2023 (4) TMI 849 - AT - Income Tax

Rectification of mistake u/s 154 - revenue being added by the AO as not recognised by the assessee - uncertified bills deducted from the turnover in the statement of Profit and Loss relates to Credit notes issued by the- assessee on account of Contractees not allowing the measurements/quantification and value in the running bills submitted to them by the assessee as per the terms of the contract - HELD THAT - As intimation u/s. 143(1)(a) was issued by the AO on 13.11.2019 and the assessment proceedings had already commenced by issuance of notice u/s. 143(2) on 22.09.2019. AO while passing the assessment order u/s. 143(3) of the act, incorporated the disallowance, that was made in the intimation dated 13.11.2019. For status of appeal being preferred by the assessee against the assessment order passed u/s. 143(3) of the act dated 17.05.2021, the Ld.AR submitted that the appeal is pending before the Ld.CIT(A). In the present appeal, the Ld.AR cannot argue on merits of the addition made in respect of the alleged revenue being added by the Ld.AO, as not recognised by the assessee. Since the same is not emanating from the order of CIT(A) against which the assessee is in appeal.CIT(A) has not gone into merits and has held there is no mistake apparent on record u/s. 154 with respect to the impugned issue. From the perusal of facts in our considered view, the addition made cannot be co Disallowance in respect of the alleged employees contribution to the EPF/ESI - It is a mistake apparent on record that, the Ld.AO incorporated the addition while passing the assessment order without considering or calling for the details during the assessment proceedings. Even otherwise when the assessee s case was picked up for complete scrutiny, there was no need to issue an intimation u/s. 143(1)(a) of the act separately, disallowing the employees contribution towards ESI/PF deposited beyond the due date by the assessee. We therefore allow the present appeal only in respect of Ground no. 4(d). The assessee is granted liberty to raise the disallowance before the Ld.CIT(A) in the appeal that is pending for disposal before the first appellate authority against the assessment order dated 17.05.2021.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Addition on account of uncertified bills.
3. Disallowance of employees' contribution to EPF/ESI.
4. Scope of rectification under Section 154 of the Income Tax Act.

Condonation of Delay:

The assessee filed the appeal with a delay of 142 days, citing that the order was not perused by the staff and was noticed only in February. The Tribunal condoned the delay, emphasizing substantial justice over technicality, referencing the Supreme Court's decision in Collector Land Acquisition Vs. Mst. Katiji & Ors.

Addition on Account of Uncertified Bills:

The assessee contested the addition of Rs. 29,39,56,585/- made by the Assessing Officer (AO) for uncertified bills. The Tribunal noted that the AO did not consider the reconciliation of bills and credit notes presented by the assessee. However, the Tribunal held that the addition could not be considered a mistake apparent on record under Section 154 and upheld the CIT(A)'s decision.

Disallowance of Employees' Contribution to EPF/ESI:

The AO disallowed Rs. 9,30,900/- for delayed remittance of employees' contributions to EPF/ESI. The Tribunal found this to be a mistake apparent on record, as the AO incorporated the addition without considering details during assessment proceedings. The Tribunal allowed the appeal on this ground and granted the assessee liberty to raise the issue before the CIT(A) in the pending appeal against the assessment order dated 17.05.2021.

Scope of Rectification under Section 154:

The Tribunal emphasized that the scope of rectification under Section 154 is limited to correcting errors apparent on record. The CIT(A) held that the addition of Rs. 29,39,56,585/- and the disallowance of Rs. 9,30,900/- did not constitute mistakes apparent on record. The Tribunal agreed with this view, except for the disallowance related to employees' contributions to EPF/ESI.

Conclusion:

The appeal was partly allowed, with the Tribunal condoning the delay and allowing the appeal concerning the disallowance of employees' contributions to EPF/ESI. The Tribunal upheld the CIT(A)'s decision regarding the addition of uncertified bills.

Order pronounced in the open court on 30th March, 2023.