TaxTMI 
TaxTMI 
2022 (5) TMI 1647
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....ncome-Tax Appellate Tribunal, Allahabad Bench , Allahabad(hereinafter called " the tribunal") , reads as under:- "1. That the Ld. CIT(A), Allahabad has erred on facts in deleting the addition of Rs. 8,58,317/- made on account of suppression of interest income which was based on facts emanated from the audit report filed by assessee as Part-B of Annexure-1 of the audit report in 3CD reflected Rs. 17,12,601/- as interest received. Whereas, the profit and loss account the said audit report showed interest income to be Rs. 8,54,284/- and the assessee could not reconcile the discrepancy with documentary evidences in any proceedings. 2. That the Ld. CIT(A), Allahabad has erred on facts in deleting the addition of Rs. 11,37,000/- on account of three payments to contractors on which TDS had not been deducted and paid into the Central Government Accounts and the assessee could not substantiate his statement with documentary evidences in any proceedings. Prayer:-It is most humbly prayed that order of Ld. CIT(A) may be set-aside and the assessment order of the Assessing officer may kindly be restored considering the facts of the case. It is most humbly mentioned that though the quantu....
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....served upon the assessee, as claimed by the AO in the assessment order. The assessee submitted before the AO that return of income originally filed u/s 139(1) of the 1961 Act, be treated as return of income filed in pursuance to the notice issued by AO u/s 148 of the 1961 Act. Thereafter, the AO issued notice dated 18.11.2016 u/s 143(2) of the 1961 Act, for compliance for 25.1.2016. The AO also issued notices u/s 142(1) of the 1961 Act. The assessee initially participated in the reassessment proceedings, and filed written submissions along with acknowledgment of return of income, Balance Sheet, ledger Account, Bank Statement, Computation of income, Form 3CB and Form 3CD etc. which are placed by AO on assessment record. The explanation submitted by the assessee's counsel were considered by the AO , but the AO observed that these replies are not tenable , and hence a Show Cause Notice (SCN), dated 5th October, 2017 was issued by the AO to the assessee, which is reproduced as hereunder: "PAN: AAHFM7714J Dated: 05.10.2017 To, The Principal Officer, M/s J.P. Yadav, VIP Road, Obra, Sonebhadra (UP)- 231219 Sub: Show cause u/s 144 of the I.T. Act, 1961 for the A.Y. 2011-12 Please ....
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....of Rs. 11,37,000/-" 5. Aggrieved by reassessment order dated 22.11.2017 passed by AO u/s 147 read with Section 144 of the 1961 Act, the assessee filed first appeal before Ld. CIT(A) . During the course of appellate proceedings, the Ld. Counsel for the assessee submitted that the assessee had filed all necessary details before the AO during the course of reassessment proceedings. It was submitted by the assessee before ld. CIT(A) that it was only the last notice issued by AO u/s 142(1) of the 1961 Act, which could not be complied with by the assessee, and the AO did not give any further opportunity to the assessee and passed an ex-parte reassessment order under Section 144 read with Section 147 of the 1961 Act. During the course of appellate proceedings before ld. CIT(A), the assessee submitted that since the reassessment order was passed by the AO based on the details furnished by the assessee during the course of reassessment proceedings , the AO was not justified in framing assessment u/s 144 of the 1961 Act. The ld. CIT(A) observed that the assessee filed written submissions, ledger accounts, bank statements along with other documents , during the course of reassessment proceed....
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..../-. The assessee submitted before ld. CIT(A) that the figure reported by the Auditor in Part-B of Form-3CD is not correct. The ld. CIT(A) called for comments from the AO , who submitted his report on 24.05.2018, and the relevant portion of the remand report submitted by the AO to ld. CIT(A) is reproduced as hereunder: "The explanation and claim of the assessee at the assessment stage and now at the appeal stage, cannot be accepted as the Authorized representative of the assessee fails to understand the true implication of various reports audited and signed by an Accountant. The AR of the assessee who is not a technical person is merely putting forward his own explanations and understanding of the accounts of the assessee. The AR of the assessee was appraised of the above fact and was asked to furnish a revised report from the Accountant who had audited the accounts of the assessee instead of putting forward his own explanations. The same was not furnished and hence, addition was made on the difference of Rs. 8,58,317/- being the interest income understated by the assessee." 5.315 The Ld. CIT(A) forwarded the comments of the AO to the assessee for rebuttal , and the assessee reit....
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.... made by the AO by holding that the payment has been made to the employees of the assessee for the purposes of the assessee's business and these payments were not made by the assessee to the contractors attracting provisions of TDS u/s 194C of the 1961 Act. Thus, the ld. CIT(A) held that the disallowance made by the AO u/s 40a(ia) of the 1961 Act of Rs. 11,37,000/- cannot be sustained and was , thus, deleted by ld. CIT(A). 6. Aggrieved by appellate order passed by ld. CIT(A), Revenue has now filed second appeal before the tribunal. This appeal filed by Revenue was dismissed by Allahabad-tribunal, keeping in view low tax effect and being covered by CBDT Circular No. 17/2019 , dated 08th August , 2019 F.No. 270/Misc. 14/2007-ITJ(Pt.) , the tax effect being less than Rs. 50,00,000/- , vide appellate order dated 20th Nov, 2019 , in ITA no. 319/Alld/2018, for ay:2011-12. The Revenue filed MA before tribunal which was listed as MA no. 01/Alld/2020(arising out of ITA no. 319/Alld/2018) for ay: 2011-12 , praying for recall of the appellate order dated 20th November, 2019 passed by tribunal on the grounds that the appeal filed by Revenue is not covered by aforesaid CBDT circular, dated 08.....
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.... lacs was utilized for payment of income-tax /TDS. Thus , it was prayed that the additions made by AO , were rightly deleted by ld. CIT(A).The ld. AR drew our attentions to the bank statements of its employees and clarified that these bank statements were duly filed by the assessee before ld. CIT(A), and no additional evidences are now filed by the assessee before tribunal. The ld. Counsel for the assessee would submit that ld. CIT(A) has rightly deleted the additions as were made by the AO, and prayers were made to uphold the additions as were made by the AO. 6.5 The ld. Sr. DR submitted in rejoinder that the assessee has filed bank statement of the so called employees, and it can be seen from the bank statements that they have withdrawn the amounts in small denomination . Our attention was drawn to page 46 of paper book to contend that there are huge amount outstanding to be payable to labour, which is not possible as labour is to be paid on time. The ld. Sr. DR submitted that these are contractors of the assessee , and disallowance were rightly made by the AO, and prayers were made by the ld. SR. DR to uphold the additions as were made by the AO and it was submitted that ld. CI....
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....idity of re-opening of concluded assessment by invoking provisions of Section 147/148 of the 1961 Act, by holding that reopening was validly done by the AO under the provisions of Section 147/148 of the 1961 Act. There is no challenge by the assessee to the aforesaid legal ground adjudicated by ld. CIT(A), as the assessee chose not to file any appeal / Cross Objections (C.O.) against such adjudication by ld. CIT(A), which has now reached finality. While deleting first addition of interest income to the tune of Rs. 8,58,317on merits , the ld. CIT(A) observed that the aforesaid differential interest income stood declared by assessee in the Profit and Loss Account, and no interest income has escaped assessment, and merely because there is some technical mistakes in Part-B of Form No. 3CD wherein hire charges were merged with interest income by tax- auditor, would not call for additions being made in the hands of the assessee. On the second issue, the ld. CIT(A) while deleting the addition of Rs. 11,37,000/- as was made by the AO, was of the view that the assessee made payments to its employees , and these payments of Rs. 11,37,000/- were not made to the Contractors attracting TDS prov....
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....he interest income earned by the assessee , aggregating to Rs. 17,12,601/- as declared by tax-auditor , the first mistake being that the tax-auditor included hire charges of Rs. 14,19,980/- in the interest income which should not have been included by the tax-auditor , and second mistake committed by tax-auditor in the aforesaid tax- audit report was that the accrued interest on FDR amounting to Rs. 5,61,663/- was not included in the interest income. The assessee has sought to explain that the correct interest income credited to its Profit and Loss Account for the year under consideration, is as under S. No . PARTICUALRS AMOUNT 1 Accrued FDR Interest 561663.00 2 Interest on NSC 41878.00 3 Interest on IT Refund 250743.00 Total 854284.00 The assessee has produced copy of Profit and Loss Account for the year under consideration , which is placed at paper book at page 21. The assessee has further submitted that total interest income of Rs. 8,54,284/- has been disclosed in the credit side of Profit and Loss account and the hire charges of Rs. 14,19,980/- was also shown/disclosed in the credit side of Profit and Loss account, and , thus, the total of i....
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....e Revenue in framing assessments/processing of returns and computing the correct income chargeable to tax as well as at the same time easing the burden on the Revenue officials , that is why the certification called from tax auditor's in Form No. 3CB/Form No. 3CD under the aegis of Section 44AB is that the financial data's as contained therein is certified to be true and correct which is an onerous/heavy burden cast on tax-auditors, and the said certification does not merely called the tax auditor to certify that the affairs are 'true and fair' as is envisaged while auditing under Companies Act. Thus, certainly the burden/duty on tax-auditor is very heavy/onerous under the 1961 Act to certify contents of tax-audit report to be 'true and correct' and not merely 'true and fair'. Thus, if there was an inadvertent error committed by tax-auditor as is averred by the assessee , the assessee could have always approached tax-auditor to issue addendum/revised tax-audit report to certify correct figures after due checking's /verifications by the tax-auditors , as the qualified Chartered Accountants who are appointed as tax- auditors being responsible officer/qualified professional , are expe....
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....flecting these debits. The assessee has produced Labour Charges Payable Account as it stood in its books of accounts as claimed by the assessee(PB/page 41-59) , and claim is made that all these three debits aggregating to Rs. 11,37,000/- are debited from the above labour charges payable account. A claim is made that payment of Rs. 5,25,000/- was made to Shri Nakchhedi Ram Yadav , on 24.09.2010 vide cheque number 7428 , and also that payment of Rs. 4,00,000/- is made Mr. Avadh Bihari Yadav on 24.09.2020 , vide cheque number 7427. The bank statements of both the said persons are produced for 2-3 days , wherein the amount(s) are reflected as appearing on the credit side. A claim is made that both these persons are employees of the assessee, and have utilized the proceeds of the aforesaid sums to pay for labour charges.It is claimed that these two persons are not labour contractors and TDS provisions u/s 194C are not attracted. The bank statements of the above two persons namely Shri Nakchhedi Ram Yadav and Mr. Avadh Bihari Yadav, are furnished for 2-3 days period, and there is no evidence on record that these persons have utilized the proceeds of these aforesaid payments to make payme....