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Facts
The assessee filed its return of income, and an intimation under Section 143(1) was issued, reducing the declared loss by disallowing expenditure under Section 43B. The assessee contended that this disallowance arose from a typographical error in its Tax Audit Report (Form 3CA) and had previously disagreed with the proposed adjustments.
Held
The Tribunal found that the disallowance was indeed due to a clerical mistake in Form No. 3CA, as reconciliation proved that payments were made within the due date. The Tribunal directed the Assessing Officer to delete the addition made under Section 143(1) of the Act, ruling that no further verification by the AO was required.
Key Issues
Whether adjustments made under Section 143(1) for disallowance under Section 43B, arising from a typographical error in the Tax Audit Report, were valid and within the scope of the Centralized Processing Centre's powers.
Sections Cited
143(1), 143(1A), 44AB, 43B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: MS. MADHUMITA ROY, & SHRI NAVEEN CHANDRA
This appeal by the assessee is preferred against the order of the ld. CIT(A), Jaipur dated 22.08.2024 for A.Y 2022-23.
The assessee has raised as many as 6 grounds of appeal. However, the solitary grievance of the assessee is the adjustment made u/s 143(1)
Page 1 of 5 of audit report.
Briefly stated, the facts of the case are that the assessee filed its return of income along with Tax Audit Report u/s 44AB of the Income- tax Act, 1961 [the Act, for short] on 28.10.2022 declaring income of Rs. NIL resulting into a tax refund of Rs 2,47,400/- The Intimation u/s 143(1) of the Act dated 17.01.2023 was received by the assessee on 17.01.2023 wherein loss from Business and Profession has been reduced from Rs 1,84,91,663/- to Rs 1,75,60,958/- by making disallowance of expenditure u/s 43B of the Act amounting to Rs 9,30,705/-.
At the very outset, the ld. counsel for the assessee submitted vehemently that such prima facie adjustments wrongly made has resulted into reduced carry forward loss and the adjustments made are for the typographical error made while filing the Tax Audit Report by the staff of the Auditor whereby the column wrongly chosen was 26(i)(B)(b) instead of 26(i)(B)(a) despite the fact that the assessee has disagreed to the proposed adjustments u/s 143(1)(a) vide reply dated 15.12.2022.
The ld AR further stated that adjustments/additions as made to the returned income as reflected in the intimation are beyond the power of the Revenue under Rule 8 of the Scheme notified by the Central Board
Page 2 of 5 Scheme, 2011. The Rule 8 of Centralized Processing of Returned Scheme, 2011 says
"a). receipt and processing of electronic rectification applications in the Centre; b). the address or place, the mode and the period or the extended period within which the acknowledgement is Form ITR-V shall be accepted; c). validating any software used for e-filing the return; d). call centers to answer queries and provide taxpayer services which may include outbound calls to persons requesting for clarification to assist in the processing of this return of income; and e). managing tax administration functions such as receipt, scanning, data, entry, processing, issue of refunds storage and retrieved of income tax returns and documents in a centralized manner or receipt of paper documents through authorized intermediaries.
The ld. counsel for the assessee continued by saying that the Assessing Officer, CPC, Bangalore, has made the disallowance without calling for necessary documentation and relying merely on the Tax audit report filed by the assessee. The disallowance thus made is against the principles of natural justice and needs to be quashed since the intimation about the adjustments/ additions as made to the returned income, are beyond the scope of the CPC.
Page 3 of 5 payments were made in July before the due date. However, the ld. DR prayed for sending the matter to the Assessing Officer for verification.
We have heard the rival submissions and have perused the relevant material on record. Before us the assessee has filed the reconciliation which shows that deposit of Rs 57,952/-; Rs 6,18,078/-; Rs 81,381/- and Rs 1,73,298/- were deducted and paid in the month of April 2022 itself.
We find substance in the assessee’s argument that there is a clerical mistake in filling Form No. 3CA where the assessee has wrongly entered the amount in wrong column. For this clerical mistake, we find that the assessee should not be punished with disallowance. We also find that there is no need to send the matter to the file of the Assessing Officer for verification as the same is a clerical mistake and the payment details have been produced before us clearly show that it was clerical mistake on the part of the assessee. In that view of the matter, we direct the Assessing Officer to delete the addition made u/s 143(1) of the Act. The grounds of appeal is allowed. is allowed.