KRUSHNA NAVGHAN KARAVDRA,PORBANDAR V. .INCOME TAX OFFICER, WARD 2(4), PORBANDAR

ITA 353/RJT/2023

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The case involves Krushna Navghan Karavdra, the assessee, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming the disallowance of Rs. 1,59,36,319/- under section 43B of the Income Tax Act, 1961, for the assessment year 2018-19. The disallowance was initially made by the Central Processing Centre (CPC) based on an audit report that erroneously included cumulative figures of outstanding service tax payable. The assessee argued that the correct figure for the current year's liability was Rs. 11,56,194/-, which was mistakenly reported as Rs. 1,59,36,319/-. The Assessing Officer and CIT(A) rejected the rectification request, leading to the appeal before the Tribunal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 27244 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: SAGAR SHAH
• Keywords: Rectification of order
• Section: 250; 154; 143(1); 43B

Judgement Text

" Page | 1 ITA No. 353/RJT/2023 – A.Y. - 2018-19 Krushna Navghan Karavdra vs. ITO IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No.353/RJT/2023 (Ǔनधा[रण वष[ / Assessment Year: (2018-19) (Hybrid Hearing) Krushna Navghan Karavdra Sodhana Via Bagdavar, Gadu B.O., Paravada, Porbandar, Gujarat 360590 Vs. Income Tax Officer Ward-2(4), Porbandar èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AMAPK6752D (Assessee) (Respondent) Assessee by : Shri Sagar Shah, AR Respondent by : Shri Abhimanyu Singh Yadav, Sr.DR Date of Hearing : 08/10/2024 Date of Pronouncement : 19/12/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2018-19, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘Ld. CIT(A)/NFAC’], dated 14.08.2023, which in turn arises out of a rectification order passed by the Assessing Officer (short as ‘AO’) u/s 154 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 29.03.2022. 2. The grounds of appeal raised by the assessee are as follows: “1. On the basis of the facts and circumstances of the case, the order passed by the ld. Commissioner of Income Tax (Appeals) under section 250 of the Income Tax Act is bad in law as well as on facts as the order passed is without considering the proper facts of the facts on the record and hence is required to be quashed. Page | 2 ITA No. 353/RJT/2023 – A.Y. - 2018-19 Krushna Navghan Karavdra vs. ITO 2. On the basis of the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in passing order u/s 250 of the Act, dated 14.08.2023 in not considering the fact that the appellant had applied for the rectification request u/s 154 of the Act to rectify the amount of disallowance made with respect to the erroneous cumulative figure of Outstanding Service Tax Payable reported by the Auditor. 3. On the basis of the facts and circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals) u/s 250 of the Act is erroneous as the same is passed without considering the fact that error made by the Auditor in the Tax Audit report during the year under consideration is apparently verifiable from the evidences placed on records. The Ld. CIT(A) has failed to consider that the disallowance of Rs. 1,59,36,319/- u/s 43B of the Act in A.Y. 2018-19 reported under clause 26(i)(B)(b) is cumulative in nature ie the same is inclusive of the previous year's outstanding service tax liability. However, CIT(A) failed to appreciate that the reporting made by the Auditor is just a mistake apparent from records. 4. On the basis of the facts and circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals) u/s 250 of the Act is erroneous as the same is passed without considering the fact that instead of reporting current year disallowance of Rs 11,56,194/-, the Auditor has due to the error of the oversight reported cumulative service tax payable amount outstanding in balance sheet of Rs. 1,59,36,319/-. Actual disallowance under 43B should be of current year's liability only which amounts to Rs 11,56,194/- only. 5. On the basis of the facts and circumstances of the case, the order passed by the Ld. commissioner of Income Tax (Appeals) u/s 250 of the Act is erroneous as the same is passed without considering the fact from the evidences placed on records that the total Service Tax Turnover for the year under consideration is amounting to Rs. 77,07,900/-. Then how can the Outstanding Service Tax payable of Rs. 1,59,36,319/- for the year be more than the turnover for the year? It was merely an oversight error of the Auditor in reporting under clause 26(1)(8)(b) in mentioning the current year's liability only which amounts to Rs 11,56,194/- only and remaining amount of Rs. 1,47,80,125/- is outstanding from the initiation of the F.Y.-2017-18. 6. On the basis of the facts and circumstances of the case the order passed by the Ld. Commissioner of Income Tax (Appeals) has erred in passing order u/s 250 of the Act, dated 14.08.2023 since he has failed to consider the fact that appellant has no intention to make any non-compliance to any provision of income tax act. It was just the error of oversight and no wilful intention to violate the provisions of the law. 7. On the basis of the facts and circumstances of the case the order passed by the Ld. Commissioner of Income Tax (Appeals) u/s 250 of the Act, the appellate would herewith like to submit the Chartered Accountant Certificate which will ultimately prove that the claim of the appellate regarding the oversight mistake is true and not based on mere surmises and conjectures. Based on the certificate submitted, the allegations raised on the appellate will be dropped and hence the addition made will be required to be deleted. 8. On the basis of the facts and circumstances of the case the order passed by the Ld. Commissioner of Income Tax (Appeals) has erred in passing order u/s 250 Page | 3 ITA No. 353/RJT/2023 – A.Y. - 2018-19 Krushna Navghan Karavdra vs. ITO of the Act, dated 14.08.2023 as CIT (A) has failed to consider the correct facts of the case and hence the order passed is without required to be quashed.” 3. The relevant material facts, as culled out from the material on record, are as follows. The assessee before us is an Individual and has filed return of income for A.Y.2018-19, on 07.10.2018, declaring total income at Rs.11,74,250/-, and the CPC has processed the said return u/s 143(1) of the I.T. Act on 26.08.2019, disallowing the deduction u/s 43B of the Act amounting to Rs.1,59,36,319/-. The assessing officer noticed that assessee has not filed appeal against the intimation u/s. 143(1) of the Act dated 26.08.2019 and the assessee, vide application dated 28.03.2022, has requested for rectification u/s.154 of the Act. On perusal of the application of the assessee, it was noticed by the assessing officer that the assessee has requested to allow the deduction claimed u/s 43B of the Act on the ground that Rs. 1,59,36,319/- disallowed u/s.43B of the I.T. Act in A.Y.2018-19 by CPC u/s.143(1) of the Act is cumulative figure which is erroneously reported in audit report. 4. The assessee has requested before the assessing officer that the correct amount to be disallowed u/s.43B of the Act for A.Y.2018-19 is Rs. 11,56,194/-. 5. However, assessing officer rejected the contention of the assessee stating that assessee's request for rectification u/s.154 cannot be considered. as there is no mistake apparent from records, as the disallowance u/s.43B of the Act was made by CPC u/s. 143(1) of the Act on the basis of the figure of service tax as mentioned outstanding in audit report therefore, there is no mistake apparent from records and therefore, the application filed by the assessee u/s. 154 of the Act was rejected by the assessing officer. Page | 4 ITA No. 353/RJT/2023 – A.Y. - 2018-19 Krushna Navghan Karavdra vs. ITO 6. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has confirmed the action of the assessing officer observing as follows: “b. Further, if the appellant’s claim regarding mistake on the part of the Chartered Accountant is true; he should have obtained a certificate to that effect from his Chartered Accountant and submitted during the rectification or appeal proceeding which was not done. 2. In view of the above discussion, I do not find any reason to interfere with the order of the AO and appeal of the appellant is hereby dismissed.” 7. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 8. Learned Counsel for the assessee, argued that Chartered Accountant while issuing audit report, by mistake, mentioned in Clause 26(i)(B)(b) of the Tax Audit Report (in Form No.3CB-3CD), the tax duty cess not paid before filing the return of income to the tune ofRs.1,59,36,319/-. This figure was reported inadvertently, by mistake, by the Chartered Accountant, while furnishing the Tax Audit Report, which is placed at paper book page no.62. However, the Ld. CIT(A) directed the assessee to get the Tax Audit Report rectified by the Chartered Accountant and accordingly the assessee got rectified by the Chartered Accountant by taking the certificate from the Chartered Accountant for correction in Form No. 3CB-3CD, which is placed at paper book page no.56, wherein in Claue 26(i)(B)(b), the amount not paid on or before due date of filing return of income was to the tune of Rs.11,56,194/- ( Correct figure). Therefore, in Clause 26(i)(B)(b) the correct figure should be read as Rs.11,56,194/- instead of Rs.1,59,36,319/-. Therefore, Ld. Counsel for the assessee submitted that suitable instruction should be given to the AO to correct the mistake after examination of rectified certificate of Chartered Accountant, in respect of Form No.3CB- Audit Report. Page | 5 ITA No. 353/RJT/2023 – A.Y. - 2018-19 Krushna Navghan Karavdra vs. ITO 9. On the other hand, Ld. DR for the Revenue submitted that the assessee should furnish the Chartered Accountant Certificate, before the assessing officer, as per the direction of the Ld. CIT(A), and the necessary rectification may be done by the assessing officer. 10. We have heard both the parties and perused the materials available on record. We note that by mistake the Chartered Accountant while furnishing audit report in Form No. 3CB-3CD in Column No.26, the amount has been incorrectly mentioned by the mistake to the tune of Rs.1,59,36,319/- instead of Rs.11,56,194- (vide paper book of the assessee page nos. 62 & 56). As per the direction of the Ld. CIT(A), the assessee got certificate form the Chartered Accountant to correct the said typographical error and which is placed before the Bench. Therefore, we direct the assessing officer, to take the figure at Rs.11,56,194/- and compute the income of the assessee, in accordance with law. 11. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order is pronounced in the open court on 19/12/2024 Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot Ǒदनांक/ Date: 19/12/2024 True Copy Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "