Loading judgment…
Facts
The assessee's appeal was filed with a delay of 9 days, which was condoned by the Tribunal. The primary issue was whether the addition made by the Assessing Officer and confirmed by the CIT(A) was justified. The assessee claimed that a bonus amount of ₹.2,26,000/- was wrongly reported in the tax audit report due to oversight.
Held
The Tribunal held that the bonus amount of ₹.2,26,000/- was paid to employees and not as profit or dividend. This was supported by a certificate from the Chartered Accountant. Therefore, the addition made by the Assessing Officer was deleted.
Key Issues
Whether the addition made by the Assessing Officer, pertaining to a wrongly reported bonus payment in the tax audit report, is justified and should be confirmed by the Tribunal.
Sections Cited
44AB, 36(1)(ii)
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha
O R D E R
PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 04.03.2025 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2018-19.
We find that this appeal is filed with a delay of 9 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said affidavit, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.
The only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the addition made by the Assessing Officer in the facts and circumstances of the case.
At the outset, the ld. AR Shri T. Vasudevan, Advocate submits that the assessee paid bonus to his employees and the same is duly reflected in the Annexure placed at page 16 of the paper book, but, however, the Chartered Accountant, who conducted audit under section 44AB of the Income Tax Act, 1961 [“Act” in short] wrongly certified that the bonus was paid, which was otherwise payable as profit or dividend due to oversight. The ld. AR further submits that the assessee has obtained a certificate from Chartered Accountant, placed at page 17 of the paper book and prayed to delete the addition.
The ld. DR Shri N. Rajakumar, Addl. CIT fairly conceded the submissions of the ld. AR.
Heard both the parties and perused the material available on record. We note that in the assessment order, on perusal of the tax audit report, the Assessing Officer noted mismatch in amount paid to employees as bonus or commission under section 36(1)(ii) of the Act. The assessee submitted before the Assessing Officer that the bonus amount of ₹.2,26,000/- was wrongly reported in tax audit report in column 20(a) due to oversight, but, however, since the assessee did not produce any statement or certificate from the auditor, the Assessing Officer disallowed the same and added to the income of the assessee. On appeal, the ld. CIT(A) confirmed the addition made by the Assessing Officer.
We note that the contention of the assessee is that the bonus amount paid was wrongly reported in tax audit report in column 20(a) due to oversight and moreover, the assessee failed to submit supporting evidence during the course of assessment proceedings. However, the assessee produced copy of the certificate of the Chartered Accountant, which is placed at page 17 of the paper book, wherein, we note that the Chartered Accountant has certified that after conducting audit under section 44AB of the Act in Form 3CB and 3CD, in Column 20(a) in Form 3CD, it was wrongly certified that the bonus paid at ₹.2,26,000/- as otherwise payable as profit or dividend, whereas, actually the bonus was paid to employees, which cannot be treated as profit or dividend. Considering the certificate issued by the Chartered Accountant and brought on record, we delete the addition made by the Assessing Officer and allow the ground raised by the assessee.
In the result, the appeal filed by the assessee is allowed. Order pronounced on 02nd September, 2025 at Chennai.