Audit report adjustments apparent from processing require remand for verification, with interest computation and accounting treatment to be reexamined by AO.

Levy of interest under section 234C and an addition for a GST refund reported as not credited to profit and loss were held to raise factual and computation issues requiring verification. The Tribunal recognised that centralised processing can make adjustments apparent from the tax-audit report but found the record lacked the detailed 234C computation and supporting ledger, refund orders and accounting entries for the GST item. Both issues are remitted to the jurisdictional assessing officer for verification of interest computation and accounting treatment and for fresh decision in accordance with law; appeals allowed for statistical purposes.

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Issues: (i) Whether the levy of interest under section 234C of the Income-tax Act, 1961 is sustainable and whether it is to be computed on returned income or assessed income; (ii) Whether the addition of Rs. 38,10,67,339/- on account of GST refund not credited to profit & loss account, made by CPC during processing under section 143(1)(a) of the Income-tax Act, 1961, is sustainable.

Issue (i): Whether interest under section 234C is liable as levied by the CPC and whether such interest should be calculated on returned income or assessed income.

Analysis: The assessee challenged the interest levied under section 234C after assessment under section 143(3) r.w.s. 144B was completed and the returned income was accepted as assessed income. The Tribunal observed that the assessment order merges the earlier intimation and that the computation annexure showing details of the 234C calculation was not on record, preventing a definitive adjudication on the correctness and basis of the interest computation. The Tribunal therefore considered it necessary to remit the matter to the jurisdictional Assessing Officer for verification of the 234C calculation on the returned income and to decide in accordance with law.

Conclusion: The ground challenging levy of interest under section 234C is remitted to the file of the jurisdictional Assessing Officer for verification and decision in accordance with law; the appeal on this issue is allowed for statistical purposes (in favour of assessee procedural relief).

Issue (ii): Whether the addition of Rs. 38,10,67,339/- made by CPC under section 143(1)(a)(iv) on account of GST refund not credited to the profit & loss account is sustainable.

Analysis: The CPC adjustment was made on the basis of the tax auditor's report (Form 3CD) which reported the amount under 'amounts not credited to the profit & loss account'. The assessee's ITR did not reflect the same amount in Schedule A-OI. The Tribunal noted the tax auditor could have revised the audit report if it was erroneous and that CPC is authorised under section 143(1)(a)(iv) to make adjustments apparent from the audit report. At the same time, the assessee maintained that its accounting treatment placed the GST refund within other current assets and not through profit & loss, and requested verification of ledger entries, refund orders and accounting treatment. The Tribunal found that factual verification of GST ledger, refund applications, GST department orders and book entries is required and therefore remitted the issue to the jurisdictional Assessing Officer for verification and fresh decision.

Conclusion: The addition of Rs. 38,10,67,339/- is remitted to the file of the jurisdictional Assessing Officer for verification and decision in accordance with law; the ground is allowed for statistical purposes (in favour of assessee procedural relief).

Final Conclusion: Both appeals are not finally adjudicated on the merits but are remitted to the jurisdictional Assessing Officer for factual verification and fresh decision; the Tribunal allows the appeals for statistical purposes to enable such verification.

Ratio Decidendi: Where adjustments are apparent from the tax audit report, CPC is empowered to process returns under section 143(1)(a) (including clause (iv)), but factual disputes regarding accounting treatment or calculation of interest require remand to the jurisdictional Assessing Officer for verification and decision in accordance with law.

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