SHRI VISHWAMITRA SHIKSHAN SAMITI,INDORE vs. INCOME TAX OFFICER 5(1), INDORE

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ITA 40/IND/2024Status: DisposedITAT Indore26 July 2024AY 2020-21Bench: SHRI VIJAY PAL RAO (Judicial Member), SHRI B.M. BIYANI (Accountant Member)6 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that it could not conclusively determine whether the assessee had claimed the impugned sum as a deduction due to conflicting information and the lack of a clarifying certificate from the auditors. Therefore, the matter was remanded to the AO for fresh adjudication.

What were the facts?

The assessee filed an appeal against an intimation under section 143(1) and the CIT(A)'s order confirming an addition of Rs. 69,32,340/-. The addition was based on an inconsistency between the amount claimed in the return and the audit report regarding a contingent liability.

What were the issues?

Whether the addition made by the AO based on an audit report's mention of a contingent liability was justified when the assessee claimed no such deduction, and whether the matter should be remanded for further factual verification.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 37(1),Section 253(5)

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Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI

For Appellant: Shri Ashish Goyal and Shri N. D. Patwa, ARs
For Respondent: Shri Ashish Porwal, Sr. DR
Hearing: 25.07.2024Pronounced: 26.07.2024

आदेश / O R D E R

Per B.M. Biyani, A.M.:

1.

Feeling aggrieved by appeal-order dated 10.11.2023 passed by learned Commissioner of Income-tax (Appeal)-Addl./JCIT(A)-12, Mumbai [“CIT(A)”] which in turn arises out of intimation dated 03.11.2021 passed by CPC, Bangalore [“AO”] u/s 143(1) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2020-21, the assessee has filed this appeal on following grounds:

Vishwamitra Shikshan Samiti, Indore Assessment Year : 2020-21

(1) The intimation u/s 143(1) is bad in law, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled. (2) The Ld. CIT(A) was not justified in confirming the intimation u/s 143(1), which is bad in law, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled. (3) The Ld. CIT(A) was not justified in confirming the addition of Rs. 69,32,340/- in the return income of the assessee without considering the facts and circumstances of the case.

2.

Heard the learned Representatives of both sides at length and case- records perused.

3.

The registry has informed that there is a small delay of 2 days in filing this appeal. Ld. AR for assessee submitted that the assessee has filed an application for condonation of delay supported by an affidavit on stamp. On perusal, we observe that the assessee is a charitable society engaged in imparting education and the reason of delayed filing was such that the President of assessee-society was out of city at the relevant time and therefore the appeal-papers could not be signed. It is further submitted that the appeal was filed in time on 08.01.2024 without any delay. Ld. AR very humbly submitted that there is no deliberate lethargy, negligence, mala fide intention or ulterior motive of assessee in making delay and the assessee does not stand to derive any benefit because of delay. Ld. DR for Revenue did not raise any objection considering small delay of just 2 days and the fair explanation made by assessee. We have considered the explanation

Vishwamitra Shikshan Samiti, Indore Assessment Year : 2020-21 advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a sufficient cause for delay in filing present appeal. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a sufficient cause for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice-oriented approach. Thus, taking into account the provision of section 253(5) and the decision of Hon’ble Supreme Court, we take a judicious view, condone delay, admit appeal and proceed with hearing.

4.

Although the assessee has raised several grievances of general nature in grounds regarding illegalities in the assessment made by AO, during the course of hearing the Ld. AR for assessee did not make submissions qua illegalities. His only endeavour was that a disallowance of Rs. 69,32,346/- made by AO u/s 37(1) based on audit-report (Form No. 3CD) was not valid on merit and accordingly we confine our adjudication to the pleadings made before us.

5.

Ld. AR drew us to Para 3.6 of CIT(A)’s order to show that the impugned disallowance has been made by AO on account of ‘inconsistency in the amount not allowable u/s 37 claimed in return in Schedule OI and the Vishwamitra Shikshan Samiti, Indore Assessment Year : 2020-21 audit report’. Then, he carried us to Page No. 71 of Paper-Book to show that the auditors have reported “Bank Guarantee against FDR – Rs. 69,32,346/-” in Clause No. 21(g) of audit-report which requires reporting of “Particulars of any liability of a contingent nature”. From this reporting of auditors, the AO picked a figure for disallowance u/s 37(1) but the fact is that the assessee has not claimed any such deduction in P&L A/c. Ld. AR drew us to the audited P&L A/c filed at Page 85 of the Paper-Book and the figures of P&L A/c reported by assessee in ITR at Page 13 of the Paper-Book, in an attempt to show that there is no item of Rs. 69,32,346/- having been claimed by assessee. While arguing Ld. AR insisted very forcefully that the auditors have made a wrong reporting in Clause No. 21(g) of audit-report when the assessee has not made any such claim of deduction. Ultimately, Ld. AR submitted that when the assessee has not claimed impugned sum as deduction, there was no justification in making disallowance by AO, therefore the same must be deleted.

6.

Per contra, Ld. DR for revenue strongly submitted that the auditors have made a clear-cut reporting and it cannot be said, without any evidence, that such reporting was wrong. He proposed and contended that the matter may be remanded to Jurisdictional AO for factual verification and adjudication afresh.

7.

We have considered rival submissions of both sides and perused the documents held on record including the orders of lower-authorities. We find

Vishwamitra Shikshan Samiti, Indore Assessment Year : 2020-21 that the AO has made impugned addition taking into account the reporting made by auditors in audit report (Form No. 3CD). During first-appeal, the assessee has not made any representation before CIT(A) which has led the CIT(A) to pass an ex-parte order and upheld the addition made by AO on the basis of material available with him. Before us, the Ld. AR is harping on the point that there is a reporting mistake by auditors in audit-report and Ld. AR also carried us to P&L A/c or the portion of ITR, as mentioned above, to show that there is no item of Rs. 69,32,346/- debited in P&L. Apparently, there is no item of exact amount of Rs. 69,32,346/- appearing to the debit of P&L A/c but we find that there are debit entries to P&L A/c exceeding this amount under some broad heads. For example, the amounts debited to P&L A/c under these heads are _______. Therefore, it cannot be said with certainty that the assessee would have not clubbed this amount in such heads. Therefore, in the situation, we cannot make any conclusive finding on either side. If there is a wrong reporting by auditors or if the auditors have filed a general information of ‘contingent liability’ even if the assessee has not claimed the same as deduction, the assessee could very well file a certificate of auditors clarifying such factual aspect but it is not done. Our adjudication requires a conclusive finding that the assessee has not claimed impugned deduction but from the available documents, we are unable to arrive at such a conclusion. Therefore, in the situation, we agree with Ld. DR’s proposal to send this matter back to the file of Jurisdictional AO for adjudication afresh. This would enable the assessee to file either auditors’

Vishwamitra Shikshan Samiti, Indore Assessment Year : 2020-21 clarificatory certificate or any other evidence as the assessee deems fit and appropriate to satisfy the AO that the impugned sum was not claimed as deduction. Needless to mention that the AO shall give necessary opportunity to assessee and also consider assessee’s submission properly without being influenced by earlier order. The assessee shall also make a proper representation failing which the AO shall be at liberty to take appropriate decision in accordance with law.

8.

Resultantly, this appeal is allowed for statistical purpose.

Order pronounced in the open court on 26.07.2024

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