Mistake by CA in Audit Report if demonstrated is enough, correction in report not necessary

Mistake by CA in Tax Audit Report if demonstrated with relevant material enough, Insistence of correction in audit report is not justified

ABCAUS Case Law Citation
ABCAUS 3654 (2023) (02) ITAT

Important Case Laws covered:
Checkmate Services Pvt. Limited vs. CIT

In the instant case, the appellant assessee was in appeal before the Tribunal against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC).

The primary grievances was that CIT (Appeals) erred in confirming the disallowance under section 36(1)(va) of the Income Tax Act, 1961 (the Act).

Dissatisfied with this disallowance, the assessee carried the matter in appeal before the CIT(Appeals) and contended that the  assessee’s case was to be examined under the sector related Provident Fund Scheme wherein the due date is last date of the  next  month  in  which  the  payment  was  received. 

The assessee brought it to the notice of the CIT(Appeals) that there is no lapse for making the payments. These payments had been made within the due date.

A written submission to that effect was filed before the CIT(Appeals) stating that the there was a mistake in Tax Audit Report, i.e. the tax auditor of the assessee had mentioned the wrong due dates in tax audit report.

The Revenue contended that the assessee should have corrected its audit report.

The Tribunal observed that the auditor of the assessee has committed an error by mentioning the wrong due date for making the payment of employees’ and employer’s contribution towards the Provident Fund Account and accordingly the Assessing Officer  had disallowed the Provident Fund payments, which according to  him, were paid after the expiry of due dates.

The Tribunal further observed that the first Appellate Authority had blindly concurred with the Assessing Officer without examining the details of actual payment. He just harped upon the audit report in which the factual error crept at the end of the auditor.

The Tribunal stated that once a point is being raised by the assessee in an appeal with the help of relevant material demonstrating the factual error, the CIT(Appeals) is bound to cross verify such facts and adjudicate the issue on merit.

The Tribunal opined that the CIT(Appeals) failed to appreciate the controversy in true perspective inspite of bringing all relevant material facts.

Taking into consideration the sector specific Provident Fund Scheme and the actual payments made by the assessee within the due date, the Tribunal held that there was no lapse at the end of  the assessee for claiming the deduction. 

Accordingly the ITAT allowed the appeal of the assessee and deleted the disallowance.

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• Once assessee discharges primary onus, it shifts to AO to bring evidence to contrary – ITAT