Solutions Infini Technologies (India) Pvt. Ltd. Vs DCIT (ITAT Bangalore)
Addition Based Solely on Inadvertent Tax Audit Report Error Cannot Be Sustained u/s 143(1): ITAT Bangalore
The ITAT Bangalore held that an adjustment made under Section 143(1) merely due to an inadvertent error in the Tax Audit Report cannot be sustained, particularly when the assessee demonstrates that no such expenditure or provision actually exists in the books of account.
In this case, while processing the return under Section 143(1), the CPC made an addition of ₹1.95 crore treating it as disallowable provision for gratuity under Section 43B, based solely on disclosure made in the tax audit report. However, the assessee contended that no provision for gratuity had actually been created during the year, and the reporting in the tax audit report was merely an inadvertent mistake.
The assessee subsequently filed revised tax audit reports correcting the disclosure and supported the claim by referring to the audited financial statements and the movement of the gratuity account in the books.
The Tribunal observed that the adjustment made by CPC was solely based on the original tax audit report without verifying the underlying books of account or considering the revised audit reports explaining the error. The Tribunal relied on earlier judicial precedents holding that additions cannot be sustained when they arise merely due to typographical or inadvertent reporting errors in the tax audit report.
Accordingly, the Tribunal held that the addition of ₹1.95 crore made under Section 143(1) was unsustainable and directed the Assessing Officer to delete the adjustment after verification.
Further, regarding short grant of TDS credit, the Tribunal directed the AO to verify the claim and allow credit in accordance with law, while the ground relating to interest u/s 244A was treated as consequential.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
