Rs. 44.5 cr Addition made on Incorrect Reporting by Auditor: ITAT directs CIT(A) to condone delay of 484 days [Read Order]

In a recent ruling, the Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) held that the addition of 44.5 crores was made based on incorrect reporting by the auditor and directed the Commissioner of Income Tax (Appeals) [CIT(A)] to condone a delay of 484 days.

In this case, the assessee, ABS Fujitsu General Pvt. Ltd., is a company engaged in the business of heating, ventilation, and air conditioning activities, etc.

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The assessee filed the income tax return ( ITR ) for assessment year ( AY ) 2020-21, declaring an income of Rs. 9,75,05,600. During processing the assessment  under Section 143(1) of the Income Tax Act, 1961, an addition of Rs. 44,84,06,342 was made, including Rs. 44,58,57,745 as contingent liability towards bank guarantee and letter of credit. The assessee filed a rectification petition under Section 154, stating that this amount was a disclosure in the financials, not claimed as a deduction in the P&L Account. However, the Assessing Officer rejected the petition, upholding the addition.

There was a delay of 484 days in filing the appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], and the assessee filed a condonation petition in this regard. The CIT(A) dismissed the appeal filed by the assessee without condoning the delay.

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It was submitted by the counsel on behalf of the assessee that the assessee had a reasonable cause for the delay in filing the appeal before the CIT(A) and that  the addition was made based on the incorrect reporting made by the auditor in Form 3CD for the AY 2020-21. 

 The ITAT bench, comprising George George K (Vice President) and Padmavathy S (Accountant Member), noted that the CIT(A) dismissed the appeal due to a 484-day delay without condoning it, rejecting the reasons cited in the affidavi by the affidavitt.

The bench considered the contention raised by the assessee that the addition was made based on incorrect reporting by the auditor and by recognizing the principle of substantial justice over technicalities, the bench directed the CIT(A) to condone the delay and review the appeal on its merits.

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The bench clarified that this decision is specific to this case and cannot serve as a precedent.

The ITAT allowed the appeal filed by the assessee for statistical purposes.

The assessee was represented by Mr. Narendra Kumar Jain and the revenue by Mr. R.N. Siddppaji.

To Read the full text of the Order CLICK HERE

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