2023 (7) TMI 503 - AT - Income Tax

Disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return - Additions while processing ITR u/s 143(1)(a) at CPC - Rectification of mistake u/s 154 - addition u/s 43B and u/s 2(24)(x) r.w.s 36(1)(va) in respect of Contributions received from employees towards PF/ESI and but not deposited to the relevant funds by the due dates under respective laws - HELD THAT - The argument of the revenue that, the assessee instead of filing revised audit report rides on wrong bus and has applied the provisions u/s. 154 of the Act for rectification of mistakes, cannot be acceded to and rejected. An intimation u/s. 143(1)(a) of the Act was served upon the assessee on 21st January, 2019 and the assessee has very diligently responded with the reasons specifying that since the payments which are proposed to be disallowed are made within the specified, the same cannot be subjected to any disallowance, however, the AO, who was duty bound to consider such response from assessee, before making an addition on this account, has not considered the submission of the assessee, therefore, the same should have been considered as a mistake apparent from the record. We, thus, do not find any merit in the contention raised by the revenue and are of the view that since a mistake was apparent from the record and the AO, who was mandated by the law to consider the response of the assessee, which was submitted within the prescribed time of 30 days but has not considered the same and crystallized the addition, therefore, the mistake is apparent from record and curable within the provisions of Section 154 of the Act. Department s plea that the assessee should have revised the audit report which was carrying the mismatch with figures in ITR, cannot be considered to be a reason for not granting relief to the assessee otherwise the provision of Section 143(1)(a) of the Act and the provisos therein would become redundant. In such circumstances, we are unable to comprehend the contention of the revenue and, therefore, the same cannot be considered concurred with. Since the issue before the ld. CIT(A) wherein the submission of the assessee were taken into consideration but were not carefully read into. - CIT(A) has not gone through the facts of the case in its entirety and, therefore, has comprehend that the payments were made beyond the due date prescribed under respective statutes, therefore are disallowable. We do not persuade to concur with the finding of the ld. CIT(A). Accordingly, we set aside the order of the ld. CIT(A) and in the interest of justice, considering the merits of the case, we direct the AO to examine the authenticity of the documents submitted by the assessee in support of its contention that the impugned payments were made within the specified time and delete the addition. Thus, this issue is allowed for statistical purposes.

Summary

Issues Involved:
1. Sustaining addition of GST payable.
2. Sustaining addition of PF payable.
3. Sustaining addition for delay in payment of Employee's Contribution to Provident Fund.
4. Validity of disallowance for delay in payment of PF in Rectification order/Intimation u/s 154 r.w.s 143(1).

Summary:

1. Sustaining addition of GST payable:
The assessee contested the addition of Rs. 7,48,076/- as GST payable, arguing it was covered under section 43B and fully paid before the due date of filing the Income Tax Return (ITR). Despite submitting proof of payment to both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)], the CIT(A) upheld the addition, which the assessee claimed was against the law of natural justice.

2. Sustaining addition of PF payable:
The assessee challenged the addition of Rs. 18,236/- for PF payable for March 2018, paid on 15.04.2018, asserting it was paid within the due date prescribed under the respective Act and before the due date of filing ITR. Proof of payment was submitted to both the AO and CIT(A), but the CIT(A) confirmed the addition, which the assessee argued was unjust and against natural justice.

3. Sustaining addition for delay in payment of Employee's Contribution to Provident Fund:
The assessee disputed the addition of Rs. 12,226/- for delayed payment of Employee's Contribution to Provident Fund, contending it was paid before the due date of filing ITR. The CIT(A) ignored the assessee's submission and upheld the addition, which the assessee claimed was unjust and against natural justice.

4. Validity of disallowance for delay in payment of PF in Rectification order/Intimation u/s 154 r.w.s 143(1):
The assessee argued that the disallowance for delay in payment of PF was not a mistake apparent from the record, making the addition in the Rectification order/Intimation u/s 154 r.w.s 143(1) and its sustenance by CIT(A) legally invalid.

Tribunal's Decision:
The Tribunal noted that the assessee's response to the notice u/s 143(1)(a) was not considered by the AO, which constituted a mistake apparent from the record. The Tribunal found merit in the assessee's contention that the payments were made within the stipulated time and directed the AO to verify the authenticity of the documents submitted by the assessee and delete the addition if the payments were indeed made within the specified time. The appeal was partly allowed for statistical purposes.