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Arora & Associates Reality Limited, 131, GF, World Trade Centre, Babar Road, New Delhi Vs. DCIT CPC Bangalore
October, 25th 2021

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH ‘SMC-1’, NEW DELHI

BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER
(THROUGH VIDEO CONFERENCING)

ITA No.1706/Del/2020

Assessment Year: 2019-20

Arora & Associates Reality DCIT

Limited, 131, GF, World Vs CPC

Trade Centre, Babar Road, Bangalore

New Delhi-110001

PAN No. AAACK0330L

(APPELLANT) (RESPONDENT)

Appellant by Sh. Sanjay Jain, CA
Respondent by Sh. Sanjeev Mahajan, Sr. DR

Date of hearing: 21/10/2021
Date of Pronouncement: 25/10/2021

ORDER

PER N. K. BILLAIYA, AM:

1. This appeal by the assessee is preferred against the order of
the CIT(A)-1, New Delhi dated 31.08.2020 pertaining to
A.Y.2019-20.

2. The grievance of the assessee read as under :-
2
3

3. Briefly stated the facts of the case are that while processing
the return of income filed by the assessee, CPC Bangalore in
intimation u/s. 143 (1) of the Act disallowed Rs.7,23,552/-on
account of subscription fees paid to club.

4. The assessee agitated before the CIT(A) but the CIT(A)
dismissed the appeal by holding as under :

Decision:

5.1 The facts of the case is that the CPC Bangalore vide order
dated 20.05.2020 has made adjustment u/s 143(1 )(a) on
account of inconsistency in total amount of disallowance under
section 37of the Act relying upon the information given by the
auditor in Form 3CD. In the present appeal, the Appellant has
challenged this relying upon various judgments/ decisions
mentioned in Appellant’s submission supra in para 4.
5.2 The case of the Appellant has been carefully considered.
From the order of CPC it is apparent that following reason has
been given by CPC for making such adjustment-

iv Disallowance of expenditure indicated in the audit report but not taken

into account in computing the total income in the return 143(1)(a)(iv)
Particulars Variance
s. Amount Amount

No. in income mentioned in
Tax Form Annexure
Return
3CD

1. Inconsistency in total amount of 20000 723552 723552
disallowance under section 37

5.3 As per the provisions of section 143(1)(a)(iv) the following
adjustment can be made which is reproduced as under:

143. 2[(1) Where a return has been made under section 139,
4

or in response to a notice under sub-section (1) of section 142,
such return shall be processed in the following manner,
namely:—
(a) the total income or loss shall be computed after making
the following adjustments, namely:—

(iv) disallowance of expenditure indicated in the audit
report but not taken into account in computing the total
income in the return;

This shows that CPC is within the power to make such
adjustment as Appellant’s auditor himself disallowed it but
Appellant has claimed it in the Return of Income against the
Audit Report.
5.4 In this light, CPC is justified in making the addition under
section 37. This fact has also been reported by the Auditor
who has audited the accounts of the appellant in Form 3CD.
On the basis of the above, the addition made by CPC under
this head of Rs.7,03,552/- is confirmed and ground of appeal
no.1 to 4 are dismissed.

5. Before me the counsel for the assessee drew my attention to
the tax audit report and pointed out that the auditors have not
made any adverse comment.

6. It is the say of the Counsel that CPC, Bangalore made
addition which are not permissible in processing the return u/s.
143 (1) of the Act.
5

7. Per contra the DR strongly supported the findings of the
AO/ CIT(A).
8. I have carefully considered the intimation u/s.143 (1) of the
Act by CPC, Bangalore viz-a-viz the order of the CIT(A). Following
information was provided in the tax audit report :-

9. The reasons given by CPC for making the adjustment is
“disallowance of expenditure indicated in the audit report but not
taken into account in computing the total income in the return
u/s. 143 (1)(a)(iv)”.
10. A careful perusal of the relevant part of the audit report
show that nowhere the auditors have reported the disallowance of
6

expenditure and, therefore, invoking provisions of section 143
(1)(a)(iv) is unwarranted.

11. Considering the facts of the case in the light of the relevant
audit report mentioned here in above I direct the AO delete the
impugned addition.

12. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 25.10.2021.

*NEHA* Sd/-
(N. K. BILLAIYA)
Date:- 25.10.2021 ACCOUNTANT MEMBER

Copy forwarded to: ASSISTANT REGISTRAR
ITAT NEW DELHI
1. Appellant

2. Respondent

3. CIT

4. CIT(Appeals)

5. DR: ITAT
7

Date of dictation 21.10.2021
Date on which the typed draft is placed 25.10.2021
before the dictating Member 25.10.2021
Date on which the typed draft is placed 25.10.2021
before the Other member 25.10.2021
Date on which the approved draft comes to 25.10.2021
the Sr.PS/PS 25.10.2021
Date on which the fair order is placed before 25.10.2021
the Dictating Member for Pronouncement
Date on which the fair order comes back to
the Sr. PS/ PS
Date on which the final order is uploaded
on the website of ITAT
Date on which the file goes to the Bench
Clerk
Date on which file goes to the Head Clerk.
The date on which file goes to the Assistant
Registrar for signature on the order
Date of dispatch of the Order

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