Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-1’, NEW DELHI
Before: SH. N. K. BILLAIYA
This appeal by the assessee is preferred against the order of the CIT(A)-1, New Delhi dated 31.08.2020 pertaining to A.Y.2019-20.
The grievance of the assessee read as under :-
Briefly stated the facts of the case are that while processing the return of income filed by the assessee, CPC Bangalore in intimation u/s. 143 (1) of the Act disallowed Rs.7,23,552/-on account of subscription fees paid to club.
The assessee agitated before the CIT(A) but the CIT(A) dismissed the appeal by holding as under : Decision: 5.1 The facts of the case is that the CPC Bangalore vide order dated 20.05.2020 has made adjustment u/s 143(1 )(a) on account of inconsistency in total amount of disallowance under section 37of the Act relying upon the information given by the auditor in Form 3CD. In the present appeal, the Appellant has challenged this relying upon various judgments/ decisions mentioned in Appellant’s submission supra in para 4. 5.2 The case of the Appellant has been carefully considered. From the order of CPC it is apparent that following reason has been given by CPC for making such adjustment- iv Disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return 143(1)(a)(iv) Particulars Variance Amount Amount s. in income mentioned in No. Tax Form Annexure Return 3CD 723552 723552 1. Inconsistency in total amount of 20000 disallowance under section 37
5.3 As per the provisions of section 143(1)(a)(iv) the following adjustment can be made which is reproduced as under:
2[(1) Where a return has been made under section 139,
or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:— (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return;
This shows that CPC is within the power to make such adjustment as Appellant’s auditor himself disallowed it but Appellant has claimed it in the Return of Income against the Audit Report. 5.4 In this light, CPC is justified in making the addition under section 37. This fact has also been reported by the Auditor who has audited the accounts of the appellant in Form 3CD. On the basis of the above, the addition made by CPC under this head of Rs.7,03,552/- is confirmed and ground of appeal no.1 to 4 are dismissed.
Before me the counsel for the assessee drew my attention to the tax audit report and pointed out that the auditors have not made any adverse comment.
It is the say of the Counsel that CPC, Bangalore made addition which are not permissible in processing the return u/s. 143 (1) of the Act.
Per contra the DR strongly supported the findings of the AO/ CIT(A).
I have carefully considered the intimation u/s.143 (1) of the Act by CPC, Bangalore viz-a-viz the order of the CIT(A). Following information was provided in the tax audit report :-
The reasons given by CPC for making the adjustment is “disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return u/s. 143 (1)(a)(iv)”.
A careful perusal of the relevant part of the audit report show that nowhere the auditors have reported the disallowance of expenditure and, therefore, invoking provisions of section 143 (1)(a)(iv) is unwarranted.
Considering the facts of the case in the light of the relevant audit report mentioned here in above I direct the AO delete the impugned addition.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 25.10.2021.