2024 (8) TMI 924 - AT - Income Tax

Validity of order passed u/s 250 by CIT (A) - Disallowance of expenditure due to typographical mistake in the audit report - due to the typographical mistake done by the auditor in the audit report the amount which has been added in the total income in amount in admissible column - assessee submits that ld. CIT(A) has dismissed the appeal of the assessee only on this ground that the appellant had not filed any explanation as to how the above auditor s report is incorrect nor the auditor has given any certificate confirming that there was some typographic mistake on their part and the figure shown in the original tax audit report was not correct. HELD THAT - It appears from the order of the ld. CIT(A) that ld. CIT(A) has dismissed the appeal of the assessee on this ground that appellant had not filed any explanation as to how the auditor s report is incorrect, the auditor had not given any certificate confirming that there was typographical mistake on their part and the figure shown in the original tax audit report was not correct and to file the correct figure. Before this Tribunal,assessee filed a tax audit report that includes the FY 2017-18 assessment year up to 2018-19 and date of audit report dated 30.07.2018 and as per the submission of the ld. Counsel for the assessee is that on the basis of this audit report assessment could be made. Since it is a case of typographical mistake done by auditor in his audit report and before this Tribunal correct audit report has been filed, hence, we are in this view that the case is remanded back to the file of the AO to assess the income after going over the correct audit report filed by the assessee as above. Accordingly, the orders of both ld. CIT(A) and ld. AO is set aside, case is remanded back to the file of ld. AO to assess the income after going over the correct audit report of the assessee. Appeals filed by the assessee are allowed for statistical purposes.

Summary

Issues:
Appeals against the order passed under section 250 of the Income Tax Act, 1961 for the Assessment Year 2018-19; Disallowance of expenditure due to typographical mistake in the audit report; Dismissal of appeal by the Commissioner of Income-tax (Appeal) based on lack of explanation regarding the incorrect audit report; Remand of the case for assessment based on the correct audit report filed before the Tribunal.

Analysis:

Issue 1: Appeals against the order under section 250 of the Income Tax Act, 1961
The appellant, a partnership firm engaged in wholesale medicine business, filed appeals against the order passed under section 250 of the Income Tax Act for the Assessment Year 2018-19. The initial return of income was assessed at a different amount compared to the revised assessment under section 143(3) of the Act, resulting in an addition to the total income. The appellant challenged this addition through rectification application and subsequent appeals before the Commissioner of Income-tax (Appeal) which were dismissed, leading to the current appeals before the Tribunal.

Issue 2: Disallowance of expenditure due to typographical mistake in the audit report
The primary contention of the appellant was the disallowance of expenditure amounting to Rs. 82,20,758 due to a typographical error in the audit report. The appellant argued that the addition to the total income was a result of the auditor's mistake in the report, which was not rectified during the proceedings before the Commissioner of Income-tax (Appeal). The appellant presented a corrected audit report before the Tribunal, emphasizing that the correct figures were now available for assessment.

Issue 3: Remand of the case for assessment based on the correct audit report
Upon review of the orders by the Commissioner of Income-tax (Appeal) and the Assessing Officer, the Tribunal observed the lack of explanation regarding the incorrect audit report and the absence of a certificate from the auditor confirming the typographical error. However, considering the submission of the corrected audit report before the Tribunal, the case was remanded back to the Assessing Officer for reassessment based on the accurate figures provided in the revised audit report. Consequently, the orders of both the Commissioner of Income-tax (Appeal) and the Assessing Officer were set aside, and the appeals by the assessee were allowed for statistical purposes.

In conclusion, the Tribunal directed the reassessment of the appellant's income based on the corrected audit report, highlighting the importance of accurate documentation and the need for proper verification during tax assessments.