Vadali Nagrik Sahkari Bank Ltd., Sabarkantha V. The Asstt. Commissioner of Income Tax, SK Circle, Himatnagar

ITA 951/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9888 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 19-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Principle of natural justice
• Section: 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 951/AHD/2017 (ASSESSMENT YEAR: 2013-14) VADALI NAGRIK SAHKARI BANK LTD. P.O VADALI, DIST: SABARKANTHA-383235 V/S THE ACIT, SK CIRCLE, HIMATNAGAR (APPELLANT) (RESPONDENT) PAN: AAAAT4290L APPELLANT BY : SHRI MEHUL TALERA, AR RESPONDENT BY : SHRI LALIT P. JAIN, SR. D.R. ( )/ ORDER DATE OF HEARING : 20 -02-201 9 DATE OF PRONOUNCEMENT : 16 -05-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)-2, AHMEDABAD DATED 20.02.2017 PERTAINING TO A.Y. 2013-14 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO.951/A HD/2017 . A.Y. 2013-14 2 1.1 THE ORDER PASSED U/S. 250 ON 20-2-2017 FOR A.Y.2013-14 BY CIT (A)-2 A'BAD TO THE EXTENT OF UPHOLDING THE ADDITIONS/DISALLOWAN CES IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FURNISHED AND T HE EVIDENCE PRODUCED BY THE APPELLANT. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW A ND OR ON FACTS IN UPHOLDING FOLLOWING ADDITIONS/DISALLOWANCES: (I) AUDIT FEES AS PRIOR PERIOD RS. 75,000 (II) LEAVE ENCASHMENT PROVISION RS. 2,00,000 (III) EXEMPTION OF DIVIDEND INCOME RS. 11,750 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN MAKING ABOVE SAID AD DITIONS/DISALLOWANCES. IT IS THEREFORE PRAYED THAT THE DISALLOWANCE/ADDITI ONS TO THE EXTENT UPHELD BY CIT(A) SHOULD BE DELETED. 2. GROUND NO. 2.1(III) WITH REGARD TO EXEMPTION OF DIV IDEND INCOME HAS NOT BEEN PRESSED BY THE ASSESSEE/ APPELLANT BECAUSE OF SMALL NESS OF AMOUNT. THEREFORE, WE WOULD LIKE TO DISPOSE OF GROUND NO. (I) & (II). 3. APPELLANT IS A COOPERATIVE BANK AND ENGAGED IN BANK ING ACTIVITIES AS PER RBI GUIDELINES AND BANKING REGULATION ACT. IT HAD FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 ON 30.09.2013 DECLARING TOT AL INCOME OF RS. 20,37,990/-. 4. ASSESSEE HAS CLAIMED AUDIT FEES AS PRIOR PERIOD OF RS. 75,000/-. IT IS NOTICED THAT IN PROFIT AND LOSS ACCOUNT, ASSESSEE HAS DEBIT ED EXPENSES UNDER HEAD OF AUDIT FEE OF RS. 1,25,5000/- AND LEAVE ENCASHMENT A NAMAT EXPENSES OF RS. ITA NO.951/A HD/2017 . A.Y. 2013-14 3 4,98,488/- IN PROFIT AND LOSS ACCOUNT ON PROVISION BASIS DURING THE YEAR UNDER CONSIDERATION. ON ENQUIRY MADE BY THE LOWER AUTHORI TIES, ASSESSEE SUBMITTED DETAIL OF AUDIT FEES OF RS. 33,000/- PAID TO SHRI H R PATEL AND RS.21,500/- PAID TO SHRI PRITECH & RATHO ASSOCIATES CHARTERED ACCOUN TANTS AND RS. 24,000 PAID TO SHRI ARVIND P. DOSHI FOR BILL NO. 206 DATED 12.0 6.2013 AND FOR REMAINING 46,000/- APPELLANT DID NOT FURNISH ANY DETAIL AND E VEN BEFORE US, THE APPELLANT COULD NOT GIVE ANY SUPPORTIVE EVIDENCE. OUT OF AFOR ESAID AMOUNT, RS. 5,000/- WHICH RELATED TO PREVIOUS YEAR AS BILL WAS RAISED O N 12.03.2012 AND RS. 24,000/- WHICH RELATED TO SUBSEQUENT YEAR AS BILL WAS RAISED ON 28.12.2013 AND REMAINING AMOUNT RS. 46,000/- IS CLAIMED BY THE APPELLANT WIT HOUT ANY BASIS ON PROVISION BASIS. OUT OF 75,000/-, WE ALLOW RS. 29,000/- AS AS SESSEE HAS GIVEN DETAILS BEFORE THE LOWER AUTHORITIES AND FOR RS. 46,000/-, ASSESSEE WAS ASKED BY THE BENCH BUT COULD NOT GIVE ANY SATISFACTORILY REPLY. THEREFORE, OUT OF RS. 75,000/- RS. 46,000/- IS CONFIRMED. 5. NOW WE COME TO LEAVE ENCASHMENT ANAMAT AN AMOUNT OF RS. 2,00,000/- ON PROVISION BASIS UNDER HEAD OF LEAVE ENCASHMENT AND SAID AMOUNT TO BE PAID AT THE TIME OF RETIREMENT OF STAFF SHRI K.D. SONI ON 3 1.08.2014 BECAUSE AMOUNT WAS NOT RELATED TO THE YEAR UNDER CONSIDERATION AND LOWER AUTHORITIES DISALLOWED THE CLAIM OF THE APPELLANT. 6. AS PER MERCANTILE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT, THE LIABILITIES ARE REQUIRED TO BE RECOGNIZED ON ACCRUA L BASIS. LEAVE ENCASHMENT IS ALLOWABLE ON PAYMENT BASIS HAVING REGARD TO ITS PEC ULIAR NATURE. THE PAYMENT WAS STATED TO BE MADE AT THE TIME OF RETIREMENT OF STAFF AND CLAIMED EXPENDITURE ON PAYMENT BASIS. THE ACTION IS SUPPORT ABLE BY EVIDENCES. HENCE, THE CLAIM NEEDS TO BE ALLOWED. THE A.O. IS DIRECTED TO DO SO. ITA NO.951/A HD/2017 . A.Y. 2013-14 4 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16- 05- 2019 SD/- SD/- (PRADIP KUMAR KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 16/05/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD