Addition under section 36(1)(va) based on tax audit figures restored to AO for fresh verification and speaking order

Addition under alleged delayed deposit of employees' provident fund and ESI contributions was challenged as arising from erroneous entries in the original tax audit report (Form 3CD) that pertained to another client. The assessee demonstrated absence of employees liable under PF/ESI and the chartered accountant filed and uploaded a revised Form 3CD correcting the figures. Applying principles of natural justice, the Tribunal restored the matter to the jurisdictional Assessing Officer to verify the revised tax audit report, examine deductibility in relation to employee contributions, and pass a speaking order after hearing; appeal allowed for statistical purposes.

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Issues: Whether the addition of Rs.12,81,710 under section 36(1)(va) based on figures in the originally uploaded Form 3CD (tax audit report) that later proved to be erroneous should stand, and whether the revised Form 3CD uploaded subsequently by the assessees Chartered Accountant warrants fresh examination by the Assessing Officer.

Analysis: The originally processed return and the adjustment under section 36(1)(va) were based solely on entries in the original Form 3CD which mistakenly contained another clients PF/ESI figures. The assessee demonstrated she had no employees liable to PF/ESI and the Chartered Accountant accepted and corrected the error by uploading a revised Form 3CD with acknowledgment. Given the correction on the income-tax portal and the absence of employees, principles of natural justice require that the jurisdictional Assessing Officer verify the revised report, examine the claim regarding applicability of section 36(1)(va), and pass a speaking order after granting opportunity of being heard. The matter therefore requires remand for fresh consideration rather than affirmation of the original automated adjustment.

Conclusion: The appellate relief is in favour of the assessee to the extent that the matter is restored to the jurisdictional Assessing Officer for verification of the revised Form 3CD, determination of applicability of section 36(1)(va), and passing of a speaking order after granting adequate opportunity of being heard; the appeal is allowed for statistical purposes.

Ratio Decidendi: Where a tax audit report uploaded on the income-tax portal is shown to contain an inadvertent error subsequently corrected by a duly acknowledged revised report, the taxing authority must re-examine the corrected report and decide afresh after affording the assessee an opportunity of hearing rather than mechanically sustaining an adjustment arising from the erroneous original upload.

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