date. Consequently, there was not a delay in filing the return. The ITAT deleted the fee and allowed this appeal as well.

Overall, the ITAT Delhi allowed both the assessee’s appeals in full.