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Facts
The assessee filed an appeal against an intimation issued under section 143(1) for AY 2018-2019, which entirely disallowed claimed expenditures on the ground that the audit report was not filed within time. The appeal was filed with a 59-day delay, which was condoned. The assessee contended that the disallowance was not an arithmetical mistake and the intimation should be quashed, also citing improper notice delivery.
Held
The Tribunal held that a blanket disallowance of all expenses for non-filing of an audit report does not constitute an arithmetical mistake permissible under section 143(1) of the Act. Such an adjustment would require re-computation under normal accounting principles. Consequently, the adjustment made in the intimation was deleted, and the intimation issued under section 143(1) was quashed.
Key Issues
Whether a blanket disallowance of expenses due to non-filing of an audit report, made via intimation under Section 143(1), can be considered an arithmetical mistake.
Sections Cited
Section 143(1) of the Income Tax Act
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आदेश / O R D E R Per Bench :
This is an appeal filed by the assessee against the order of the ld. Addl./JCIT(A)-4, Mumbai, dated 18.06.2024 for the assessment year 2018- 2019 2. The appeal of the assessee is filed belatedly by 59 days. In this regard, the assessee has filed condonation application stating sufficient reasons for condonation of delay, which are not found to be false. Ld.Sr. DR also did not raise any serious objection. Considering the prayer of the assessee, the delay of 59 days in filing the appeal is condoned and the appeal is admitted for hearing.
It was submitted by the Ld.AR that the return filed by the assessee for the impugned assessment year was processed and intimation u/s.143(1) of the Act had been issued wherein the expenditure claimed by the assessee has been disallowed on the ground that audit report has not been filed within time. It was submission that the adjustment as made in the intimation is not permissible, insofar as it is not an arithmetical mistake. It was the submission that the intimation is liable to be quashed. It was submitted by the Ld.AR that the assessee did not receive the notice and the assessee had specifically mentioned in the form 35 that the notices should not be sent by email but should be sent by post as the President Secretary and Treasurer of the club keeps on changing. It was submission that as the adjustment in the intimation is not permissible, the intimation is liable to be quashed.
In reply, Ld.Sr. DR vehemently supported the order of the Assessing Officer/CPC and the Ld. CIT(A).
We have considered the rival submissions. A perusal of the intimation issued u/s.143(1) of the Act shows that the expenditures claimed by the assessee has been disallowed in its entirety in the intimation. If the Assessing Officer/CPC purposes to make disallowance of the expenditure on account of the non-filing of the audit report within time, then the expenditure of the assessee would have to be redrafted and the income should have to be computed under the normal accountancy principle. There is no provision for blanket disallowance for all expenses and it would not fall in the category of an arithmetical mistake which is permissible in the intimation u/s.143(1) of the Act. As the adjustment made in the intimation is not a permissible adjustment, the adjustment as made in the intimation u/s.143(1) of the Act stands deleted and the intimation issued u/s.143(1) of the Act stands quashed.
In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 01/01/2026.