M/S NOVA IRON AND STEEL LTD.,CHANDIGARH vs. DCIT, CC-1, CHANDIGARH

Order PER PARESH M. JOSHI, J.M. : This is an appeal filed by the Assessee for A.Y. 2020-21. The corresponding previous year is 01/04/2019 to 31/03/2020. The appeal is filed under section 253 of the Income Tax Act, 1961 as and by way of second appeal under the Act. The assessee is aggrieved by order dt. 22/03/2023 passed in appeal No. 10765/2019-20 of Ld. CIT(A) under section 250 of the Act, which is hereinafter referred to as the “impugned order”. Factual Matrix 2. The assessee is a limited company engaged in the business of manufacturing of Iron and Steel items. It filed its return of income for A.Y. 2020-21 on 13/02/2021 declaring loss of Rs. 33,41,53,728/-. The return of income was processed under section 143(1) of the Act vide intimation dt. 25/11/2021. 2.1 The Centralised Processing Centre (CPC) Bengaluru while processing the return under section 143(1) unjustifiably made an addition of Rs. 51,42,946/- under section 36(1)(va) on account of late deposit of employees contribution to PF/ESI despite the fact that the same was duly paid before filing of Income Tax Return.

(i) That the intimation under section 143(1) of the Income Tax Act, 1961 issued by CPC Bengaluru is against law and facts on the file in as much as they were not justified to arbitrarily add an amount of Rs. 51,42,946/- deposited on account of late deposit of PF and ESI despite the fact that the same was duly paid before the due date of filing of Income Tax Return. (This issue is not pressed)

(ii) That the intimation under section 143(1) of the Income Tax Act, 1961 issued by CPC Bengaluru is against law and facts in as much as they were not justified to arbitrarily add an amount of Rs. 7,03,125/- deposited on account of bonus payable despite the fact that the same was deposited on or before the due date of filing of Return of Income.

(iii) The CPC was further not justified not to consider and allowing the claim of depreciation of Rs. 89,96,72,987/- as duly disclosed in the Tax Audit Report as against wrongly claimed in the return of income at Rs. 1,03,13,420/- despite the fact that same had been claimed before CPC vide letter dt. 29.09.21. The Ld. CIT(A) in so far as ‘issues and grounds’ raised in the present appeal 3. before us is concerned has held as under:

“6. In the ITR the assessee has claimed depreciation of Rs. 1,03,13,420/- which was allowed by the CPC while processing u/s 143(1) whereas in this ground of appeal the assessee has claimed depreciation Rs. 89,96,72,987/-. In the written submission during the appellate proceedings it was stated that depreciation of Rs. 89,96,72,987/- was claimed in the tax audit report whereas the appellant has made claim of Rs. 1,03,13,420/- inadvertently in the ITR. On consideration facts of the case, it is found that CPC has processed the return as per the particulars furnished in the ITR in respect of depreciation (vide Schedule BP point no. 12(i). Therefore the CPC was justified in considering depreciation of Rs. 1,03,13,420/-. The appellant could have furnished revised return once it has discovered the above omission /wrong statement as per the provisions of section 139(5) of the Act. Accordingly no merit is found in such ground of appeal taken by the appellant. The same is hereby dismissed. “ That the Ld. CIT(A) in the impugned order has not given any finding on issue of 4. addition of amount of Rs. 7,03,125/- deposited on account of bonus payable despite the fact that the same was deposited on or before the due date of filing of return of income.

1. That order passed u/s 250(6) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Appeals)-3, Gurgaon is against law and facts on the file in as much as he was not justified to arbitrarily uphold the action of the Centralized Processing Centre, Bengaluru in rejecting the claim of the appellant to allow depreciation on block of assets at Rs. 89,96,72,987/-.

2. That the Learned CIT(A) was not justified to uphold the action of the Centralized Processing Centre, Bengaluru by observing that the same is not a mistake apparent from record whereas in the Tax Audit Report, this very amount of Rs. 89,96,72,987/-had been duly mentioned by the Auditors. 3. That action of the Learned CIT(A) in rejecting the claim of depreciation of Rs. 1,03,13,420/- claimed in the return is unjustified as the Tax Audit Report also form the part of the record. 4. That the Learned CIT(A) failed to adjudicate the ground relating to payment of bonus payable of Rs. 7,03,125/-, which was otherwise allowable u/s 43B of the Act. Record of Hearing 6. The hearing in the appeal took place on 14/08/2024 before us when both the parties appeared and were heard at length on merits of their respective submissions. The Ld. AR contended that claim of depreciation of Rs. 1,03,13,420/- was wrongly allowed by the CPC, Bangaluru while processing under section 143(1) whereas the correct figure was Rs. 89,96,72,937/-. An application for rectification was made under section 154 but same came to be rejected on the ground that it is not a mistake apparent from the records vide communication dt. 17/05/2022 [ page 51 & 52 of Paper Book 2]. According to Ld. AR correct amount of depreciation in TAR [Tax Audit Report] is Rs. 89,96,72,987/- whereas by mistake the amount of depreciation claimed in return of income was Rs. 1,03,14,420/-. Hence this mistake deserves to be rectified. However in the impugned order despite bringing it to the notice of Ld. CIT(A) he has not rectified the error which was inadvertent. Our attention was invited to page 20 of PB-I Column No. 18 of Form No. 3CA/3CD audit report under section 44AB of the Act, wherein all material particulars of depreciation allowable as per the Act, in respect of each asset or block of assets is shown which aggregates to Rs. 89,96,72,987/- and ot 1,03,13,420/- as claimed in ITR. It was contended that the Revenue authorities are to compute true and correct income by allowing all claims as admissible. Hence denying the claim of depreciation at Rs. 89,96,72,987/- is unjustified and bad in law. It was contended that their repeated pleas have not been considered by the Ld. CIT(A) which is genuine. The Ld. AR then placed reliance on judgement of Hon’ble Delhi High Court in case of CIT Vs. Heidrick and Struggles Inc. reported in (2024) 461 ITR 33 (Del) wherein it has been held that it is the duty of AO to grant relief to the assessee even if not claimed. Reliance was placed on CBDT Circular No. 14 of 1955. It was finally contended that in so far issue of payment of bonus is considered there is no finding given by Ld. CIT(A) in the impugned order and this limited issue relating to payment of bonus be remanded back to the file of Ld. CIT(A).

7. Per contra the Ld. DR has contended that assessee company ought to have filed revised return for such an issue of depreciation and supported orders of lower authorities below. Findings and Conclusions

8. We now examine the legality, validity and proprietary of impugned order. We hold that the Ld. CIT(A) ought to taken the correct figure of depreciation which was Rs. 89,96,72,987/- and ought to have granted relief as this is the correct figure as per TAR. The figure of Rs. 1,03,13,420/- is incorrectly stated in ITR through inadvertence. The Ld. CIT(A) ought to have carefully perused the TAR and ought to have given relief, by not doing so Ld. CIT(A) has erred in law and we set aside the impugned order of Ld. CIT(A) on issue of depreciation only. In so far as issue of payment of bonus is considered Ld. CIT(A) ought to have dealt with the issue but has failed to do so. No speaking order is passed on this issue. Therefore we remand this issue of payment of bonus of Rs. 7,03,125/- back to the file of Ld. CIT(A) with a direction to deal with this issue according to law and pass a speaking order.