ACIT, C-2(1), Chandigarh V. M/s Punjab State Coop. Bank Ltd., Chandigarh

ITA 857/CHANDI/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0302 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-03-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 30-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE
• Section: 43B; 44AB

Judgement Text

, . , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B CHANDIGARH , , , BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NO. 857/CHD/2019 / ASSESSMENT YEAR : 2012-13 THE ACIT, CIRCLE 2(1), CHANDIGARH. VS M/S PUNJAB STATE COOP BANK LTD., SCO 51-52, SECTOR 17-B, CHANDIGARH. ./ PAN /TAN NO: AAAAP0253B / APPELLANT / RESPONDENT / REVENUE BY : SHRI G.S. PHANI KISHORE,CIT-DR / ASSESSEE BY : SHRI ATUL GOYAL, C.A. / DATE OF HEARING : 1 7.03.2020 / DATE OF PRONOUNCEMENT : 15.06.2020 / ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE WHEREIN THE CORRECTNESS OF THE ORDER DATED 22.03.20 19 OF CIT(A)-1 CHANDIGARH PERTAINING TO 2012-13 ASSESSMEN T YEAR IS ASSAILED BY THE REVENUE ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATIN G THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE FROM RS. 5,98 ,23,429/- TO RS. 1,66,73,353/- ON ACCOUNT OF EXCESS CONTRIBUTION RECEIVED FROM CEN TRAL COOPERATIVE BANKS (CCBS) OVER PAYMENTS BY IGNORING THE FACTS THAT THE ASSESSEE ITSELF CLAIMED THE DEDUCTION OF RS. 4,31,50,076/- OUT OF THE CONTRIBUT IONS RECEIVED ON ACCOUNT OF PAYMENTS. THIS HAS RESULTED INTO DOUBLE DEDUCTION AMOUNTING TO RS. 4,31,50,076/- TO THE ASSESSEE. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROU NDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED-OFF. ITA 857 /CHD/2019 A.Y. 2012-13 PAGE 2 OF 6 4. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CA NCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 2. THE LD. AR MR. ATUL GOYAL APPEARING ON BEHALF OF THE ASSESSEE ON 16.03.2020 REFERRING TO THE IMPUGNED SU BMITTED THAT THE SPECIFIC FINDING OF THE CIT-A GRANTING PAR TIAL RELIEF TO THE ASSESSEE WAS A SUBJECT MATTER OF APPEAL FILE D BY THE REVENUE BEFORE THE ITAT. TO THE EXTENT THE ADDITION WAS SUSTAINED, THE ASSESSEE HAD ALSO COME IN A CROSS-AP PEAL BEFORE THE ITAT. HOWEVER, THE REVENUES APPEAL, IT WAS SUBMITTED, HAD COME UP FOR HEARING ON AN EARLIER DA TE AND THE ORDER IS AVAILABLE. FILING A COPY OF THE ORDER, IT WAS HIS PRAYER THAT WITH IDENTICAL DIRECTIONS THE ASSESSEE S APPEAL MAY BE DECIDED BY REMANDING THE ORDER BACK TO THE C IT(A). ATTENTION WAS INVITED TO THE RELEVANT FINDINGS GIVE N BY THE COORDINATE BENCH IN ITA 813/CHD/2019 IN ITS ORDER D ATED 29.11.2019. 3. THE LD. CIT-DR SOUGHT TIME TO GO THROUGH THE ORD ER. EVEN OTHERWISE IT WAS HIS SUBMISSION THAT THE COPY FILED WAS NOT LEGIBLE. THE LD. A.R. STATED THAT HE SHALL FILE A LEGIBLE COPY. ACCORDINGLY, IN VIEW OF THESE FACTS TIME WAS GRANTED FOR THE BENEFIT OF THE REVENUE. 4. ON THE NEXT DATE OF HEARING, THE LD. CIT-DR SUBM ITTED THAT THERE IS NO DOUBT THAT THE ISSUE IS SAME AND F ACTS ALSO CONTINUE TO REMAIN SIMILAR. ACCORDINGLY, IT WAS AL SO HIS ITA 857 /CHD/2019 A.Y. 2012-13 PAGE 3 OF 6 REQUEST THAT REMAND AS PRAYED FOR MAY BE DIRECTED. HOWEVER IT WAS SPECIFIC PRAYER THAT THE REMAND MAY BE DIREC TED WITH THE OBSERVATIONS THAT THE CIT(A) WHILE DECIDING MAY NECESSARILY FIRST VERIFY THE ACCOUNTING ENTRIES AVA ILABLE ON RECORD AND ONLY THEREAFTER CONSIDERING THE SUBMISS IONS AND THE PLEADINGS OF THE ASSESSEE, WHATEVER THEY MAY BE , ONLY THEN PASS AN APPROPRIATE ORDER. IT WAS HIS SUBMISSI ON THAT IT MAY BE DIRECTED THAT ACCOUNTING ENTRIES MUST NECESS ARILY BE LOOKED INTO. NO OBJECTION TO THE SAID REQUEST WAS M ADE BY THE LD. AR. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE WE NOTICE HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH. 6. FOR THE SAKE OF COMPLETENESS IT MAY BE REFERRED THAT BEFORE THE CO-ORDINATE BENCH, THE FOLLOWING GROUND WAS RAISED BY THE REVENUE : - 1. THAT THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN MAKING ADDITION OF RS. 1,66,73,353 WHICH INCLUDES THE AMOUNT OF RS. 20,40, 40, 845 UNDER THE PROVISIONS OF SECTION 43B OF THE INCOME TAX ACT 1961 WHEN THE SAM E HAS NOT BEEN CLAIMED BY THE APPELLANT AS DEDUCTION. 7. SETTING OUT THE FACTS, ARGUMENTS AND SUBMISSION S AS UNDER THE ISSUE WAS REMANDED WITH THE FOLLOWING DI RECTIONS BY THE CO-ORDINATE BENCH : 2. THE SOLITARY ISSUE IN THE PRESENT APPEAL RELATES TO DISALLOWANCE MADE U/S 43(B)/41(7) OF THE ACT AND THE FACTS RELATING TO TH E ISSUE ARE THAT THE AO NOTED FROM AUDIT REPORT FILED BY THE ASSESSEE U/S 44AB OF THE ACT THAT THE ASSESSEE HAD MADE PROVISIONS FOR GRATUITY AND LEAVE SALARY AND HAD AL SO MADE PAYMENT ON THESE ITA 857 /CHD/2019 A.Y. 2012-13 PAGE 4 OF 6 ACCOUNTS TO ITS EMPLOYEES DURING THE RELEVANT YEAR. HE ALSO NOTED THAT THE ASSESSEE HAD RECEIVED CONTRIBUTIONS FROM VARIOUS DISTRICT CE NTRAL CO-OPERATIVE BANK (CCB) ON THESE ACCOUNTS DURING THE RELEVANT PREVIOUS YEAR . IN THIS REGARD, THE DETAIL AS MENTIONED IN THE AUDIT REPORT AND REPRODUCED IN THE ORDER OF THE LD. CIT(A) AT PAGE NO. 3 IS AS UNDER:- PARTICULAR OPENING BALANCE AS ON 31.3.2011/ 01.04.2011 PROVISION MADE DURING THE YEAR CONTRIBUTION RECEIVED FROM TOTAL (2+3+4) PAID DURING THE YEAR CL OSING BALANCE AS ON 31.3.2012 CCBS 1 2 3 4 5 6 7 NON COMMON 3,75,04,128.79 5,35,94,427.00 22,21,31,653.44 4,80,39,337.00 2,88,03,217.00 1,36,30,227.00 63,184.00 4,93,146.00 20,34,84,515.00 13,56,06,649.79 92890790.00 439246395.44 33816717.00 9333359.00 144217416.00 101789932.79 83557431.00 295028979.44 CADRE GRATUITY LEAVE SALARY COMMON CADRE TOTAL 37,32,30,209.23 3,04,72,781.00 20,40,40,845.00 66,77,43,835.23 18,73,67,492.00 48,03,76,343.2 3. THE AO FURTHER NOTED THAT THE FIGURES WERE CLASSIFI ED INTO TWO CATEGORIES OF EMPLOYEES, NON COMMON CADRE EMPLOYEES WHICH REFERRE D TO STAFF EXCLUSIVELY WITH THE ASSESSEE AND COMMON CADRE EMPLOYEES WHICH REFER RED TO STAFF WHICH COULD BE TRANSFERRED FROM THE ASSESSEE TO VARIOUS CCBS AND V ICE VERSA. HE FURTHER NOTED THAT IN THE COMPUTATION OF INCOME FILED BY THE ASSESSEE THE PROVISION MADE DURING THE YEAR BOTH ON ACCOUNT OF NON COMMON CADRE & COMMON CADRE EMPLOYEES AMOUNTING TO RS. 9,04,72,781/- HAD BEEN ADDED BACK TO THE INCOME OF THE ASSESSEE AND THE AMOUNT ACTUALLY PAID HAD BEEN CLAIMED AS DE DUCTION. WITH THE ENTIRE AMOUNT PAID HAVING BEEN CLAIMED AS DEDUCTION WITH R ESPECT TO THE NON COMMON CADRE EMPLOYEES, WHILE WITH RESPECT TO THE COMMON C ADRE EMPLOYEES, THE ASSESSEE HAD REDUCED THE PAYMENT MADE FROM THE CONTRIBUTIONS RECEIVED FROM CCBS AND WITH NOTHING REMAINING,NO DEDUCTION ON ACCOUNT OF THE SA ME HAD BEEN CLAIMED. THE ASSESSEE HAD CLAIMED DEDUCTION ON ACCOUNT OF PAYME NT MADE AS UNDER:- GRATUITY ACTUALLY PAID (NON COMMON CADRE) RS. 3,38, 16,717/- LEAVE SALARY ACTUALLY PAID (NON COMMON CADRE) RS. 9 3,33,359/- GRATUITY ACTUALLY PAID (COMMON CADRE)(14,42,17,416- 20,34,84,515) RS. NIL 4. THE AO HELD THAT THE CONTRIBUTIONS RECEIVED FROM THE CCBS ON ACCOUNT OF NON COMMON CADRE AND COMMON CADRE EMPLOYEES WAS THE INCOME OF THE ASSESSEE AND THEREFORE, THE SAME WAS TO BE INCLUDED IN ITS I NCOME. HE THEREFORE, TREATED THE CONTRIBUTIONS RECEIVED ON ACCOUNT OF GRATUITY AND S ALARY OF NON COMMON CADRE EMPLOYEES AMOUNTING TO RS. 63,184/- AND RS. 4,93,14 6/- AS THE INCOME OF THE ASSESSEE, WHILE FOR THE COMMON CADRE EMPLOYEES, HE TREATED THE SURPLUS REMAIN AFTER DEDUCTING THE AMOUNT PAID DURING THE YEAR, AS INCOME OF THE ASSESSEE AMOUNTING TO RS. 5,92,67,099/- (20,34,84,515.00 1 4,42,17,416.00). 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) WHERE THE ASSESSEE CONTENDED THAT THE CCBS WERE SEPARATE ENTITIES AND ON TRANSFER OF THE EMPLOYEES TO THE ASSESSEE SOCIETY THE CONTRIBUTIONS IN THE NAME OF EMPLOYEES ON ACCOUNT OF GRATUITY AND LEAVE SALARY WAS ALSO TRANSFERRED AND PAYMENTS MADE OUT OF THE SAME TO THESE EMPLOYEES. THAT THE AMOUNT RECEIVED THEREF ORE, FROM CCB S WAS NOT THE INCOME OF THE ASSESSEE. THE LD.CIT(A) AGREED WITH T HE SAME BUT HE FURTHER WENT ON TO HOLD THAT THE AMOUNT OF ADDITION TO BE MADE ON A CCOUNT OF PROVISION FOR LEAVE ITA 857 /CHD/2019 A.Y. 2012-13 PAGE 5 OF 6 SALARY AND GRATUITY WAS TO BE THE DIFFERENCE BETWEE N THE OPENING BALANCE AND THE CLOSING BALANCE OF THE PROVISIONS, WHICH AS PER THE LD. CIT(A) AMOUNTED TO RS. 10,71,46,134/- TAKING THE OPENING BALANCE OF THE PR OVISIONS FROM THE TAX AUDIT REPORT AT RS. 37,32,30,209.23/- AND THE CLOSING BAL ANCE AT RS. 48,03,76,343.23/-. FURTHER, NOTHING THAT THE ASSESSEE HAD DISALLOWED AN AMOUNT OF RS. 9,04,72,781/- BEING THE PROVISION CREATED DURING THE YEAR, HE RED UCED THE SAME FROM THE TOTAL DISALLOWANCE WORKED OUT AS ABOVE AND MADE ADDITION TO THE EXTENT OF RS. 1,66,73,353/-. IT IS THIS ADDITION/DISALLOWANCE WHI CH HAS BEEN CHALLENGED BEFORE US. 6. DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE LD. CIT(A) HAD FAILED TO APPRECI ATE THE FACTS OF THE CASE WHILE APPLYING THE PROVISIONS OF LAW AS PER SECTION 40A(7 ) OF THE ACT., MAKING DISALLOWANCE OF THE PROVISION MADE ON ACCOUNT OF GR ATUITY AND LEAVE SALARY. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE SAME CO ULD NOT BE WORKED OUT BY REDUCING THE OPENING BALANCE OF THE PROVISIONS FROM THE CLOSING BALANCE OF THE PROVISIONS ,AS DONE BY THE LD.CIT(A). LD.COUNSEL FO R THE ASSESSEE CONTENDED THAT THE CLOSING BALANCE REPRESENTED THE FIGURE ARRIVE D AT AFTER MAKING ADJUSTMENT TO THE OPENING BALANCE OF THE PROVISION CREATED DURIN G THE YEAR, THE PAYMENTS MADE DURING THE YEAR AND THE CONTRIBUTIONS RECEIVED FRO M CCBS AS REDUCED BY PAYMENTS MADE OUT OF THE SAME DURING THE YEAR. HE DREW OUR A TTENTION TO THE FIGURES IN THIS REGARD AS REFLECTED IN THE TAX AUDIT REPORT REPRODU CED ABOVE. THEREFORE, IT WAS CONTENDED ,THAT THE LD. CIT(A) BY REDUCING THE OPE NING BALANCE OF PROVISION FROM THE CLOSING BALANCE , HAD INCLUDED THE CONTRIBUTI ONS RECEIVED FROM CCBS, IN THE CALCULATION OF AMOUNT OF PROVISION FOR GRATUITY/LEA VE MADE DURING THE YEAR WHILE AT THE SAME TIME HOLDING THAT THE CONTRIBUTIONS FROM C CBS WAS NOT THE INCOME OF THE ASSESSEE. 7. THE LD. DR STATED THAT THESE WERE FACTUAL CONTE NTIONS MADE BY THE ASSESSEE WHICH NEEDED VERIFICATION AND THEREFORE PLEADED TH AT THE MATTER BE RESTORED BACK TO THE LD. CIT(A) FOR ADJUDICATION AFRESH. THE LD. COUNSEL FOR THE ASSESSEE DID NOT OBJECT TO THE SAME. 8. IN VIEW OF THE ABOVE, WE RESTORE THE ISSUE BACK TO THE LD. CIT(A) TO CONSIDER THAT THE FACTUAL PLEADINGS MADE BY THE ASSESSEE AS ABOVE. SINCE THE ASSESSEE IS ONLY AGGRIEVED BY THE CALCULATION DONE BY THE LD. CIT(A) WHILE DISALLOWING THE PROVISIONS MADE FOR GRATUITY AND LEAVE SALARY, WE DIRECT THE LD. CIT(A) TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING THE FACTUAL EXPLANATION GI VEN BY THE ASSESSEE. NEEDLESS TO ADD THAT DUE OPPORTUNITY OF HEARING BE GRANTED TO T HE ASSESSEE. IN VIEW OF THE ABOVE, THE GROUNDS RAISED BY THE ASS ESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. 8. ACCORDINGLY, NOTING THAT FACTS CIRCUMSTANCES RE MAIN IDENTICAL IN TERMS OF THE PRAYER OF THE PARTIES AND THE SPECIFIC PRAYER OF THE LD. CIT-DR, THE ISSUE IS REM ANDED BACK TO THE FILE OF THE LD. CIT(A)DIRECTING HIM TO DECID E THE ISSUE ITA 857 /CHD/2019 A.Y. 2012-13 PAGE 6 OF 6 FOLLOWING THE DIRECTIONS OF THE COORDINATE BENCH G IVEN IN PARA 8 OF THE ORDER IN ITA 813/CHD/2019.HE IS FURTH ER DIRECTED TO VERIFY THE ACCOUNTING ENTRIES AND THERE AFTER PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW. IDEALLY, THE CROSS APPEALS OF THE ASSESSEE AND THE REVENUE SHOULD HAVE BEEN HEARD TOGETHER WHICH FACT SHOULD HAVE BEEN BROUGHT TO THE NOTICE OF THE ITAT BY THE PARTIES. WITH THE ABOVE D IRECTIONS, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICA L PURPOSES. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 9. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JUNE,2020. SD/- SD/- ( ) ( ) (ANNAPURNA GUPTA) (DIVA SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER POONAM / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. / CIT 4. ( )/ THE CIT(A) 5. , , / DR, ITAT, CHANDIGARH 6. / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR