https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=770330 https://www.taxtmi.com/caselaws?id=770330 Addition made by the CPC u/s 143(1) - ICDS (Income Computation and Disclosure Standards) adjustments and deviations in stock valuation - allegation of non considering the provisions of Section 40 and Section 43B of the Act through Notification No. 28/2021, dated 01.04.2021 - Whether assessee was entitled to file a revised tax audit report after the end of the relevant assessment year to rectify a typographical error in the original tax audit report, particularly in relation to the inclusion of GST in purchase figures under clause 14(b) of Form 3CD? AR argued that there was a gross violation of principles of natural justice, where the ld. CPC/AO cannot make adjustment/addition without duly giving notice to the assessee - AR contended that the assessee was brought to the notice of discrepancy in the tax audit report only during the Section 143(1) proceeding subsequent to which the assessee had filed its revised tax audit report and there is no express bar in the provision of law for filing the revised tax audit report in case of the other additions made when there has been a genuine error crept in in the tax audit report HELD THAT:- It is observed that the assessee has received intimation u/s. 143(1) pertaining to only the addition made u/s. 41 of the Act, where there was inconsistency in the amount of profit chargeable to tax u/s. 41 specified in the report and in the audit report. In the present case in hand, the CPC/ld. AO has failed to include the adjustment in the proposed adjustment u/s.143(1)(a) of the Act and has merely mentioned the adjustmen on account of inconsistency in the amount of profit chargeable to tax u/s. 41 of the Act as per the return of income and the audit report. There is no iota of doubt that the CPC/AO has not sought for the assessee's response either in writing or via mail pertaining to the said adjustment. It is also evident that the CPC/ld. AO has merely stated that the said adjustment is made due to non-compliance/no response from the assessee, which fact is not correct as per the records placed before us. Proviso to Section 143(1)(a) categorically specifies that before making an adjustment it is mandatory for the CPC/AO to provide an intimation to the assessee either in writing or in electronic mode pertaining to the proposed adjustment. In the present case in hand, this exercise has been carried out before processing the return u/s. 143(1) of the Act, thereby violating the principles of natural justice. On the above observation, we do not find any infirmity in the order of the ld. CIT(A) on this issue. Revision of the tax audit report in case of any arithmetical error or incorrect claim - The decisions relied upon by the ld. AR has dealt with identical issues, where the coordinate benches have decided the issue based on the revised tax audit report in case of inadvertent error and the same has not been restricted to the disallowance u/s 40 or Section 43B of the Act. We are conscious of the fact that a tax audit report could be amended strictly only as per the method recommended in Statement on Auditing Standards - SA-560 on 'Subsequent Events', there is no bar on the Tribunal to decide on an issue based on the revised tax audit report especially in cases where there has been inadvertent error crept in in the original tax audit report. Even otherwise, there has to be a recourse to the assessee in case of any inadvertent error which are not malafide, where the assessee should not be put to unnecessary hardships due to mere technicalities. We therefore deem it fit to uphold the order of ld. CIT(A) on this issue where it has been held that the same is a typographical error with no malafide intention, thereby directing the ld. AO to delete the impugned adjustment after duly verifying that the said adjustment is merely due to the typographical error in the figures in the original tax audit report. On the above observation, the grounds of appeal filed by the revenue holds no merit and is hereby dismissed. Appeal filed by the revenue is dismissed. Case-Laws Income Tax Thu, 17 Apr 2025 00:00:00 +0530