2023 (4) TMI 1171

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....he assessee filed return of income declaring income at 'Nil' along with the tax audit report. The return filed by the assessee was processed under Section 143(1) of the Act dated 25.11.2021 wherein addition/disallowance of partners remuneration amounting to Rs.10,50,000/- was made while processing the return. Against the adjustment so made, the assessee e-filed application under Section 154 dated 17.11.2022 seeking rectification of mistake while processing intimation under Section 143(1) and reversal of the disallowance. The rectification under Section 154 was however passed by the AO (CPC) reiterating the adjustments and without any relief. 3. Aggrieved by the denial of rectification, the assessee preferred appeal before the CIT(A). The C....

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....portunity is impermissible in law. (ii) without prejudice to the aforesaid contention, the AO CPC indulged in making adjustment without appreciating the correct facts of the case and summarily rejected the rectification application emanating from the apparent error in the action of the AO (CPC) while processing the return. On facts, the assessee firm filed its return of income declaring the income at Rs.1,66,50,276/- before set off of earlier years business losses and depreciation loss to the extent of taxable income of Rs.1,66,50,276/- for the year under consideration. After setting of the losses of earlier years, balance depreciation loss of Rs.3,49,998/- remained to be carried forward for set off in subsequent years. As contended, the ....

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.... lakh as wrongly reported by the auditor in point no.21 of the tax audit report which was the figure of earlier year. The incorrect assumption of facts contrary to accounts of assessee has resulted in error in the tax audit report and assessee should not be penalized for such inadvertent mistake in tax audit report. A reference was made the decision of co-ordinate Bench of ITAT in the case of Kalpesh Synthetics (P) Ltd. vs. DCIT (Mum) 137 Taxmann.com 475. Thus, the clerical and bona fide mistake of apparent nature deserves to be rectified to shun miscarriage of justice. 7. We find force in the plea of the assessee. Admittedly, the figures entered towards partner remuneration in the P&L account are inconsistent with the tax audit report due....