Additions made due to typing error in Form 3CD is not legally permissible where auditor of the assessee inadvertent committed mistake mentioning wrong amount of profit-ITAT
ABCAUS Case Law Citation:
ABCAUS 2176 (2018) (01) ITAT
The assessee was aggrieved by the order of the CIT(A) confirming the addition made by the Assessing Officer (AO) on account of typing error in the Audit Report Form-3CD in contrast to audited profit & loss account.
Brief Facts of the Case:
The assessee was covered under tax audit u/s 44AB of the Income Tax Act, 1961 (the Act). He filed its return of income declaring an income as net profit in the audited profit & loss account. However the amount of net profit reported by the chartered accountant in the Form 3CD Audit Report was more than the amount of net profit as per audited profit & loss account.
The AO required the assessee to explain the difference and show cause as to why the difference amount be not added to the income of the assessee. As per the order of the AO, the assessee did not submit anything to the Assessing Officer, and accordingly, AO made the addition for the amount of said difference. Simultaneously, the AO initiated the penalty proceedings u/s 271(1)(c) of the on the ground that the assessee had conceal the particular of this income and submitted inaccurate particulars of such income.
Before the CIT(A), the assessee explained that the AO was explained that it was a typographical error and had been inadvertently committed by wrong typing made by the staff of the auditors. The Assessing Officer kept the explanation of file and thereafter did not raise any further query. The assessee claimed that he was under a bonafide belief that the explanation furnished had been accepted.
The assessee submitted that the books of account had not been rejected and the figure of net profit as declared by the assessee in the Profit & Loss Account and the ITR had been accepted as such. The fact that books of account had been accepted, clearly shows that the the addition of the difference was a typographical error.
However, the CIT(A), confirmed the addition made by the Assessing Officer and dismissed assessee’s appeal.
Being further aggrieved, assessee has carried the matter before the Tribunal.
Contention made on behalf of the Appellant Assessee:
It was submitted that all the documents showing that there was an inadvertent mistake in Form 3CD Audit Report were furnished to the Department, but the same were not considered.
Observations made by the Tribunal:
The ITAT noted that the assessee had filed the reply to the show cause notice in which the assessee had categorically stated the amount of turnover and net profit. It was also stated that an inadvertent mistake occurred while filing 3CA Report.
The auditor of the assessee had also given a clarification on the net profit shown in para 40 of 3CD Report. The auditor specifically mentioned the correct net profit as per profit & loss account and the figure of net profit mentioned in para 40 of 3CD Report had inadvertently been wrongly mentioned It was stated that the mistake had taken place while importing the figures of depreciation from fixed assets schedule while finalizing the audit of accounts and while importing the data in 3CD Audit Report.
The ITAT opined that there was an inadvertent mistake committed by the Auditor of the assessee by wrongly mentioning figure in Form 3CD Audit Report. Therefore, addition made due to some typing error was not legally permissible
The ITAT directed the deletion of addition made in the hands of the assessee.
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