Assessee's Appeal Allowed Due to Procedural Irregularities | Complete Documentation & Fair Opportunity Emphasized

The appeal of the Assessee was allowed for statistical purposes, highlighting procedural irregularities including disallowance without proper notice and lack of opportunity to be heard. The Tribunal emphasized the necessity for complete documentation and procedural compliance, setting aside the order for denovo-adjudication to enable the Assessee to submit all necessary documents.

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Issues:
1. Disallowance on account of delayed payment of employees' contribution to Provident Fund and Employees State Insurance Corporation Fund.
2. Disallowance confirmed under Explanation 5 of section 43B of the Act.
3. Lack of notice under section 154 of the Act.
4. Incomplete submission of documents and rectification application.

Issue 1: Disallowance on account of delayed payment of employees' contribution to Provident Fund and Employees State Insurance Corporation Fund:
The Assessee contested the disallowance made by the CPC, Bengaluru under section 154 of the Act regarding delayed payment of employees' contribution to Provident Fund and ESIC. The Assessee argued that the disallowance was directly made without proper notice and justification. The Order under section 154 increased the Total Income, leading to the appeal. The Authorised Representative highlighted the direct disallowance by the Assessing Officer and the lack of opportunity for the Assessee to be heard, emphasizing non-compliance with section 154(3) of the Act. The Assessee sought deletion of the disallowance based on procedural irregularities.

Issue 2: Disallowance confirmed under Explanation 5 of section 43B of the Act:
The Assessee challenged the disallowance upheld by the Commissioner of Income Tax (Appeals) NFAC under Explanation 5 of section 43B of the Act. The disallowance was made in response to an application filed under section 154 for rectification. The Assessee argued against the confirmation of the disallowance invoking the newly inserted Explanation 5 by the Finance Act, 2021. The grounds of appeal raised by the Assessee questioned the justification of the disallowance and the application of the amended provision.

Issue 3: Lack of notice under section 154 of the Act:
The Assessee raised concerns regarding the lack of notice issued by the Assessing Officer under section 154 of the Act before making the disallowance. The Assessee contended that the direct disallowance without providing an opportunity to be heard violated the provisions of section 154(3) of the Act. The absence of notice and opportunity for the Assessee to present their case was emphasized as a procedural flaw that needed rectification.

Issue 4: Incomplete submission of documents and rectification application:
The Tribunal noted that the Assessee had not submitted complete copies of the Order under section 143(1) and Order under section 154. Additionally, the Assessee failed to provide a copy of the Rectification application filed before the ACIT/DCIT(CPC). The incomplete submission of documents hindered a comprehensive understanding of the case. The Tribunal highlighted the necessity for all relevant facts to be on record for a fair adjudication. As a result, the Tribunal set aside the order for denovo-adjudication by the Ld.CIT(A) to allow the Assessee to submit all necessary documents.

In conclusion, the appeal of the Assessee was allowed for statistical purposes, emphasizing the importance of complete documentation and procedural compliance in tax matters.

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