Asia Steels, Kanpur V. Assistant Director of Income Tax, CPC, Bengaluru

ITA 22/LKW/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8704 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Appeal Filed On: 23-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARISH GIDWANI
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “SMC”, LUCKNOW BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA No. 22/Lkw/2022 Assessment Year 2019-20 Income Tax Officer, Ward 1(2)(1), Kanpur Vs. Asia Steels, 76/546, Coolie Bazar, Kanpur - 208001 PAN – AABFA5075A (Respondent) (Appellant) Shri P.K. Kapoor, CA Appellant by Shri Harish Gidwani, DR Respondent by 06/06/2022 Date of hearing 10/06/2022 Date of pronouncement O R D E R This appeal has been filed by the assessee against the order of the ld. CIT(A), dated 021.10.2021 for Assessment Year 2019-20. The grounds taken by the assessee are reproduced below: “1. That the appellant denies its liability to be assessed at total income of Rs. 1,24,040/- as against returned income of Rs. NIL and accordingly denies its liability to pay tax, cess and interest demand here on. 2. That having regard to the facts and circumstances of the case, Ld. Commissioner of Income Tax, (Appeals), National Faceless Appeal Centre, Delhi has erred in law and on facts in confirming the action of Ld. AO (CPC, Bengaluru) in making disallowance u/s 36 of the Income Tax Act, 1961 has failed to appreciate that provisions of ESI/PF are not applicable in the case of the assessee & addition of Rs 1,24,040/- u/s 36 of the Income Tax Act, 1961 has wrongly been made on the wrong feeding of the data by Chartered Accountant in Audit Report of the assessee for A.Y. 2019-20. 3. Because various adverse observations and allegations made by the lower authorities are contrary to the facts, material £ evidences available on record. 2 4. Because the order of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi is against the principle of natural justice erroneous and not tenable in law and on facts. 5 Because the appellant craves leave to add, amend, delete modify and of the grounds of appeal till the final date of hearing and disposal of appeal.” 2. The ld. AR at the outset submitted that there is a delay of 132 days in filing the appeal before this Tribunal which had happened as the assessee got seriously ill from 06.11.2021 to 12.01.2022 and in this respect my attention was invited to receipt of Dr. Mayank Mehrotra which is annexed in the application for condonation of delay. In view of above, it was submitted that there is a reasonable case for delay in filing the appeal which may be condoned. 3. The ld. DR did not have any objection to the condonation of delay. Therefore, finding the reason for delay reasonable the delay in filing the appeal was condoned and AR was asked to proceed with his arguments. 4. The ld. AR submitted that the Assessing Officer has made a disallowance u/s. 36 amounting to Rs.1,24,040/- being unpaid ESI/PF which the CPC had picked from the audit report furnished by the assessee. The ld. AR submitted that the auditor of the assessee while completing the audit inadvertently mentioned the figure of some other client and therefore the audit report was not correct as far as the declaration of this liability in the audit report is concerned and therefore the auditor was approached and he submitted a revised tax audit report which was uploaded in the income tax portal on 17.06.2020 and my attention was invited to P.B. pgs. 27 to 37 where the copies of such audit report was placed. Inviting my attention to original audit report placed at P.B. pgs. 12 to 26 the ld. AR submitted this amount of Rs.1,24,040/- was mentioned in the original audit report whereas in the revised audit report such figure is NIL. My attention was further invited to copy of P&L account and balance sheet where there is no mention of any amount regarding ESI/PF. It was submitted that the figure in audit report was wrongly mentioned by the auditor which has been further rectified by 3 the same auditor. Therefore, the sustenance of disallowance by ld. CIT(A) is not justified. 5. The ld. DR, on the other hand submitted that the CPC had picked up the figure from the copy of audit report only and the order of CPC is dated 5.3.2020 and the assessee had uploaded the revised tax audit report on 17.09.2020, therefore at the time of passing of order by CPC u/s. 143(1) this revised audit report was not before CPC and therefore there is no mistake apparent from record and hence ld. CIT(A) has rightly dismissed the appeal of the assessee. 6. I have heard the rival parties and have gone through the material placed on record. I find that the assessee is a trader and the copy of balance sheet placed in P.B. pg. 25 does not reflect any unpaid liabilities on account of ESI/PF. From the copy of P&L account placed in P.B. pg. 24 I find that the expenses on account of salary are only to the extent of Rs.72,000/- .Therefore, from the amount of salary itself it can be concluded that the provisions of provident fund and ESI/PF were not applicable to the assessee. I further find that it is a fact that originally the tax auditor had filled up the column regarding non payment of ESI/PF which is apparent from copy of the auditor report and CPC had rightly picked up amount as disallowance u/s. 36 of the Act. The auditor issued a revised tax audit report which is placed in P.B. pgs. 27 to 37. In the revised tax audit report, there is no mention of this disallowance u/s. 36 of the Act. The auditors has also given a certificate placed in P.B. pg.38, wherein he has admitted that due to some technical fault in software point no.20b of tax audit report in Form 3CB has been wrongly filled. He has further certified that the point no.20b of tax audit report in Form 3CB is NIL and the provisions of employees provident fund and ESI were not applicable in the case of the assessee. I find that the ld. DR had argued that since there is no mistake apparent from record, the ld. CIT(A) has rightly dismissed the appeal of the assessee however, I find that assessee has filed appeal before ld. CIT(A) against the order of CPC passed u/s. 143(1) which fact is apparent from the order of ld. CIT(A) and before ld. 4 CIT(A), it was submitted that the provisions of ESI/PF were not applicable to. It was also submitted that chartered accountant had wrongly entered those details in the tax audit report. However the ld. CIT(A) dismissed the appeal of the assessee by holding that no evidence has been furnished for such claim that the provisions of provident fund were not applicable to the assessee. However, I find that the assessee had filed the revised tax audit report and original tax audit report and the certificate of auditor. Tthe assessee has also enclosed at pgs. 41 to 42 the copy of acknowledgement evidencing that written submissions were filed before ld. CIT(A) therefore it is wrong on the part of ld. CIT(A) to hold that no evidence was filed before him. The copy of acknowledgement placed at pgs. 41 and 42 clearly mentions that revised audit report and certificate of auditor was filed before ld. CIT(A). In view of these facts and circumstances, I delete the additions sustained by the ld. CIT(A). 7. In the result, appeal filed by the assessee is allowed. (Order pronounced in the open court on 10/06/2022) Sd/- (T.S. Kapoor) Accountant Member Aks – Dtd. 10/06/2022 Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File Assistant Registrar