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Facts
The assessee is in appeal against the order of the CIT(A) which confirmed an adjustment made by the CPC to the assessee's income. This adjustment arose from the reporting in the Tax Audit Report regarding the net effect on profit due to deviation from inventory valuation.
Held
The Tribunal held that the adjustment stemmed from a potential misreporting by the Tax Auditor, where the net effect on profit should have been Nil. Accepting the assessee's submission, the issue was remitted back to the Jurisdictional AO for verification.
Key Issues
Whether the adjustment made by the CPC based on the Tax Audit Report regarding inventory valuation was erroneous due to reporting errors, and if the matter should be remanded for verification.
Sections Cited
143(1), 145A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: HON’BLE SHRI ABY T. VARKEY, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा*रण वष* / Assessment Year: 2022-23) Madura Coats Pvt. Ltd. ACIT बनाम/ 35, New Jail Road, Madurai H.O., Corporate Circle-2, Vs. Madurai – 625 001. Madurai. �थायीलेखासं./जीआइआरसं./PAN/TAN No. AABCM-8279-K (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ� की ओर से/ Appellant by : Shri Nikhil (Advocate) – Ld. AR (Through Virtual Mode) ��थ� की ओर से/Respondent by : Shri Nilay Baran Som (CIT) -Ld. DR सुनवाई की तारीख/Date of Hearing : 29-01-2025 घोषणा की तारीख /Date of Pronouncement : 03-02-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member)
Aforesaid appeal by assessee for Assessment Year (AY) 2022-23 arises out of the order of learned Addl. / Joint Commissioner of Income Tax (Appeals), Bhubaneswar [CIT(A)] dated 18-09-2024 in the matter of an intimation issued by Ld. Assessing Officer [AO] u/s. 143(1) of the Act on 29-07-2023.
The Ld. AR appeared virtually and submitted that the dispute has arisen only due to wrong reporting in Tax Audit Report. The Ld. AR pleaded that the matter may be sent back to the file of Jurisdictional AO to verify the same.
It could be seen that CPC made certain adjustment to the income of the assessee for Rs.27.27 Crores on account of adjustment for ICDS as reported by Tax Auditor. Upon further appeal, Ld. CIT(A) limited the same to Rs.22.47 Crores against which the assessee is in further appeal before us. The impugned adjustment stem from reporting in Clause 14(b) of Tax Audit Report wherein Tax Auditor reported that net effect on profit on account of deviation from inventory valuation as prescribed under Sec.145A would be Rs.22.47 Crores. The Ld. CIT(A) accordingly confirmed the said adjustment.
The Ld. AR appeared virtually and stated that the adjustment has occurred due to wrong reporting of figures by Tax Auditor whereas the net effect of the GST component on valuation of inventories would ultimately be Nil. The Ld. AR stated that the same may be subject to verification by Jurisdictional AO.
Apparently, the assessee has erred in transmitting the correct data of Tax Audit Report. Upon perusal of Annexure-5 of manual Tax Audit Report as placed on Page No.514 of the paper-book, it could be seen that there would be reduction in profit to the extent of Rs.24.97 Crores due to increase of opening stock of raw material due to inclusion of GST on which credit is availed. The said figure apparently has been transmitted as Rs.2.49 Crores and hence the adjustment. As per Annexure-5, the net effect of adjustments would ultimately be Nil. Therefore, accepting the prayer of Ld. AR, we remit this issue back to the file of Jurisdictional AO for limited purpose of said verification. The assessee is directed to substantiate its claim. If there is mere typographical error, the impugned adjustment as sustained by Ld. CIT(A) would stand deleted. No other ground has been urged in the appeal.
The appeal stand allowed for statistical purposes. Order pronounced on 3rd February, 2025