The Income Tax Appellate Tribunal (ITAT) Chandigarh bench held that the lower authority has failed to verify the date of tax audit report submitted by the auditor in as per Form No.3CD. Thus, the bench directed readjudication .
Assessee, Eastman Exports Private Limited after filing its return which was processed by the CPC, Bangalore and intimation under section 143(1) Income Tax Act, 1961 was issued to the assessee wherein an amount of Rs. 17,53,799/- was disallowed.
As per the intimation it was points out that there is inconsistency in amount debited to the P&L Account of the previous year and which is disallowable under section 43B wherein the assessee in the return of income has disallowed a sum of Rs. 1,19,214/- as against an amount of Rs. 18,73,013/- as per Tax Audit Report in Form No. 3CD.
Thereafter, the assessee filed a rectification application but which was rejected. Accordingly, the assessee filed an appeal before the Commissioner of Income Tax (Appeal) {CIT(A)}.
Before the CIT(A) assessee submitted that an amount of Rs. 17,53,799/- was disallowed by the CPC due to inconsistency in disallowance as per the Tax Audit Report an and as per the return of income on account of bonus, leave with wages, casual leave with wages.
Hence, these payments were paid before the due date of filing of the return of income and given that the Tax Audit Report was issued and signed by the Tax Auditor on 09/10/2017, So the necessary effect thereof could not be taken in the Tax Audit Report and accordingly, the Auditors have disallowed the same.
After considering the submission, the CIT(A) observed that that if this amount were paid before 10/10/2017, it defies all logic as to how this amount was shown as not been paid till 19/10/2017 by the C.A in Form No. 3CD which is signed on 19/10/2017.
Thus, the C.A. Certificate dated 10/10/2017 appears to be incorrect and could not be relied upon where the statutory documents , that is Form No. 3CD which is part of the assessment record evidence the event of not payment till 19/10/2017.
Against these findings CIT(A) filed an appeal before the tribunal.
Tej Mohan Singh Counsel for assessee submitted the sum of Rs. 17,53,799/- towards bonus, leave with wages and leave encashment has been actually paid before the due date of filing of the return of income as per the Certificate obtained from the Auditor on 10/10/2017.
Amanpreet Kaur, counsel appeared on behalf of the revenue, supported the decision of the lower authorities.
After reviewing the facts and submissions of the both parties the single member bench of Aakash Deep Jain, (Vice President) and Vikram Singh Yadav ( Accountant Member) observed that the CIT(A) has considered the date of the Audit Report as 19/10/2017 where as the assessee has submitted the date of Audit Report as 09/10/2017.
Therefore, the bench directed the matter for re-adjudication after calling for necessary documentation.
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