CPC was not justified in ignoring the revised tax audit report furnished by the assessee correcting the mistake committed in the original tax audit report – ITAT
In a recent judgment, the ITAT Mumbai has held that CPC was not justified in ignoring the revised tax audit report furnished by the assessee correcting the mistake committed in the original tax audit report.
ABCAUS Case Law Citation:
ABCAUS 4107 (2024) (06) ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming addition made u/s 43B of the Income Tax Act, 1961 (the Act) by the CPC while processing the return of income.
The above said amount was related to the unpaid leave encashment amount, which was disallowable u/s 43B(f) of the Act. The assessee submitted that the above said amount pertained to the outstanding liability for the preceding Assessment Year and hence was disallowable only in the preceding AY instead of disallowance u/s 43B(f) for the current Assessment Year.
It was submitted that the format of “Tax Audit Report” contains specific clauses for reporting these kinds of cases in order to ensure that double disallowance is not being made.
It was submitted that the amount which was continue to be outstanding from the preceding AY, should have been reported in clause 26(i)(A)(b) of the Tax Audit Report. However, the Tax Auditor by mistake, has reported the same in Clause 26(i)(B)(b) of the Tax audit report.
According to the assessee, the CPC did not take cognizance of the revised tax audit report furnished by the assessee and made the disallowance again while processing the return of income u/s 143(1) of the Act by placing reliance on the original tax audit report. This has led to double disallowance of very same amount, once in in preceding AY and again in current AY.
According to assessee, it filed a rectification petition u/s 154 of the Act, but the same had not been disposed of yet.
The Tribunal opined that there should not be any dispute that the assessing officer is required to compute the total income in accordance with the provisions of Income tax Act and he cannot take advantage of the mistake, if any, committed by the assessee or tax auditor. In this view of the matter, the CPC was not justified in ignoring the revised tax audit report furnished by the assessee correcting the mistake committed in the original tax audit report. Therefore, in principle the impugned disallowance was liable to be deleted.
Accordingly, the Tribunal set aside the order passed by CIT(A) and restored the same to the file of the AO with direction to examine the factual aspects and if the addition will result in double disallowance, the same should be deleted.
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