2018 (1) TMI 1672 - AT - Income Tax

Addition on account of typing error in the Audit Report 3CD when compared with the audited profit loss account - HELD THAT - As analyzed facts circumstances of the case we find that on a perusal of the paper book filed by the assessee especially the statement of profit loss account the profit before tax is Rs. 1, 13, 41, 172.87 and correspondingly the clarification letter filed by the Chartered Accountant of the assessee clearly states that the figure mentioned in column 40(C) of 3CD Audit Report has to be read as Rs. 1, 13, 41, 173/- instead of Rs. 1, 77, 94, 019/- which was inadvertently mentioned. Even before the Assessing Officer the same was explained vide letter dated 13/1/2017 as is appearing at page 7 of the paper book filed before us in response to notice dated 25/11/2016. In this view of the matter we are of the considered view that there was an inadvertent mistake committed by the Auditor of the assessee by wrongly mentioning the figure in column 40(C) of 3CD Audit Report as Rs. 1, 13, 41, 173/- instead of Rs. 1, 77, 94, 019/- therefore any addition in the hands of the assessee due to some typing error is not legally permissible. With these findings we direct the deletion of addition made in the hands of the assessee. Accordingly grounds of appeal taken by the assessee are allowed.

Summary

Issues:
Addition of Rs. 64,52,847 due to typing error in Audit Report 3CD.

Analysis:
The appeal arose from the confirmation of an addition of Rs. 64,52,847 by the ld. CIT(A) due to a typing error in the Audit Report 3CD. The net profit in the 3CD Audit Report was Rs. 1,77,94,019, while in the audited profit & loss account, it was Rs. 1,13,41,173. The assessee failed to explain the difference, leading to the addition by the Assessing Officer. The assessee contended that it was a typographical error, supported by submissions and explanations. The ld. CIT(A) upheld the addition, prompting the appeal before the ITAT.

The assessee argued before the ITAT that the discrepancy was due to an inadvertent mistake by the auditor, as evidenced by various documents submitted. The Chartered Accountant clarified that the correct figure in the 3CD Audit Report should be Rs. 1,13,41,173, not Rs. 1,77,94,019. The ITAT noted the explanations provided to the Assessing Officer and found the mistake to be inadvertent. Consequently, the addition was deemed impermissible, and it was directed to be deleted. The ITAT allowed the appeal, ruling in favor of the assessee.

In conclusion, the ITAT set aside the addition of Rs. 64,52,847 made due to a typing error in the Audit Report 3CD, deeming it an inadvertent mistake by the auditor. The ITAT's decision favored the assessee, directing the deletion of the addition and allowing the appeal.