Income Tax Appellate Tribunal - Chandigarh
M/S A.P. Knit Fab, Bawa Colony, Ludhiana vs Dcit Cc-3, Ludhiana on 13 September, 2022
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, 'A', CHANDIGARH BEFORE SHRI A.D. JAIN, VICE PRESIDENT & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 5 2 9 / C H D / 2 0 2 2 नधारण वष / Assessment Year : 2020-21 M/s A.P Knit Fab, Vs. The Asstt. Director of Income Bawa Colony, बनाम Tax, CPC Bahadur Ke Road, Bangaluru Ludhiana थायी लेखा सं./PAN NO: AAUFA3235B अपीलाथ /Appellant यथ /Respondent Hearing through video Conferencing नधा रती क ओर से/Assessee by : Sh. Sudhir Sehgal, Advocate.
राज व क ओर से/ Revenue by : Smt. Priyanka Dhar, Sr.DR
सन
ु वाई क तार%ख/Date of Hearing : 12.09.2022
उदघोषणा क तार%ख/Date of Pronouncement : 13.09.2022
आदे श/Order
Per A.D. Jain, Vice President:
This is an appeal by the assessee against the order dated 30.05.2022 of the Ld. Commissioner of Income Tax (Appeals)-5, Ludhiana [herein referred to as 'CIT(A)'], for assessment year 2020-21.
2. The following grounds have been raised by the assessee in this appeal:-
1. That the Ld. CIT(A) has erred in confirming the addition on account of disallowance of Rs. 17,19,015/- on account of bonus payable which was mistakenly mentioned by the Chartered Accountant while filing the Tax Audit Report in the wrong column, the same had been paid within time as per law.2
2. That the finding of the Ld. CIT(A) in confirming the addition of Rs. 17,19,015/-as made by the CPC, Bangalore is against the actual facts & circumstances.
3. That the appellant craves leave to add, amend any ground or grounds of appeal before the appeal is finally heard or disposed.
3. The brief facts of the case are that the assessee is an individual carrying on the business of manufacturing and trading of Hosiery goods, Yarn and Knitted cloth in the name and style of M/s A.P. Hosiery Industries. It had filed its return of income for the year under consideration on 24.12.2020 at an income of Rs. 33,20,870/-. The copy of Acknowledgement as well Computation of income, forming part of paper book at Pg 1-4 was placed on file. The return of the assessee was processed u/s 143(1) of the Act and income was assessed at Rs. 50,67,870/- wherein, the following additions were made by the AO:-
a) Disallowance u/s 36(1)(iii) of the Act to the tune of Rs. 1,190/-
b) Addition u/s 36(1 )(va) of the Act to the tune of Rs. 26796/-
c) Addition u/s 36(1 )(ii) of the Act to the tune of Rs. 17,19,015/-
4. Against the order passed u/s 143(1) of the Act, the assessee preferred an appeal before the CIT(A)-5, Ludhiana and additions / disallowances made as at Sr. no. (a) and (b) above were deleted by the Ld. CIT(A), whereas the addition mentioned at Sr. No. (c) has been confirmed.
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5. The background of such addition was that at the time of filing of Tax Audit Report (TAR) in Form BCD, the Chartered Accountant of the assessee, due to inadvertent error, in clause 20(a) (Pg 9 of PB), had mentioned the amount of bonus paid as per the Bonus Act, 1965 to the employees to the tune of Rs. 17,19,015/-, which depicts that the said bonus of Rs. 17,19,015/- had been paid to the employees as profit or dividend. The copy of TAR in Form 3CD is forming part of the assessee's paper book at Pages 5 - 19. It has been submitted that to clarify the situation that the bonus is not payable to employees as profit/dividend, a certificate from the Chartered Accountant was also filed before the Ld. CIT(A) by the assessee, wherein, it was certified by the Chartered Accountant that due to inadvertent error, the amount of bonus has been wrongly shown in clause 20(a) of the Tax Audit Report. A copy of the certificate from Chartered Accountant is forming part of the paper book, at page 52. Even the documents in the shape of details of bonus paid and bonus register for the F.Y. 2019-20, duly signed by the employees evidencing the payment of bonus before due date of return was also filed with the CIT(A) and the same are forming part of the paper book, at pages 53 & 54 - 95, respectively. However, the Ld. CIT(A) was of the opinion that any modification in the Audit Report via filing of certificate is not allowed and, therefore, the disallowance of Rs. 17,19,015/-, as made by the CPC, was confirmed by the CIT(A).
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6. Before us, the Ld. counsel for the assessee has contended that the assessee has paid bonus of Rs. 17,19,015/- as per the Bonus Act, 1965 to the employees during the year under consideration. A date wise chart of bonus paid to employees is forming part of the paper book at page 53. All the payment were made before the due date of filing of return of income, i.e., 24.12.2020. However, due to inadvertent error, the Chartered Accountant mentioned the said amount under clause 20(a) of the TAR i.e. "amount payable to employees as bonus or commission where such sum was otherwise payable to him as Profits or Dividend"
which is not the case of the assessee in fact. The Auditor tried to rectify his mistake by filing a certificate, wherein, it has been mentioned that the particulars had wrongly been mentioned in clause 20(a) of the TAR due to an inadvertent error and, therefore, no disallowance u/s 36(1 )(ii) of the I.T. Act is called for on this issue. Therefore, it was merely a clerical error and the same should be viewed in the light of the evidence on record, which depicts that the payment has been made to labourers under the Payment of Bonus Act and clause 20(a), wherein, inadvertent reporting has been made by the Chartered Accountant, is not applicable in the case of the assessee. It is trite that the assessee should not suffer on account of the mistake which has been made by the counsel/ auditor of the assessee.
7. An application has been filed, for admission of additional evidence in the shape of a revised Tax Audit Report from the same Chartered Accountant. The same is forming part of the paper book, at 5 pages 20 - 51. It is submitted that the said evidence goes to the root of the matter, as the same is a vital piece of evidence, which goes to prove the case of the assessee and, therefore, the above Revised Audit report may be admitted as additional evidence by the ITAT in view of the judgment of the Hon'ble Supreme Court in the case of Tek Ram (Dead) Through LRs V/s Commissioner of Income Tax, 357 ITR 133 (SC), and the judgment of Hon'ble jurisdictional High Court in the case of Mukta Metal Works, 336 ITR 555 (P&H). In these judgments, the Hon'ble Supreme Court and the jurisdictional Punjab & Haryana High Court have held that where the additional evidence is must for a just decision of the case, the same deserves to be admitted. It is maintained that the evidence now being tendered clearly is a very vital piece of evidence.
8. On the other hand, the Ld. DR strongly placed reliance on the impugned order.
9. Having heard both the parties and having perused the material on record, we find that it was due to an inadvertent error of the C.A. of the assessee, that he (the CA) mentioned the amount of bonus paid to employees, under clause 20(a) of the Tax Audit Report, i.e., "amount payable to the employees as bonus or commission where such sum was otherwise payable to him as Profits or Dividend" whereas, the payment had actually been made to labourers under the Payment of Bonus Act. This inadvertent mistake was tried to be rectified by the C.A. by filing certificate (ABP page 52) along with details (ABP-53). The same was, however, not accepted.
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10. The revised Tax Audit Report (ABP pave 20 - 51), we find, is a vital piece of evidence and it requires to be admitted as additional evidence, since it would be necessary for a just and proper decision of the matter. Accordingly, the application for additional evidence is allowed and the revised Tax Audit Report (ABP pages 20 -51) is taken on record. The matter is, accordingly, remitted to the file of the AO, to be decided afresh in accordance with law, on taking into consideration the aforesaid revised Tax Audit Report, and after affording due and adequate opportunity of hearing to the assessee. The assessee, no doubt, shall cooperate in the fresh proceedings before the AO. Ordered accordingly.
11. In the result, for statistical purposes, the appeal of the assessee is treated as allowed.
Order pronounced on 13.09.2022.
Sd/- Sd/-
(VIKRAM SINGH YADAV) ( A.D. JAIN )
Accountant Member Vice President
Dated : 13.09.2022
"आर.के."
आदे श क त,ल-प अ.े-षत / Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आय2
ु त/ CIT
4. आयकर आय2
ु त (अपील)/ The CIT(A)
5. -वभागीय त न7ध, आयकर अपील%य आ7धकरण, च9डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File
आदे शानुसार/ By order,
सहायक पंजीकार/ Assistant Registrar
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