M/s. Pragati Glass Pvt.Ltd., Bharuch V. The Dy.CIT.,Bharuch Circle, Bharuch

ITA 54/AHD/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6858 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAMES KURAIR
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 115JB

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD .., .. , ! BEFORE SHRI D.K. TYAGI, HONBLE JUDICIAL MEMBER AND SHRI A.K.GARODIA, HONBLE ACCOUNTANT MEMBER ITA NO.54/AHD/2011 ASSESSMENT YEAR:2007-08 PRAGATI GLASS PRIVATE LIMITED, KHARACH, KOSAMBA (R.S.), DISTRICT BHARUCH PIN 394 120 PAN NO.AABCP7377H V/S. DEPUTY COMMISSIONER OF INCOME-TAX, BHARUCH CIRCLE, BHARUCH (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI SURENDRA MODIANI, AR RESPONDENT BY:- SHRI JAMES KURAIR, DR DATE OF HEARING 02-12-2011 DATE OF PRONOUNCEMENT 09-12-2011 ' ' ' ' /O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER:- THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-VI, BARODA DAT ED 30-11-2010 FOR ASSESSMENT YEAR 2007-08. THE GROUND RAISED BY THE A SSESSEE IS AS UNDER:- 2. THE LEARNED COMMISSIONER (APPEALS) ERRED IN CON FIRMING ADDITION OF RS.1218627/- BEING PROVISION FOR BONUS, TO THE BOOK ITA NO.54/AHD/2011 A.Y. 2007-08 PRAGATI GLASS PVT. LTD. V. DCIT, BHARUCH PAGE 2 PROFITS UNDER SECTION 115JB. YOUR APPELLATE SUBMITS THAT THE ADDITION IS NOT JUSTIFIED AND PRAYS THAT THE SAME B E DELETED. 2. THE BRIEF FACTS ARE THAT IT IS NOTED BY THE ASSE SSING OFFICER IN PARA- 6 OF THE ASSESSMENT ORDER THAT ASSESSEE HAS DEBITED RS.12,18,627/- TO PROFIT AND LOSS ACCOUNT TOWARDS PROVISION FOR BONUS . IN THE SAME PARA, THE AO HAS ALSO REFERRED TO SOME OTHER EXPENDITURE DEBITED BY THE ASSESSEE TO THE PROFIT AND LOSS ACCOUNT BUT ON THES E ISSUES, THE MATTER HAS ATTAINED FINALITY AND THERE IS NO DISPUTE BEFOR E US WITH REGARD TO THOSE ITEMS. REGARDING THIS AMOUNT OF PROVISION FOR BONUS, THE AO HAS STATED IN THE ASSESSMENT ORDER THAT IT IS UNEXPLAIN ED LIABILITY AND MADE ADDITION WHILE COMPUTING BOOK PROFIT U/S. 115JB OF THE INCOME-TAX ACT, 1961. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. IT WAS SUBMITTED BY LD. AR OF THE ASSESSEE BEFOR E US THAT AS PER THE PROVISION OF PAYMENT OF BONUS ACT, THE ASSESSEE IS LIABLE TO PAY BONUS @ 20% OF ELIGIBLE SALARY FOR THE YEAR AND AMO UNT PAYABLE WAS COMPUTED AT RS.12,18,627/- AND THE SAME WAS PROVIDE D IN THE BOOKS OF ACCOUNT AS PER APPLICABLE ACCOUNTING STANDARD AND T HE PROVISION OF COMPANIES ACT, 1956. IT WAS ALSO COMMITTED THAT THE RE WAS NO UNCERTAINTY ABOUT IT AND HENCE, THE ADDITION MADE B Y AO IS NOT JUSTIFIED. HE ALSO SUBMITTED A COPY OF THE RELEVANT PAGE OF TA X AUDIT REPORT FOR THE NEXT YEAR I.E. A.Y. 2008-09 AND POINTED OUT THAT SA ME AMOUNT WAS ACTUALLY PAID IN THE NEXT YEAR AS NOTED BY THE TAX AUDITOR. A QUERY WAS RAISED BY THE BENCH AS TO WHAT IS THE BASIS OF MAKI NG PROVISION @ 20% OF SALARY AND WHERE IS THE COMPUTATION OF ALLOCABLE OF SURPLUS AS PER THE PAYMENT OF COMPANIES ACT, 1965 JUSTIFYING PROVISION @ 20%. IN REPLY, IT ITA NO.54/AHD/2011 A.Y. 2007-08 PRAGATI GLASS PVT. LTD. V. DCIT, BHARUCH PAGE 3 WAS SUBMITTED BY LD. AR OF THE ASSESSEE THAT THIS W ORKING IS NOT READILY AVAILABLE. 4. LD. DR OF THE REVENUE SUPPORTED THE ORDER OF AUT HORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT IT IS NOTED BY LD. CIT(A) IN PARA-5.2A OF HIS ORDER THAT THE ASSESSEE HAS NOT MADE ANY SUBMISSION AS TO WHY THE PROVISION OF BONUS WAS CERTAIN LIABILITY. BEFORE US ALSO, NO SUC H EVIDENCE HAS BEEN PLACED ON RECORD TO SHOW AND ESTABLISH THAT THE PRO VISION WAS FOR ASCERTAINED LIABILITY AND IN OUR CONSIDERED OPINION , TO ESTABLISH THAT PROVISION FOR BONUS @ 20% OF SALARY IS ASCERTAINED LIABILITY, THE ASSESSEE WAS REQUIRED TO SHOW THE AMOUNT OF ALLOCAB LE SURPLUS AS PER THE PAYMENT OF BONUS ACT TO ESTABLISH THAT SUCH ALL OCABLE SURPLUS WAS MORE THAN 20% OF SALARY OF THIS YEAR AND THEN ONLY, IT MAY BE ACCEPTED THAT IT WAS A CERTAIN LIABILITY BUT MERELY ON THIS BASIS THAT EQUAL AMOUNT WAS PAID IN THE SUBSEQUENT YEAR, IT CANNOT BE SAID THAT ON THE DATE WHEN THE PROVISION WAS MADE I.E. ON 31-03-2007, IT WAS A CERTAIN LIABILITY. HOWEVER, TO MEET THE ENDS OF JUSTICE, WE FEEL THAT ASSESSEE DESERVES ONE MORE OPPORTUNITY TO ESTABLISH THIS ASPECT BECAU SE PROPER REPRESENTATION WAS NOT MADE BY ASSESSEE BEFORE AUTH ORITIES BELOW BUT AT THE SAME TIME, NO RELEVANT QUERY WAS RAISED BY A SSESSING OFFICER AND THEREFORE, IN VIEW OF THESE FACTS THAT EQUAL AMOUNT WAS PAID IN THE NEXT YEAR, THERE APPEARS TO BE BONA FIDE CASE OF THE ASS ESSEE AND HENCE, FOR NATURAL JUSTICE, IN OUR CONSIDERED OPINION, THE ASS ESSEE DESERVES ONE MORE OPPORTUNITY IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THEREFORE, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF AO FOR A FRESH DECIS ION. WE WANT TO MAKE IT ITA NO.54/AHD/2011 A.Y. 2007-08 PRAGATI GLASS PVT. LTD. V. DCIT, BHARUCH PAGE 4 CLEAR THAT THE BURDEN IS ON THE ASSESSEE TO BRING T HE EVIDENCE ON RECORD IN RESPECT OF THIS CONTENTION THAT IT WAS A PROVISI ON FOR ASCERTAINED LIABILITY BY SHOWING THE ALLOCABLE SURPLUS FOR THE PRESENT YE AR AS PER THE PAYMENT OF BONUS ACT, 1965 OR ANY OTHER RELEVANT MATERIAL T O ESTABLISH THAT IT WAS A PROVISION OF ASCERTAINED LIABILITY. THEREAFTER, T HE AO SHOULD PASS NECESSARY ORDER ACCORDING TO LAW AFTER PROVIDING RE ASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF ASSESSEE STANDS ALLOW FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 09/12/2011 # ' $ %& '() 09 / 12 / 2011 !+ , $ - . SD/- SD/- ( .. ) ( .. ) (D.K.TYAGI) (A.K. GAROD IA) ( ) ( ! ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) *DKP '()- 09/12/2011 . ' ' ' ' $ $$ $ 012 012 012 012 32&1 32&1 32&1 32&1 / COPY OF ORDER FORWARDED TO:- 1. 56 / APPELLANT 2. 056 / RESPONDENT 3. (( 1 +9 / CONCERNED CIT 4. +9- / CIT (A) 5. 2<= 01' , , / DR, ITAT, AHMEDABAD 6. ? @# / GUARD FILE. BY ORDER/ ' , /TRUE COPY/ A/ (B , .