Mismatch in the Tax Audit Report & Income Tax Return – Dis-allowance u/s 43B- Remedy

Mismatch in the Tax Audit Report & Income Tax Return - Dis-allowance u/s 43B- Remedy

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Mismatch in the Tax Audit Report & Income Tax Return – Dis-allowance u/s 43B- Remedy

There are lot many taxpayers who are receiving notices / intimaiton under section 143(1)(a) from CPC, Bengaluru whereby addition to the returned income is done by CPC due to delay in payment of sums like PF, ESIC beyond the due date of under the relevant Act but paid well before the due date of filing income tax return.
In Tax Audit Report in Form No. 3CD, the tax auditor are mandatorily just required to report the due date of payment and the actual date of payment.
Department was of the view that the sum is allowable as deduction only if it is paid within the due date under the relevant Act. Department was not allowing the deduction if it is paid after the due date of relevant Act but the due date of filing the Income Tax Return.
However, the judiciary have upheld that the deduction have upheld that the deduction is admissible even if it paid beyond the due date under the relevant Act but before the due date of filing income tax return.
In view of this, though the sum is allowable as deduction pursuant to judicial pronouncements still the department is not allowing as deduction as can be ascertained from the CPC intimation now forwarded.
The copy of the order pursuant to which the deduction can be claimed is enclosed with this write up.
What is the remedy now
The software is supposed to be not accepting the judicial prnoucnemnts.
No matter how many time a rectification or remark is filed, the CPC is not deleting the addition.
The alternative could be to
1. To offer the amount as addition u/s 43B AND
2. To claim the same as deduction u/s 37(1).
By this, the software at CPC would process the returns in accordance with their system and will allow deduction u/s 37(1) as per judicial pronouncement.
Let us hope that the return are not processed without considering any judicial pronouncement as it will cause a lot of hardship. Lot many notices are issued by the CPC for above reasons causing enormous inconvenience to the taxpayers.
Is it ease of doing business?
Hope CPC software is also amended in line with the judicial pronouncement or the Act is amended in line with the CPC.

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