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TMI Blog2022 (5) TMI 1647X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee never produced the aforesaid addendum/revised tax-audit report from tax-auditor. CIT(A) deleted the additions without calling for such information from the tax-auditors and then reconciling/verifying from the books of accounts, but merely deleted the additions .Needless to say that powers of ld. CIT(A) are co-terminus with powers of the AO. It is further observed that in same Part B- Annexure-I of tax-audit report, there is a cutting/overwriting in the figure of Net Profit/(Loss) before tax which is shown at Rs. 3,78,565/- (with over-writings), and such overwriting/cutting is not countersigned / authenticated by tax-auditor, and authenticity of such overwritten figure cannot be ascertained/relied upon , which also is required to be brought on record by the tax-auditor. Thus, it will be just , fair and in the interest of justice that the appellate order of ld. CIT(A) be set aside and the matter be restored to the file of the AO for fresh determination of the issue. The assessee be directed to file revised tax-audit report/addendum to the tax-audit report and the AO to verify the same with books of accounts and other relevant evidences, to arrive at the correct income c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Revenue, being ITA No.319/Alld./2018, is directed against an appellate order dated 11.06.2018 in Appeal No. CIT(A), Allahabad/ 10138 /2017-18 passed by learned Commissioner of Income Tax (Appeals), Allahabad (hereinafter called the CIT(A) ), for assessment year(ay):2011-12, the appellate proceedings had arisen before learned CIT(A) from assessment order dated 22nd November, 2017 passed by learned Assessing Officer (hereinafter called the AO ) under Section 147 read with Section 144 of the Income-tax Act,1961(hereinafter called the Act ) .We have heard both the parties through physical hearing mode in Open Court. 2. The grounds of appeal raised by Revenue in ITA No. 319/Alld./2018, in memo of appeal filed with Income-Tax Appellate Tribunal, Allahabad Bench , Allahabad(hereinafter called the tribunal ) , reads as under:- 1. That the Ld. CIT(A), Allahabad has erred on facts in deleting the addition of Rs. 8,58,317/- made on account of suppression of interest income which was based on facts emanated from the audit report filed by assessee as Part-B of Annexure-1 of the audit report in 3CD reflected Rs. 17,12,601/- as interest received. Whereas, the profit and loss account the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment. II. As per ledger account of labour charges, it is found that the assessee has paid Rs. 5,25,000/-, Rs. 4,00,000/- and 2,12,000/- through cheque Nos. 007428, 007427 007470 respectively to labour contractors. The assessee had not deducted TDS on above payment u/s 194C of the I.T. Act, which was liable to be deducted under the provision of I.T. Act to as sub-contractor payment. The above sum of Rs. 11,37,000/- is liable to be added as per provision of 40(a)(ia). In view of the above facts, I have reason to believe that income of Rs. 11,37,000/- chargeable to tax escaped assessment. Sd/- DCIT,C-3,Mzp. 4. The notice u/s 148 of the 1961 Act, dated 7th June, 2016 was issued by the AO and served upon the assessee, as claimed by the AO in the assessment order. The assessee submitted before the AO that return of income originally filed u/s 139(1) of the 1961 Act, be treated as return of income filed in pursuance to the notice issued by AO u/s 148 of the 1961 Act. Thereafter, the AO issued notice dated 18.11.2016 u/s 143(2) of the 1961 Act, for compliance for 25.1.2016. The AO also issued notices u/s 142(1) of the 1961 Act. The assessee initially participated in the reassessment proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh cheque Nos. 007428, 007427 007470 respectively to labour contractors. The assessee had not deducted TDS on the above payment u/s 194C which was liable to be deducted. The assessee vide Notice u/s 142(1) dated 24.07.2017 was asked to explain this issue. But, the assessee failed to file satisfactory papers and documents. However, the assessee submitted some replies, but the same cannot be accepted for lack of supporting papers and documents. Therefore, Rs. 11,37,000/- (525000+400000+212000) is added to the total income of the assessee as no TDS has been deducted on the payments made to labour contractors u/s 40(a)(ia) of the Income Tax Act, 1961. Addition of Rs. 11,37,000/- 5. Aggrieved by reassessment order dated 22.11.2017 passed by AO u/s 147 read with Section 144 of the 1961 Act, the assessee filed first appeal before Ld. CIT(A) . During the course of appellate proceedings, the Ld. Counsel for the assessee submitted that the assessee had filed all necessary details before the AO during the course of reassessment proceedings. It was submitted by the assessee before ld. CIT(A) that it was only the last notice issued by AO u/s 142(1) of the 1961 Act, which could not be complied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Profit and Loss account, and the total of interest income and hire charges of Rs. 22,74,264/- consists of the following as under: S. No. PARTICUALRS AMOUNT 1 Accrued FDR Interest 561663.00 2 Interest on NSC 41878.00 3 Interest on IT Refund 250743.00 4 Hire Charges 1419980.00 Total 2274264.00 5.314 The assessee further submitted that the auditor has noticed the interest income as per Profit and Loss account of Rs. 8,54,284/-. However, in Part B of Form 3CD, the interest income does not include accrued interest on FDR of Rs. 5,61,683/-, but it includes hire charges of Rs. 14,19,980/-. The assessee submitted before ld. CIT(A) that the figure reported by the Auditor in Part-B of Form-3CD is not correct. The ld. CIT(A) called for comments from the AO , who submitted his report on 24.05.2018, and the relevant portion of the remand report submitted by the AO to ld. CIT(A) is reproduced as hereunder: The explanation and claim of the assessee at the assessment stage and now at the appeal stage, cannot be accepted as the Authorized representative of the assessee fails to understand the true implication of various reports audited and signed by an Accountant. The AR of the assessee who is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 16,000/- and Rs. 13,000/- respectively. The assessee enclosed the salary account evidencing payment of salary to these persons. The ld. CIT(A) called for remand report from the AO, who submitted that the contentions of the assessee cannot be accepted being merely an afterthought which was not brought to the knowledge of the AO during the assessment proceedings. The ld. CIT(A) observed that the AO has not given any material to disprove the salary account showing payment of salary to these two persons. Keeping in view these facts, the ld. CIT(A) deleted the additions made by the AO by holding that the payment has been made to the employees of the assessee for the purposes of the assessee s business and these payments were not made by the assessee to the contractors attracting provisions of TDS u/s 194C of the 1961 Act. Thus, the ld. CIT(A) held that the disallowance made by the AO u/s 40a(ia) of the 1961 Act of Rs. 11,37,000/- cannot be sustained and was , thus, deleted by ld. CIT(A). 6. Aggrieved by appellate order passed by ld. CIT(A), Revenue has now filed second appeal before the tribunal. This appeal filed by Revenue was dismissed by Allahabad-tribunal, keeping in view lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs were made to upheld the additions as were made by the AO and set aside the appellate order passed by ld. CIT(A). 6.4 The Ld. Counsel for the assessee, on the other hand, submitted that the interest income of Rs. 8.58 lacs was duly credited to the Profit and Loss account, and no income had escaped assessment and it was merely a technical mistake committed by Auditors in tax-audit report. The ld. Counsel for the assessee submitted that the payment of Rs.11.37 lacs were made for work executed for the assessee, and it was submitted that Rs. 2.12 lacs , out of Rs. 11.37 lacs was utilized for payment of income-tax /TDS. Thus , it was prayed that the additions made by AO , were rightly deleted by ld. CIT(A).The ld. AR drew our attentions to the bank statements of its employees and clarified that these bank statements were duly filed by the assessee before ld. CIT(A), and no additional evidences are now filed by the assessee before tribunal. The ld. Counsel for the assessee would submit that ld. CIT(A) has rightly deleted the additions as were made by the AO, and prayers were made to uphold the additions as were made by the AO. 6.5 The ld. Sr. DR submitted in rejoinder that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractor vide cheque number s 007428, 007427 and 007470, without deducting income tax at source u/s 194C, which led to the additions being made by the AO u/s 40(a)(ia) of the 1961 Act. The reassessment order was a best judgment assessment order u/s 144/147, as the assessee failed to give replies to SCN dated 05.10.2017. The assessee being aggrieved filed first appeal with ld. CIT(A) who was pleased to stood partly allow the appeal filed by the assessee. The ld. CIT(A) dismissed the legal ground raised by assessee, wherein the assessee challenged the legality and validity of re-opening of concluded assessment by invoking provisions of Section 147/148 of the 1961 Act, by holding that reopening was validly done by the AO under the provisions of Section 147/148 of the 1961 Act. There is no challenge by the assessee to the aforesaid legal ground adjudicated by ld. CIT(A), as the assessee chose not to file any appeal / Cross Objections (C.O.) against such adjudication by ld. CIT(A), which has now reached finality. While deleting first addition of interest income to the tune of Rs. 8,58,317on merits , the ld. CIT(A) observed that the aforesaid differential interest income stood declared b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to us, the particulars given in the said Form No. 3CD and the Annexure thereto are true and correct. The assessee has sought to explain the break-up of the aforesaid amount of Rs. 17,12,601/- as certified by the tax-auditor , as under: S. No. PARTICUALRS AMOUNT 1 Interest on NSC 41878.00 2 Hire charges 1419980.00 3 Intt. On I.T. Refund 250743.00 Total 1712601.00 The assessee , in nutshell, is contending that the tax-auditor committed two mistakes while certifying tax-audit report dated 24.09.2011 , while certifying the interest income earned by the assessee , aggregating to Rs. 17,12,601/- as declared by tax-auditor , the first mistake being that the tax-auditor included hire charges of Rs. 14,19,980/- in the interest income which should not have been included by the tax-auditor , and second mistake committed by tax-auditor in the aforesaid tax- audit report was that the accrued interest on FDR amounting to Rs. 5,61,663/- was not included in the interest income. The assessee has sought to explain that the correct interest income credited to its Profit and Loss Account for the year under consideration, is as under S. No . PARTICUALRS AMOUNT 1 Accrued FDR Interest 561663.00 2 Interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the tax-auditors. The 1961 Act has made provisions of tax-audit under Section 44AB of the 1961 Act, wherein the onus is now put on the tax-auditors who are qualified Chartered Accountants to certify financial details/data s of the tax-payers in the prescribed form no. 3CB and 3CD as part of tax-audit under the provisions of Section 44AB, with a view that such certification by a qualified Chartered Accountant would assist the Revenue in framing assessments/processing of returns and computing the correct income chargeable to tax as well as at the same time easing the burden on the Revenue officials , that is why the certification called from tax auditor s in Form No. 3CB/Form No. 3CD under the aegis of Section 44AB is that the financial data s as contained therein is certified to be true and correct which is an onerous/heavy burden cast on tax-auditors, and the said certification does not merely called the tax auditor to certify that the affairs are true and fair as is envisaged while auditing under Companies Act. Thus, certainly the burden/duty on tax-auditor is very heavy/onerous under the 1961 Act to certify contents of tax-audit report to be true and correct and not merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted by the assessee shall be admitted by the AO in accordance with law and be decided on merits in accordance with law.We order accordingly. So far as second issue is concerned, it is observed that the assessee has made in aggregate payment of Rs. 11,37,000/- ( Rs. 5,25,000/- + Rs. 4,00,000/- and Rs. 2,12,000/- ) , by cheque s , which stood debited to its bank account. The bank statement is produced by the assessee, reflecting these debits. The assessee has produced Labour Charges Payable Account as it stood in its books of accounts as claimed by the assessee(PB/page 41-59) , and claim is made that all these three debits aggregating to Rs. 11,37,000/- are debited from the above labour charges payable account. A claim is made that payment of Rs. 5,25,000/- was made to Shri Nakchhedi Ram Yadav , on 24.09.2010 vide cheque number 7428 , and also that payment of Rs. 4,00,000/- is made Mr. Avadh Bihari Yadav on 24.09.2020 , vide cheque number 7427. The bank statements of both the said persons are produced for 2-3 days , wherein the amount(s) are reflected as appearing on the credit side. A claim is made that both these persons are employees of the assessee, and have utilized the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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