NANESH PROJECTS,RAIPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CPC, BANGALORE

आयकर अपीलीय अधिकरण, रायपुर न्यायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR श्री रविश सूद, न्याधयक सदस्य एिं श्री अरुण खोड़वपया, लेखा सदस्य के समक्ष । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं./ITA No.63/RPR/2021 (Assessment Years: 2018-2019) Nanesh Projects, Vs DCIT, CPC, Bangalore Sai Nagar, Devendra Nagar Road, Raipur-492001 PAN No. :AADFN 9947 J (अपीलार्थी /Appellant) (प्रत्यर्थी / Respondent) .. धििााररती की ओर से /Assessee by : Shri Praveen Jain, CA राजस्ि की ओर से /Revenue by : Shri Choudhary N.C.Roy, Sr. DR सुििाई की तारीख / Date of Hearing : 26/06/2023 घोषणा की तारीख/Date of Pronouncement : 10/07/2023 आदेश / O R D E R Per Arun Khodpia, AM : The assessee has filed this appeal against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 23.06.2021 for the assessment year 2018-2019, on the following grounds:- 1. Ground 1: That on the facts and on the circumstances of the case, Ld. CIT(A) erred in sustaining addition of GST payable amounting to Rs. 7,48,076/- in spite of the fact that same is covered u/s 43B and has been fully paid before the due date of filing ITR. Proof of payment of GST was submitted before Ld. AO as well as Ld. CIT(A), ignored the submission of the assessee Ld. CIT(A) has confirmed the addition which is bad in law, against law of natural justice and uncalled for; disallowance made and sustained may kindly be deleted. 2. Ground 2: That on the facts and on the circumstances of the case, Ld. CIT(A) erred in sustaining addition of PF payable amounting to_Rs. 18,236/- for the month of March 2018 which is paid on 15.04.2018 in spite of the fact that same has been fully paid within due date prescribed under the respective Act and also due date of filing ITR. Proof of payment was submitted before Ld. AO as well as Ld. CIT(A), ignored the submission of the assessee Ld. CIT(A) has confirmed the addition which is bad in law, against law of natural justice and uncalled for; disallowance made and sustained may kindly be deleted.

2 ITA No.63/RPR/21 3. Ground 3: That on the facts and on the circumstances of the case, Ld. CIT(A) erred in sustaining addition made by Ld. AO amounting to Rs 12,226/- towards delay in payment of Employee's Contribution to Provident fund in spite of the fact that same has been paid before due date of filing ITR. CIT(A) ignored the submission of the assessee and has confirmed the addition which is bad in law, against law of natural justice and uncalled for; disallowance made and, sustained may kindly be deleted. 4. Ground 3: Disallowance for delay in payment of PF is not a mistake apparent from record, thus addition of same in Rectification order/Intimation u/s 154 r.w.s 143(1) and sustaining the same by CIT(A) is bad in law and may kindly be deleted. 5. Ground 5: The appellant craves leave to add, amend, alter and delete the ground(s) of appeal at the time of hearing the appeal. I. RELIEF SOUGHT That above mentioned disallowance amounting to Rs. 7,78,538/- made by Ld. AO sustained by CIT(A) is uncalled for, against the natural justice may kindly be deleted. 2. Ld. AR, at the outset, did not press the ground No.3. Accordingly, ground No.3 is dismissed as not pressed. Ground No.5 is general in nature. 3. The issue remained before us to be decided with respect of the amount of Rs.7,66,312/- which were disallowed on account of “disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return.” Brief facts of the case are that the assessee company is engaged 4. in the business of Construction & site preparation works. The assessee filed its return of income for A.Y. 2018-19 on 30.10.2018 declaring total income of Rs. 24,31, 780/-. Subsequently, DCIT, CPC, Bangalore passed rectification order u/s.154 of the Act, dated

3 ITA No.63/RPR/21 28.11.2019, the AO in the Order/intimation u/s 154 r.w.s 143(1) of the Act, made disallowance/addition of Rs.7,66,312/- under section 43B and Rs.12.226/- u/s 2(24)(x) r.w.s 36(1 )(va) in respect of Contributions received from employees towards PF/ESI and but not deposited to the relevant funds by the due dates under respective laws. 5. Against the above order of the Assessing Officer, the assessee filed appeal before the ld. CIT(A) and filed its written submission substantiating its claim, however, the ld CIT(A) dismissed the appeal of the assessee upholding the appeal of the assessee on the ground that the assessee could not substantiate its claim before the AO. 6. Now, the assessee is in further appeal before the Tribunal with the grievance that the ld.CIT(A) has wrongly decided the issue stating that the delayed payment cannot be allowed u/s.43B of the Act without appreciating the fact that such payments were not delayed but were made in time. 7. Ld. AR, at the outset, submitted that addition of Rs.7,78,538/- was made by assessing the return of assessee u/s.143(1) of the Act. A notice for proposed adjustment u/s.143(1)(a) of the Act was issued to the assessee on 21.01.2019. The assessee had submitted its response to the said communication on the same day i.e. on 21.01.2019, copy of the acknowledgement showing online response to the notice u/s.143(1)(a) of the Act by the assessee dated 21.01.2019 was furnished in support of this contention. The addition was consisting of two amounts i.e. one is with

4 ITA No.63/RPR/21 respect of employees contribution to the fund set up under the EPF Act for Rs.12,226/- and secondly on account of delayed payment of EPF payable of Rs.18,236/- and GST payable of Rs.7,48,076/-. It was submitted by the ld. AR that the amount of Rs.7,66,312/- was paid within the stipulated time of the relevant statutes and also before the due date of filing of return u/s.131 of the Act, hence, the disallowance made by the AO was uncalled for and unjustified. In support of this contention, ld AR submitted the fact that the amount of Rs.7,66,312/- was paid in time and the same was duly informed to the AO while responding to the communication for proposed adjustments u/s.143(1)(a) of the Act dated 21.01.2019, however, the response of the assessee was not considered by the AO and the addition proposed was crystalized. It was the submission of the ld. AR that the response of the assessee was well within the time of 30 days as mandatory under the provisions of Section 143(1)(a) of the Act, therefore, the same should have been considered and if the addition was to be made opportunity of being heard or rebuttal should have been provided to the assessee which was not done by the ld. AO. Considering such a conduct of the AO, since the mistake of not considering the assessee’s submission towards notice u/s.143(1)(a) is apparent from records, the assessee opted to file a rectification application u/s.154 of the Act to have the mistake apparent from records rectified and requisite relief to be granted to the assessee. An order u/s.154 of the Act dated 28.11.2019 was passed, however, the addition made u/s.143(1) of the Act was not deleted and the disallowance or

5 ITA No.63/RPR/21 addition was kept alive. The CIT(A) has also disregarded the contention of the assessee and dismissed the appeal and sustained the addition of Rs.7,66,312/-. 8. Ld.AR drew our attention to page 27 onwards of the paper book, wherein the assessee has furnished the copy of written submission made before the ld. CIT(A), dated 12.03.2021, wherein the assessee has clearly submitted the EPF payable of Rs.18,236/- and GST payable of Rs.7,48,076/- was paid within the stipulated due dates of respective statutes and also before the due date of filing of return u/s.139(1) of the Act. Copies of challan for payment of the amount, alleged as delayed payments were also submitted, the same are extracted as under :-

6 ITA No.63/RPR/21

7 ITA No.63/RPR/21 made in time and are not liable to be disallowed. It was therefore, prayer that the order of the ld. CIT(A) should be set aside and since the mistake is apparent from record, the addition made on account of delayed payment shall be deleted and appeal of the assessee may please be allowed. 10. On the other hand, ld. Sr. DR vehemently supported the orders of the authorities below and filed his written submissions which read as under :- The assesee has challenged in ground no -3 disallowances in payment of PF is not a mistake apparent from records, thus addition of the same in rectification order us 154 r.w.s.l43(l) and sustaining the same by CITA is bad in law and may kindly be deleted."" 1.Section 44AB mandates a liability of the assesee to file his audited report certified by qualified CA in time, based on his books of account in accordance with accounting standard prescribed in the rule. The report furnished and uploaded in the ITBA is legal evidence explaining the business transaction balance sheet and other financial statement. There is no reasons to disbelieve the transaction entered in audited report. Based on the data in audited report, and entry made in matching column of ITR, found not verifiable, the CPC rightly disallowed the expenditure claimed by the assesee. 2.The genesis of the grievances of the assesee is not based on some issues required legal interpretation and cannot be said as debatable issues and is out of the scope of section 143(1) of the Act. It is omission and commission on the part of the assesee while uploading his audited report and ITR of transaction value of his business. Section 143(l)(iv) categorically defined any difference in expenditure claimed in ITR mismatched with the audited report is subject to disallowances. It is not restricted to arithmetical error but beyond that also in some of the legal matter. The Mismatch of figures in ITR is subject matter of disallowances and cannot equated with legal interpretation. Hence, disallowances made by CPC is mismatch expenditure is within the scope of section 143(1) of the act. 3. Disallowances of mismatch entry in ITR is provided in section 143(1) of the Act. .Section 143(l)(iv) empowers the AO CPC to process ITR . The processing of ITR is based on "Mismatch concept" categorically

8 ITA No.63/RPR/21 defined in subsection (iv)of section 143(1) . The plain reading of the said section doesn't hit any issues involving " legal or debatable aspects" of the entries in 1TR and mismatch audited report. Section 143(1) explanations is as (1) Where a return has been made under section 139, or in response to a notice under subsection (1) o/section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure —[or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made: Provided also that no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018; Explanation.— For the purposes of this sub-section,— (a) "an incorrect claim apparent from any information in the return " shall mean a claim, on the basis of an entry, in the return,— (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or

9 ITA No.63/RPR/21 (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assesee under clause (c), and where no adjustment has been made under clause (a). 4.The CPC have the jurisdiction and power to process under section 143(1) of the Act all the ITR ..... : Vide Notification by CBDT, New Delhi, the 10th June, 2022 (INCOME-TAX) S.O. 2693(E).— TheAO CPC Authorised undersection 120 of the Actto pocressthe ITR filed under section 139(1) by the assesee for specified class of person and business and area and is reproduces as under:- . . "In exercise of the powers conferred by sub-sections (1), (2) and (5) of section 120 of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as the said Act) and in supersession of Notification No. 23/2021 bearing S.O. 1435(E) dated the 31st March, 2021 published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (ii), except as respects things done or omitted to be done before such supersession, the Central Board of Direct Taxes hereby directs that the Income-tax Authorities of Units specified in Column (2) of the Schedule below, having their headquarters at the places mentioned in Column (3) of the said Schedule, shall exercise the powers and functions of Assessing Officers concurrently, to facilitate the conduct of Faceless Assessment proceedings undersection 144B of the said Act, in respect of a/I persons or class of persons, or incomes or class of incomes, or cases or class of cases in the territory of India, excluding the persons or class of persons, or incomes or class of incomes, or cases or class of cases covered by the Notification No. 57/2014 bearing S. O. 2814(E) dated the 3 rd November, 2014 published in the Gazette of India, Extraordinary, Part II, Section 3, subsection (ii) or by the Notification No. 70/2014 bearing S.O. 2915(E) dated the 13th November, 2014 published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (ii): SCHEDULE The AO CPC unit from S.No 361. to 481 Bengluru. This notification is in pursuance of Ad. VI Order No. 114 of 2022 dated 6th June, 2022 for reversion/deployment and re-designation of existing posts of Income-tax Authorities. Therefore, this notification is given effect from the said date. It is certified that no person is being adversely affected by giving retrospective effect to this notification."

10 ITA No.63/RPR/21 C. The column of ITR and audited report hit by 143(1) is duly notified in CBDT circular to disallow mismatch figure. In exercise of the powers conferred by sub-sections (1), (2) and (5) of section 120 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes in the notification of the Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes No.61/2022 dated the 10th June, 2022, published in Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) vide number S.O. 2693(E) dated the 10th June, 2022 has identify the entries for processing of ITR. 3. From the circular discussed below, CBDT has facilitated through its notification to revised audited report and allowed to upload rectified audited report. That is remedies available with the assesee, instead the assesee preferred application under section 154 of the act. Unless the assesee rectify his commission or omission by filing revised audited report, the mismatch figure cannot be processed by CPC. Hence, the rejection of his 154 application was rightly done by the CPC. The assesee cannot reach to his desired destination by catching wrong bus. It was negligence of the assesee which can be corrected by the assesee him self. The simple answer to it, is corrects the entry which has been incorrectly entered due to omission by filing revised audited report or ITR. The assesee without exhausting remady available at his door wrongly stepped to filing application under section 154 of the act. The Act and ITBA has given him sufficient scope forfiling a revised audited reportto cure wrong entry made by the assesee. The assesee objection in context with quasy judicial functioning of the CPC is base less and is not accepted..'-. D. Redressal of mismatch entry in ITR,disallowed by CPC. The CBDT by its notification dated 01-04-2021, provided services to redress the grievances of the assesee generated from the any omission or commission of the assesee while filing his ITR or in audited report. It reads as under. MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 1st April, 2021 (INCOME-TAX) G.S.R. 246(E).— In exercise of the powers conferred by section 44AB read with section 295 of the Incometax Act (43 of 1961), the Central Board of Direct Taxes, hereby, mokes the following rules further to amend the Income-tax Rules, 1962, namely:- 1. Short title and commencement.- (1) These rules may be called the Income-tax (eighth Amendment) Rules, 2021.

11 ITA No.63/RPR/21 (2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Income-tax Rules, 1962,- (a) in rule 6G, after sub-rule (2), the following sub-rule shall be inserted, namely:- (3) The report of audit furnished under this rule may be revised by the person by getting revised report of audit from an accountant, duly signed and verified by such accountant, and furnish it before the end of the relevant assessment year for which the report pertains, if there is payment by such person after furnishing of report under subrule (1) and (2) which necessitates recalculation of disallowance under section 40 or section 43B. //; From the above, it is settled that CPC is empowered to process the ITR in accordance with the provisions of section 143(1) of the act mismatch entry with audited report. Section 143(l)(iv) is based on "mismatch concept " and provides that any mismatch entry in audited report with ITR is subject matter of disallowances. The mismatch relevant entry is notified for disallowances under section 143(1) of the Act. The mismatch entry is curable by only by filing revised Audit report. The assesee, instead of filing revised audited report, rides on wrong bus, i.e application under section 154 of the Act, hence ,the order passed u/s 143(1) is valid and rejection of application under section 154 is also valid. Therefore, the order passed by the CITA confirming the disallowances, as above, is sustainable. 11. We have heard rival submissions and perused the material available on record. First, we shall deal with the contention of the ld. DR that the CPC is empowered to process the ITR in accordance with the provisions of Section 143(1) of the Act, in mismatch in the entries in ITR with the audit report is the subject matter of disallowance. The mismatch of relevant entries informed for disallowance u/s.143(1) of the Act. Such mismatch is curable only by filing revised audit report. The assessee instead of filing revised audit report rides on wrong bus and has applied the provisions u/s.154 of the Act for rectification of mistakes. Hence, the order passed u/s.143(1) of the Act is valid and rejection of application u/s.154 of the Act is also valid, therefore, the order passed by the ld. CIT(A) confirming the disallowance is sustainable. This contention of the

12 ITA No.63/RPR/21 revenue cannot be acceded to for the reason that any addition made u/s.143(1) of the Act has to go through the process as prescribed in Section 143(1)(a) of the Act, which is extracted hereinunder for better analysis :- 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; [***] (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; [(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80- IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made:]

13 ITA No.63/RPR/21 says that no such adjustment shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode. It is provided further that the response received from the assessee, if any, shall be considered before making any adjustment and in a case where no response is received within 30 days of the issue of such intimation, such adjustment shall be made. Coming to the factual aspect of the present case, wherein an intimation u/s.143(1)(a) of the Act was served upon the assessee on 21st January, 2019 and the assessee has very diligently responded with the reasons specifying that since the payments which are proposed to be disallowed are made within the specified, the same cannot be subjected to any disallowance, however, the AO, who was duty bound to consider such response from assessee, before making an addition on this account, has not considered the submission of the assessee, therefore, the same should have been considered as a mistake apparent from the record. We, thus, do not find any merit in the contention raised by the revenue and are of the view that since a mistake was apparent from the record and the AO, who was mandated by the law to consider the response of the assessee, which was submitted within the prescribed time of 30 days but has not considered the same and crystallized the addition, therefore, the mistake is apparent from record and curable within the provisions of Section 154 of the Act. Department’s plea that the assessee should have revised the audit report which was carrying the mismatch with figures in ITR, cannot be considered to be a reason for not granting relief to the assessee

14 ITA No.63/RPR/21 otherwise the provision of Section 143(1)(a) of the Act and the provisos therein would become redundant. In such circumstances, we are unable to comprehend the contention of the revenue and, therefore, the same cannot be considered concurred with. 13. Admittedly, a notice u/s.143(1)(a) of the Act, dated 21.01.2019, wherein the assessee was asked to explain about the errors/incorrect claims/inconsistencies pertaining to certain payments disallowable u/s.43B & 36(1)(va) of the Act. In response, the assessee submitted its clarification on the issue immediately on 21.01.2019 itself, but the same was not considered while framing the intimation u/s.143(1) of the Act. The assessee tried to have this mistake rectified through the course of provisions of Section 154 of the Act, but failed to succeed. Therefore, the issue was raised before the ld. CIT(A). Going through the facts of the case, on perusal of the order of the ld. CIT(A) and the copy of submission made before the ld.CIT(A) by the assessee, it is discernible that the ld. CIT(A) has elaborately discussed the issue pertaining to the payments covered by the provisions of Section 43B of the Act and the mandate of law, when such payments are deposited beyond the due date as stipulated under their respective statutes. Ld. CIT(A) also mentioned the observations of the Hon’ble High Courts and circulars of CBDT in this regard and has concluded that as per amendment brought into in the recent Finance Act, the delayed payment cannot be allowed u/s.43B of the Act and has confirmed the disallowance/addition made u/s.43B of the Act and u/s.2(24)(x) r.w.s.36(1)(va) of the Act. On perusal of the order of

15 ITA No.63/RPR/21 the ld. CIT(A), it is also transpired that the assessee’s submission, that payments were made in time, in support of which copies of challan showing that the payments were made within the due dates of respective statutes, were not at all considered or discussed in the order, only discussing the mandate of law without recognising its applicability on the facts of the case and sustaining the addition without making any observation that how the mandate of law is applicable on the facts which are not in consonance for which the mandate is directed in the present case, is an erroneous application on law and, therefore, the order of the ld. CIT(A) wherein consequence of delayed payment was discussed at length but it was not observed that in the instant case, there was no delay in payments, thus, such provisions of law which are applicable in a particular situation, which is not the situation of the case in hand, cannot be applied. In such a peculiar situation, since the issue before the ld. CIT(A) wherein the submission of the assessee were taken into consideration but were not carefully read into, the ld. CIT(A) has observed that the assessee has argued that if the payments were made within the due date of filing of return, the same had to be allowed, however, the submission of the assessee that the payments were made within the due date stipulated under the respective statutes and also before filing of return, the same should have been allowed. This clearly shows that the ld. CIT(A) has not gone through the facts of the case in its entirety and, therefore, has comprehend that the payments were made beyond the due date prescribed under respective statutes, therefore are disallowable. We

16 ITA No.63/RPR/21 do not persuade to concur with the finding of the ld. CIT(A). Accordingly, we set aside the order of the ld. CIT(A) and in the interest of justice, considering the merits of the case, we direct the AO to examine the authenticity of the documents submitted by the assessee in support of its contention that the impugned payments were made within the specified time and delete the addition. We also direct the assessee to submit all the relevant documents before the AO along with explanations to substantiate its contentions. Thus, this issue is allowed for statistical purposes. 14. In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the court on 10/07/2023. Sd/- Sd/- (RAVISH SOOD) (ARUN KHODPIA) न्याधयक सदस्य / JUDICIAL MEMBER लेखा सदस्य / ACCOUNTANT MEMBER रायपुर/Raipur; ददिांक Dated 10/07/2023 Prakash Kumar Mishra, Sr.P.S(on tour) आदेश की प्रधतधलवप अग्रेवषत/Copy of the Order forwarded to : अपीलार्थी / The Appellant- 1. 2. प्रत्यर्थी / The Respondent- 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT विभागीय प्रविविवि, आयकर अपीलीय अविकरण, रायपुर/ DR, ITAT, 5. Raipur 6. गार्ा फाईल / Guard file. आदेशािुसार/ BY ORDER, सत्यावपत प्रधत //True Copy//

(Assistant Registrar) आयकर अपीलीय अधिकरण, रायपुर/ITAT, Raipur