2022 (9) TMI 1362 - AT - Income Tax

Disallowance on account of bonus payable - Amount mistakenly mentioned by the Chartered Accountant while filing the Tax Audit Report in the wrong column, the same had been paid within time as per law - admission of additional evidences - HELD THAT - We agree with the contention of the Ld. AR that the revised Tax Audit Report is a vital piece of evidence which goes to the very root of the matter and should be admitted for the furtherance of cause of justice. Accordingly, admit the additional evidence and since the lower authorities have not had any occasion to examine the same - expedient to restore the issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh after duly considering the revised Tax Audit Report which I have admitted as additional evidence. The AO is further directed to grant adequate opportunity to the assessee prior to the passing of order in accordance with law. Appeal of the assessee stands allowed for statistical purposes.

Summary

Issues:
Appeal against order by CIT(A) for assessment year 2020-21, Disallowance under sections 36(1)(viii) and 36(1)(va) of the Income Tax Act, 1961, Addition under section 36(1)(ii) of the Act, Challenge of addition of Rs. 21,92,232/-, Clerical error in Tax Audit Report, Admissibility of additional evidence, Restoration of issue to Assessing Officer.

Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2020-21. The assessee, an individual engaged in the business of manufacturing and trading, had filed a return declaring income of Rs. 26,78,580/-. The Income Tax Department assessed the income at Rs. 49,17,260/- after disallowances and additions under various sections of the Income Tax Act, including sections 36(1)(viii), 36(1)(va), and 36(1)(ii).

The CIT(A) partly allowed the appeal by deleting certain disallowances but confirmed the addition of Rs. 21,92,232/- made under section 36(1)(ii) of the Act. The assessee challenged this addition before the ITAT, contending that the amount was mistakenly mentioned in the wrong column of the Tax Audit Report by the Chartered Accountant, even though it had been paid within the stipulated time.

The assessee argued that the payments were made to employees as per the Payment of Bonus Act, 1965, and provided evidence to support this claim, including employee-wise details of bonus paid and wage registers. The ITAT noted that a revised Tax Audit Report rectifying the clerical error had been submitted and deemed it necessary evidence for a just decision. The ITAT admitted the additional evidence and directed the Assessing Officer to re-examine the issue after considering the revised report.

Both parties agreed to the admission of additional evidence, and the ITAT allowed the appeal for statistical purposes, restoring the issue to the Assessing Officer for fresh adjudication in accordance with the law. The ITAT emphasized granting adequate opportunity to the assessee before passing any order.

In conclusion, the ITAT allowed the appeal, highlighting the importance of considering vital evidence for a just decision and ensuring due process in the assessment proceedings.