Adhaan Solution Pvt. Ltd. Vs ACIT (ITAT Ahmedabad)
ITAT Ahmedabad held that addition u/s. 36(1)(va) of the Income Tax Act for delayed payment of employees’ contributions to PF and ESIC based on mis-reporting by the auditor in the audit report is unjustified. Accordingly, addition restriction.
Facts- The case of the assessee was selected for scrutiny, and notices under Sections 143(2) and 142(1) of the Income Tax Act were issued. After considering the replies submitted by the assessee, the AO passed an order under Section 143(3) on 14.12.2019, making the addition of Rs. 3,73,04,580/-under Section 36(1)(va) for delayed payment of employees’ contributions to PF and ESIC.
CIT(A) upheld the decision of AO. Being aggrieved, the present appeal is filed.
Conclusion- Held that the addition has been made on the basis of certain misreporting’s by the Auditor, in the Audit Report. The assessee had given a separate chart giving details of over 700 Challans with respect to PF/ESI payment, in order to demonstrate that most of the deposits had been made by the assessee within the due stipulated date, however, the detailed information/data submitted by the assessee was omitted to be considered by the Tax Authorities. Further, the counsel for the assessee submitted that since part of the hearing before Ld. CIT(Appeals) was falling within the Covid period, the assessee did not get adequate opportunity to present its facts before Ld. CIT(Appeals), for his consideration. Thirdly, the counsel for the assessee submitted that similar additions with respect to assessment year 2016-17 had also been made by the assessing officer owing to misreporting in the Audit Report, however, Ld. CIT(Appeals) on appreciation of detailed evidence filed by the assessee during the course of appellate proceedings had given substantial relief to the assessee on this issue. Finally, the counsel for the assessee submitted that if given an opportunity before Ld. CIT(Appeals), he is in a position to demonstrate that out of the total additions amounting to Rs. 3,73,04,580/- made by the assessing officer, only a sum of Rs. 47, 59,430/-has been deposited beyond the due stipulated date and hence the addition is liable to be restricted only to the aforesaid amount.
