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2023 (4) TMI 1171 - AT - Income Tax


Issues involved:
The appeal against the order of the Commissioner of Income Tax (Appeals) concerning the assessment order under Section 154 of the Income Tax Act, 1961 for AY 2020-21.

Details of the Judgment:

Issue 1: Denial of Rectification by CIT(A)
The Assessee filed an appeal against the order of the CIT(A) rejecting the rectification application under Section 154 of the Act. The CIT(A) upheld the adjustments made by the Assessing Officer concerning the partners' remuneration based on the Tax Audit Report. The CIT(A) found that the intimation was in line with the report and declined to interfere with the rectification order.

Issue 2: Appeal Before the Tribunal
The Assessee appealed before the Tribunal challenging the decision of the CIT(A). The Tribunal considered the submissions made before the CIT(A), rectification application before the Assessing Officer, and other relevant documents. The Assessee raised objections regarding the disallowance of partnership remuneration without proper notice and the incorrect adjustment made by the CPC.

Issue 3: Correct Determination of Total Income
The Assessee contended that the total income should be determined in accordance with the law as per the Return of Income (ROI). They argued that the correct figures of remuneration were not considered due to a clerical error in the Tax Audit Report. The Assessee emphasized the importance of the audited financial statements in reflecting the accurate remuneration paid to partners.

Judgment:
The Tribunal acknowledged the Assessee's plea, noting the inconsistency between the figures in the Profit and Loss account and the Tax Audit Report. They recognized the clerical error made by the tax auditor and the availability of the correct position through a certificate. The Tribunal found an apparent mistake in the adoption of incorrect figures without providing the Assessee with the required opportunity under the law. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter to the Assessing Officer for redetermination, ensuring the Assessee's right to present the correct factual position on the admissible partner remuneration under Section 40(b) of the Act. The decision aimed to uphold the principles of natural justice as mandated by Section 143(1) of the Act. The appeal of the Assessee was allowed for statistical purposes.

 

 

 

 

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