Typographical error in Tax Audit Report: ITAT remits back matter to National Faceless Appeal Centre

The brief facts of the case are that the assessee is an individual and proprietor of M/s. Lopa Enterprise, which is engaged in providing manpower supply services to industrial customers. For the Assessment Year 2018-19, the assessee filed his return of income on 04.10.2018 declaring the income of Rs.37,22,340/-. The Centralized Processing Centre, Bangalore (hereinafter referred to as the “CPC”) passed the intimation under Section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) vide intimation dated 17.05.2019 by making disallowance on account of the delayed payment in relation to sum received from employees of Rs.23,97,818/ as contribution to Provided Fund and other statutory fund under Section 36(1)(va) of the Act and demanded a tax of Rs.7,96,320/-. This intimation order was challenged by way of an appeal before the National Faceless Appeal Centre (“NFAC” in short) by the assessee. The NFAC, after detailed discussion, held that the facts indicate that the sum of Rs.23,97,818/- being employees contribution to provident fund has been paid late under that Act and based on the reasoning above, the addition made by the CPC deserves to be upheld and confirmed the addition of Rs.23,97,818/- and dismissed the appeal filed by the assessee.

Aggrieved by the order of the NFAC, the assessee is in appeal before the Income Tax Appellate Tribunal (ITAT).

The ground of Appeal in reference to the Error was:

“A. Ld. AO and Ld. CIT Appeals have grossly erred in disallowing employee contribution to PF aggregating to Rs.23,97,818/- as per the original TAR.

B. AO and Ld. CIT Appeals ought to have observed the apparent error in the reporting payment for the month of September’17 taking clues of previous as we as post payments made by the appellant and observed apparent excess payment of Rs.14,16,000/- reported in the TAR and hence ought not to have taxed the said amount.

Appellant therefore pleads that Excess disallowance of 14,16,000/- be deleted as it is attributed due to arithmetic error.

ITAT Order:

5. Regarding the issue raised in concise ground No. G(1) with respect to the excess disallowance of Rs.14,16,000/- be deleted as it is attributed due to arithmetic error, the assessee by way of his submission submitted that there was a typographical error in reporting the details of the employees’ contribution to PF in the Tax Audit Report for September 2017. It is also submitted that instead of the actual amount paid of Rs.1,57,315/-, an amount of Rs.15,73,315/- (number ‘3’ was typed twice) was reported. The Tax Auditor duly corrected the said error by filing the revised Tax Audit Report on 28.03.2019 and copy of the revised Tax Audit Report was placed on record. It is, therefore, submitted that the addition of Rs.14,16,000/- out of the total addition of Rs.23,97,818/- on account of such undisputed facts deserves to be deleted in absence of collection of any such amount from the employees towards PF.

6. It can be seen that intimation under section 143(1) of the Act was issued by the CPC on 17.05.2019 and the assessee has not made any attempt to file rectification petition against the intimation issued by the CPC u/s 143(1) of the Act. The assessee for the first time before this Tribunal has filed a combined challan of account for employees’ PF as well as the revised Tax Audit Report under Section 44AB of the Act. The revised Tax Audit Report was uploaded on 28.03.2019 which is much earlier than the intimation issued by the CPC dated 17.05.2019 under Section 143(1) of the Act. The learned DR appearing for the Department stated that this issue has not been properly projected before the NFAC and hence the same may be remitted back to the file of Assessing Officer for verification and correction. We are in agreement with the statement of the learned Departmental Representative and hereby remit this issue back to the file of the Assessing Officer to rectify the arithmetic mistake.

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