POSITIVE PACKAGING INDUSTRIES LTD, MUMBAI V. ADDL CIOT RG 3(2), MUMBAI

ITA 1665/MUM/2010

• Counselvise Citation: 166519914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 11-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 04-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALEXANDER CHANDY
• Assessee Lawyers: DR K SHIVARAM; S R PARIKH
• Keywords: Opportunity of being heard; Set aside
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND R.K.PANDA (A.M ) ITA NO. 1665/MUM/2010 (ASSESSMENT YEAR: 2006-07) M/S POSITIVE PACKAGING INDUSTRIES LTD., 98, JOLLY MAKER CHAMBERS II, NARIMAN POINT, MUMBAI-400021 PAN:AAACP2836Q THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 3(2), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020. APPELLANT V/S RESPONDENT APPELLANT BY : DR.K.SHIVARAM AND SH RI S.R.PARIKH RESPONDENT BY : SHRI ALEXANDER CHANDY O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16.12.2009 PASSED BY THE LE ARNED COMMISSIONER OF INCOME TAX (A) FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G OF FLEXIBLE PACKAGING MATERIALS, ROTOGRAVURE, PRINTING CYLINDERS AND METALISED FILMS, FILED RETURN DECLA RING TOTAL INCOME OF RS.10,47,91,217/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTED THAT IN THE TAX AUDIT REPORT IN ANNEXURE E OF THE CLAUSE 21(I)(A), THE FOLLOWING DETAILS HAVE BEEN MENTIONED (PARA 5.1 OF ASSESSMENT ORDER): ITA NO. 1665/MUM/2010 (ASSESSMENT YEAR: 2006-07) 2 PRE-EXITED ON THE FIRST DAY OF THE PREVIOUS YEAR B UT WAS NOT ALLOWED IN THE ASSESSMENT OF ANY PRECEDING PREV IOUS YEAR AND WAS PAID DURING THE PREVIOUS YEAR AND NO T PAID DURING THE PREVIOUS YEAR. PARTICULARS AMOUNT DISALLOWED IN A.Y.2005 - 06 AMOUNT PAID AMOUNT REVERSED TOTAL GRAM PANCHAYAT TAX 54,573 - - 54,573 BONUS 8, 02,584 3,90,317 2,22,690 1,89,577 LEAVE ENCASHMENT 13, 18,058 4,58,530 4,63,378 3,96,150 TOTAL 21,75, 215 8,48,847 6,86,068 6,40,300 IN VIEW OF THE ABOVE, THE ASSESSEE WAS ASKED AS TO WHY RS.6,86,300/- AS AMOUNT PAYABLE ON ACCOUNT OF BONUS AND LEAVE ENCASHMENT SHOULD NOT BE DISALLOWED. IN THE ABSENCE OF ANY EXPLANATION BY THE ASSESSEE, THE AO ADDED RS.6,86,300/- UNDER SECTION 43B OF THE ACT. THE A O AFTER MAKING SOME OTHER DISALLOWANCES ON ACCOUNT OF PF COMPLETED THE ASSESSMENT AT AN INCOME OF RS.10,54,83,030/- VIDE ORDER DATED 22.12.2008 PASS ED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SH ORT THE ACT). 3. ON APPEAL, IT WAS SUBMITTED BY THE ASSESSEE THA T THE APPELLANT HAD PAID BONUS OF RS.3,90,317/- OUT OF T HE PROVISIONS OF RS.8,02,584/- MADE IN THE EARLIER YE AR. ITA NO. 1665/MUM/2010 (ASSESSMENT YEAR: 2006-07) 3 SIMILARLY, OUT OF THE PROVISION FOR LEAVE ENCASHME NT TOTALING TO RS.13,18,058/- MADE IN THE EARLIER YEAR THE APP ELLANT HAD PAID A SUM OF RS.4,58,530/- DURING THE CURRENT YEA R. AS THERE WAS EXCESS PROVISIONS OF BONUS AND LEAVE ENCA SHMENT MADE IN THE EARLIER YEAR THEREFORE THE APPELLANT RE VERSED THE AMOUNT OF RS.2,22,690/- AND RS.4,63,378/- FOR BON US AND LEAVE ENCASHMENT RESPECTIVELY. THE APPELLANT HAD R EDUCED THIS AMOUNT FROM THE INCOME FOR THE CURRENT YEAR HE NCE THE SAID AMOUNT REVERSED SHOULD BE ALLOWED AS DEDUCTION AS PER THE PROVISIONS OF SECTION 43B OF THE ACT. HOWEVER , THE LEARNED COMMISSIONER OF INCOME TAX (A), OBSERVED TH AT SINCE THE SAID AMOUNT OF RS.2,22,690/- AND RS.4,63, 378/- CLAIMED TO HAVE BEEN REVERSED DURING THE YEAR HAVE NOT BEEN ACTUALLY PAID FOR BONUS AND LEAVE ENCASHMENT IN THE YEAR UNDER CONSIDERATION, THE APPELLANT IS NOT FU LFILLING THE CONDITIONS OF THE PROVISIONS OF SECTION 43B OF THE ACT, THEREFORE, NO DEDUCTION FOR THE SAID AMOUNT OF BO NUS AND LEAVE ENCASHMENT CLAIMED TO HAVE BEEN REVERSED IS PERMISSIBLE AND ACCORDINGLY, HE UPHELD THE DISALLOW ANCE MADE BY THE AO. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A) THE ASSESSEE IS IN A PPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTEN ANCE OF ITA NO. 1665/MUM/2010 (ASSESSMENT YEAR: 2006-07) 4 ADDITION OF REVERSAL OF BONUS AND LEAVE ENCASHMENT OF RS.6,86,300/-. 5. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE WHILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (A) FURTHER SUBMITS THAT SINCE THE ADDITION OF BON US OF RS.8,02,584/- AND LEAVE ENCASHMENT OF RS.13,18,058 /- HAS BEEN MADE IN THE ASSESSMENT YEAR 2005-06 AND OUT OF IT, THE ASSESSEE, DURING THE YEAR, REVERSED THE AMOUNT OF RS.2,22,690/- OUT OF BONUS AND LEAVE ENCASHMENT OF RS.4,63,378/-, THEREFORE, THE LEARNED COMMISSIONER OF INCOME TAX (A) WAS NOT JUSTIFIED IN DISALLOWING THE AMOUNT AS DEDUCTION AS THE SAME HAS ALREADY BEEN TAXED IN THE ASSESSMENT YEAR 2005-06. IN ALTERNATIVE, HE SUBMIT S THAT THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO FOR VE RIFICATION. 6. ON THE OTHER HAND, THE LEARNED D.R. SUPPORTS THE ORDER OF THE AO AND THE LEARNED COMMISSIONER OF INCOME TAX (A). HE FURTHER SUBMITS THAT HE HAS NO OBJECTION IF THE ISSUE IS SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION. 7. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD, WE ITA NO. 1665/MUM/2010 (ASSESSMENT YEAR: 2006-07) 5 FIND THAT THERE IS NO DISPUTE THAT IN THE ASSESSMEN T YEAR 2005-06 THE AMOUNT OF LEAVE ENCASHMENT OF RS.13,18 ,058/- AND BONUS OF RS.8,02,584/- WAS DISALLOWED BY THE AO UNDER SECTION 43B OF THE ACT. HOWEVER, OUT OF IT , THE AO HAS ALLOWED BONUS OF RS.21,87,327/-, GRATUITY OF RS.3,13,809/- AND GRAM PANCHYAT TAX RS.41,259/- ON THE GROUND THAT IT WAS DISALLOWED IN THE LAST YEAR BUT PAID /REVERSED IN THE CURRENT YEAR. WE FURTHER FIND THA T ON THE SAME SYSTEM OF ACCOUNTING THE ASSESSEE HAS MADE CLA IM OF BONUS OF RS.2,22,690/- AND LEAVE ENCASHMENT OF RS.4,63,378/-. HOWEVER, THE SAME WAS DISALLOWED BY THE AO AS THE ASSESSEE FAILED TO OFFER ANY EXPLANATION. T HE LEARNED COMMISSIONER OF INCOME TAX (A) CONFIRMED THE SAME O N THE GROUND THAT THE ASSESSEE HAS NOT FULFILLED THE CON DITION LAID DOWN UNDER THE PROVISION OF SECTION 43B OF THE ACT. SINCE THE ASSESSEE HAS MADE NO EXPLANATION BEFORE THE AO AND IN THE ABSENCE THEREOF THE ASSESSEES CLAIM COULD NOT BE EXAMINED IN THE LIGHT OF THE FINDINGS RECORDED IN T HE ASSESSMENT YEAR 2005-06, THEREFORE, IN THE INTEREST S OF JUSTICE, WE CONSIDER IT FAIR AND REASONABLE THAT TH E MATTER SHOULD GO BACK TO THE FILE OF THE AO AND ACCORDING LY, WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVAT IONS AS ITA NO. 1665/MUM/2010 (ASSESSMENT YEAR: 2006-07) 6 STATED ABOVE AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE ASSESSEES APPEAL STANDS PART LY ALLOWED FOR STATISTICAL PURPOSES. . ORDER PRONOUNCED IN THE OPEN COURT ON 20TH JULY,201 1. SD. SD. (R.K.PANDA ) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 20 TH JULY, 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI