2022 (2) TMI 1345 - AT - Income Tax

Rectification u/s 154 - assessee had not filed copy of the impugned Rectification application before this Tribunal - HELD THAT - In the absence of copy of Rectification Application and complete order u/s 154, it is not possible for us to understand the exact plea taken by the assessee. The assessee has raised one ground that the AO had not served notice u/s.154. This ground was also raised by the assessee before the ld.CIT(A). CIT(A) had not adjudicated the impugned ground regarding notice. CIT(A) has not given any finding regarding the notice u/s.154. On perusal of the Form 35 filed by the assessee before the Commissioner of Income tax (appeals) , the assessee in the coloumn number 12 has mentioned that Additional Evidence has been filed by the assessee. However, in the Order, the ld.CIT(A) has not discussed anything about the additional evidence. We are of the opinion that in the interest of justice, it is required that all facts need to be on record, which assessee has failed to submit. Therefore, we set aside the order to the Ld.CIT(A) for denovo-adjudication. The Ld.CIT(A) shall give opportunity to the assessee. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
1. Disallowance on account of delayed payment of employees' contribution to Provident Fund and Employees State Insurance Corporation Fund.
2. Disallowance confirmed under Explanation 5 of section 43B of the Act.
3. Lack of notice under section 154 of the Act.
4. Incomplete submission of documents and rectification application.

Issue 1: Disallowance on account of delayed payment of employees' contribution to Provident Fund and Employees State Insurance Corporation Fund:
The Assessee contested the disallowance made by the CPC, Bengaluru under section 154 of the Act regarding delayed payment of employees' contribution to Provident Fund and ESIC. The Assessee argued that the disallowance was directly made without proper notice and justification. The Order under section 154 increased the Total Income, leading to the appeal. The Authorised Representative highlighted the direct disallowance by the Assessing Officer and the lack of opportunity for the Assessee to be heard, emphasizing non-compliance with section 154(3) of the Act. The Assessee sought deletion of the disallowance based on procedural irregularities.

Issue 2: Disallowance confirmed under Explanation 5 of section 43B of the Act:
The Assessee challenged the disallowance upheld by the Commissioner of Income Tax (Appeals) NFAC under Explanation 5 of section 43B of the Act. The disallowance was made in response to an application filed under section 154 for rectification. The Assessee argued against the confirmation of the disallowance invoking the newly inserted Explanation 5 by the Finance Act, 2021. The grounds of appeal raised by the Assessee questioned the justification of the disallowance and the application of the amended provision.

Issue 3: Lack of notice under section 154 of the Act:
The Assessee raised concerns regarding the lack of notice issued by the Assessing Officer under section 154 of the Act before making the disallowance. The Assessee contended that the direct disallowance without providing an opportunity to be heard violated the provisions of section 154(3) of the Act. The absence of notice and opportunity for the Assessee to present their case was emphasized as a procedural flaw that needed rectification.

Issue 4: Incomplete submission of documents and rectification application:
The Tribunal noted that the Assessee had not submitted complete copies of the Order under section 143(1) and Order under section 154. Additionally, the Assessee failed to provide a copy of the Rectification application filed before the ACIT/DCIT(CPC). The incomplete submission of documents hindered a comprehensive understanding of the case. The Tribunal highlighted the necessity for all relevant facts to be on record for a fair adjudication. As a result, the Tribunal set aside the order for denovo-adjudication by the Ld.CIT(A) to allow the Assessee to submit all necessary documents.

In conclusion, the appeal of the Assessee was allowed for statistical purposes, emphasizing the importance of complete documentation and procedural compliance in tax matters.