2022 (3) TMI 30 - AT - Income Tax

Difference in net profit as reported in ITR filed for the relevant assessment year and tax audit report filed by the auditor u/s.44AB in Form 3CD - HELD THAT - On perusal of reasons given by the Assessing Officer, it is abundantly clear that even after filing revised tax audit report, tax auditor has reported very same net profit which was reported in earlier tax audit report filed on 17.10.2016, even before the assessee filed return of income on 27.10.2016. If at all, claim of the assessee is correct that auditor has not considered year end provisions while uploading Form 3CD, then tax auditor would have corrected said mistake, when he had filed second audit report on 27.10.2016, subsequent to return of income filed by the assessee on 19.10.2016. In this case, net profit shown in Form 3CD as per first audit report filed on 17.10.2016 and second audit report filed on 27.10.2016 is one and the same, whereas, there is difference in net profit shown by the assessee in ITR filed on 19.10.2016 and same is unreconciled, although the assessee claims to have reconciled difference by showing certain provisions, but said claim was not satisfactorily explained to the Assessing Officer as well as learned CIT(A). Even before us, although the assessee has filed a chart explaining difference between income and expenditure shown in ITR as well as Form 3CD, but claim of the assessee goes unproved in absence of any evidences. Therefore, we are of the considered view that there is no error in the reasons given by the Assessing Officer to make additions towards difference in net profit shown in ITR filed for relevant assessment year and tax audit report issued in Form 3CD. Assessing Officer, after considering relevant facts has rightly made additions towards difference in net profit. The learned CIT(A) after considering relevant arguments of the assessee has rightly held that there is no error in the reasons given by the Assessing Officer to make additions towards difference in net profit. Hence, we are inclined to uphold findings of the learned CIT(A) and dismiss appeal filed by the assessee.

Summary

Issues:
Difference in net profit reported in ITR and tax audit report for assessment year 2016-17.

Analysis:
1. The appeal was filed against the order of the Commissioner of Income Tax (Appeals)-1, Trichy for the assessment year 2016-17.
2. The assessee raised various grounds of appeal, challenging the Assessing Officer's decision regarding the net profit reported in the ITR and tax audit report.
3. The Assessing Officer noted a variance in the net profit figures reported in the ITR and tax audit report, leading to a difference of ?42,77,602.
4. The assessee explained that the tax auditor had not considered certain year-end provisions in the tax audit report, causing the discrepancy.
5. Despite the assessee's explanation, the Assessing Officer rejected the arguments and made additions to the returned income.
6. The CIT(A) upheld the Assessing Officer's decision, stating that the revised audit report did not reflect the provisions made for expenses, thereby sustaining the additions.
7. During the appeal, the assessee argued that the mistake of the auditor should not penalize the assessee, citing relevant case laws and emphasizing the reconciliation of differences.
8. After considering all submissions, the tribunal found no error in the Assessing Officer's reasoning for the additions made towards the difference in net profit.
9. The tribunal distinguished the cited case laws from the present case, emphasizing the unproved reconciliation of differences by the assessee.
10. The tribunal further differentiated the facts of the Hon'ble Supreme Court decision cited by the assessee, concluding that the error in the present case was not comparable to the bonafide error discussed in the Supreme Court case.
11. Ultimately, the tribunal dismissed the appeal filed by the assessee, upholding the findings of the CIT(A) and the additions made by the Assessing Officer.

This detailed analysis highlights the issues raised, the arguments presented by the parties, and the tribunal's decision based on the facts and legal principles involved in the case.