ASIA STEELS,KANPUR vs. ASSISTANT DIRECTOR OF INCOME TAX, CPC, BENGALURU

That having regard to the facts and circumstances of the case, Ld. Commissioner of Income Tax, (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in confirming the action of Ld. AO (CPC, Bengaluru) in making disallowance u/s 36 of the Income Tax Act, 1961 has failed to appreciate that provisions of ESI/PF are not applicable in the case of the assessee & addition of Rs 1,24,040/- u/s 36 of the Income Tax Act, 1961 has wrongly been made on the wrong feeding of the data by Chartered Accountant in Audit Report of the assessee for A.Y. 2019-20.

Because various adverse observations and allegations made by the lower authorities are contrary to the facts, material £ evidences available on record.

Because the order of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi is against the principle of natural justice erroneous and not tenable in law and on facts. 5 Because the appellant craves leave to add, amend, delete modify and of the grounds of appeal

The ld. DR, on the other hand submitted that the CPC had picked up the figure from the copy of audit report only and the order of CPC is dated 5.3.2020 and the assessee had uploaded the revised tax audit report on 17.09.2020, therefore at the time of passing of order by CPC u/s. 143(1) this revised audit report was not before CPC and therefore there is no mistake apparent from record and hence ld. CIT(A) has rightly dismissed the appeal of the assessee.

I have heard the rival parties and have gone through the material placed on record. I find that the assessee is a trader and the copy of balance sheet placed in P.B. pg. 25 does not reflect any unpaid liabilities on account of ESI/PF. From the copy of P&L account placed in P.B. pg. 24 I find that the expenses on account of salary are only to the extent of Rs.72,000/- .Therefore, from the amount of salary itself it can be concluded that the provisions of provident fund and ESI/PF were not applicable to the assessee. I further find that it is a fact that originally the tax auditor had filled up the column regarding non payment of ESI/PF which is apparent from copy of the auditor report and CPC had rightly picked up amount as disallowance u/s. 36 of the Act. The auditor issued a revised tax audit report which is placed in P.B. pgs. 27 to 37. In the revised tax audit report, there is no mention of this disallowance u/s. 36 of the Act. The auditors has also given a certificate placed in P.B. pg.38, wherein he has admitted that due to some technical fault in software point no.20b of tax audit report in Form 3CB has been wrongly filled. He has further certified that the point no.20b of tax audit report in Form 3CB is NIL and the provisions of employees provident fund and ESI were not applicable in the case of the assessee. I find that the ld. DR had argued that since there is no mistake apparent from record, the ld. CIT(A) has rightly dismissed the appeal of the assessee however, I find that assessee has filed appeal before ld. CIT(A) against the order of CPC passed u/s. 143(1) which fact is apparent from the order of ld. CIT(A) and before ld.