Calcutta High Court
Modern Malleables Ltd vs Commissioner Of Income Tax on 29 April, 2011
Author: Bhaskar Bhattacharya
Bench: Bhaskar Bhattacharya
1
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
(Original Side)
Present:
The Hon'ble Mr. Justice Bhaskar Bhattacharya
And
The Hon'ble Justice Sambuddha Chakrabarti
I.T.A. No.112 of 2004
Modern Malleables Ltd.
Versus
Commissioner of Income tax, (Central-II), Kol.
For the Appellant: Mr. J.P. Khaitan,
Mr. Ravi Asopa.
For the Respondent: Mr. Dipak Shome.
Heard on: 17.03.2001.
Judgment on: 29th April, 2011.
Bhaskar Bhattacharya, J.:
This appeal under Section 260A of the Income-tax Act is at the instance of an assessee and is directed against an order dated October 28, 2003 passed by the Income-tax Appellate Tribunal, "B" Bench, Calcutta, in Income-tax Appeal bearing ITA Nos.973 and 1103 (Kol/2001) for the Assessment Year 1996-97. 2 The facts giving rise to filing of this appeal may be summed up thus:
A) The appellant is a public limited company within the meaning of the Companies Act, 1956 and is assessed to tax. The appellant filed a return on November 29, 1996 disclosing a taxable income of Rs.56,35,160/- for the Assessment Year 1996-97. B) The Income-tax Department commenced a search against the assessee on September 3, 1997 and the same was concluded on October 31, 1997.
C) During the previous year relevant to the Assessment Year 1996-97, the appellant imported aluminium ingots/rods worth Rs.8,22,42,335/- from two Swiss Companies. Imports worth Rs.3,25,47,651/- were made from M/s. Gerald Metals, Switzerland and worth Rs.4,96,94,684/- from Euromin S.A., Geneva. Those imported goods were sold to an Indian Company, M/s. J.J.H. Industry Limited.
D) Upon payment to the Swiss suppliers, their respective accounts were debited and upon a sale to M/s. J.J.H. Industries Ltd., the account of to M/s. J.J.H. Industries Ltd. was debited with corresponding credit to the revenue account. The account of the Swiss suppliers to which debits had been made upon payment for the imported goods should have been closed by transferring the same to the purchase 3 account but in fact the account of Swiss suppliers were closed by transfer to the account of to M/s. J.J.H. Industries Ltd. under the head "Advances". The result was that in respect of the sale of the imported materials to M/s. J.J.H. Industries Ltd., the income stood accounted for but there was no debit to the purchase account by way of expenditure and instead, the account of M/s. J.J.H. Industries Ltd. stood debited twice, once at the time of sale and again upon the closure of the Swiss suppliers accounts. In other words, no expenditure on account of purchase of the imported materials was charged in the accounts with the income upon sale thereof was duly reflected in the accounts.
E) Upon discovery of the said mistake, the appellant passed a rectification entry in the accounts for the year subsequent to the previous year ending on September 30, 1997. In the said subsequent year the appellant did not claim any deduction in respect of the said amount of Rs.8,22,42,335/-.
F) In September 1994, the appellant purchased a factory-shed and land at Silvassa in the Union Territory of Dadra & Nagar Haveli at a cost of Rs.1,10,09,000/- for expansion of its manufacturing activities.
The appellant duly obtained the consent of the Pollution Control Authorities for carrying on the manufacturing activity at Silvassa and also applied for and obtained registration with the Central 4 Excise Authorities for the manufacturing activity at Silvassa. Registration under the Sales-tax laws was also obtained in respect of the business at Silvassa.
G) The trial production was carried out at Silvassa with the help of tools and dye form the appellant's Calcutta factory and thereafter the appellant decided to expand the factory-shed at Silvassa and consequently, during the previous year ending on March 31, 1996 a sum of Rs.1,11,40,100/- was spent on further construction. H) However, because of financial problems, the commercial production could not be commenced at Silvassa and in order to tide over the financial difficulties, in March 1996, the appellant started the factory-shed at Silvassa for Rs.4,78,91,114/- resulting in a profit of Rs.2,57,42,014/-. Since the factory-shed at Silvassa formed part of the block of assets along with the appellant's other factory-sheds under the provisions of Section 50 of the Act, the consideration received upon transfer of the Silvassa factory shed was required to be reduced from the value of the block of assets and depreciation was to be allowed under Section 32 of the Act on the value of the block of assets so reduced. In other words, the profit made on the sale of the Silvassa factory shed was not separately liable for capital gains tax but the sale proceeds thereof were to be reduced from the block of assets resulting in a lower claim for depreciation. In the original 5 return filed for the Assessment Year 1996-97, though the appellant excluded the profit on the sale of the factory, the depreciation claim was not consequently reduced.
I) Upon discovery of the aforesaid mistakes, on November 06, 1997, the appellant filed a revised return declaring a business loss of Rs.5,93,30,254/-. In the said revised return, the depreciation claim was reduced form Rs,1,70,47,101/- made in the original return to Rs.1,16,67,392/- and the sum of Rs.8,22,42,335/- which was not debited to the purchase account was reduced form the taxable income.
J) In course of the assessment proceedings, the appellant, inter alia, submitted before the Assessing Officer all the material documents in order to show that the sum of Rs.8,22,42,335/- was not debited to the purchase account and as a result, the appellant's income had been overstated by the said amount in the original return. The appellant also submitted to the Assessing Officer the relevant and material documents in respect of the Silvassa factory shed. K) The Assessing Officer sought to have an enquiry conducted at the factory shed in course of the assessment proceedings long after the same was sold and on the basis thereof concluded that the same was never put to use. Assessing Officer held that Section 50 of the Act was not applicable and since no depreciation had been allowed on 6 the Silvassa factory shed, short-term capital gain had to be computed upon sale thereof.
L) The Assessing Officer accordingly treated the profit of Rs.2,57,42,014/- as short-term capital gain. In respect of the appellant's claim for deduction of purchases of Rs.8,22,42,335/-, the Assessing Officer did not dispute the facts stated by the appellant but disallowed the claim on the ground that the mistake was not bona fide or inadvertent but deliberate. The Assessing Officer also disallowed provident fund contributions of Rs.6,93,436/- on the ground that the same were not paid within the due date. M) Another addition made to the assessment was on account of alleged unexplained expenditure of Rs.100.38 lakh in respect of aluminium ingots transferred to J.J.H. Industry Limited. Going by the Tax Audit Report, the Assessing Officer concluded that consumption of aluminium ingots had been shown only at 178.98 MT whereas the quantity transferred to J.J.H. Industry Ltd. was 301.446 MT. The value of the difference of 122.457 MT was worked out by the Assessing Officer at Rs.100.38 lakh and treated as unexplained expenditure on purchases not accounted for in the books of account. N) Being aggrieved by the foresaid decision of the Assessing Officer, the appellant preferred an appeal before the Commissioner of Income-tax (Appeals) and filed written submissions and all relevant and material 7 documents and the Commissioner of Income-tax (Appeals ) disposed of the appeal with the following observations:
i) The Commissioner of Income-tax (Appeals) accepted the position that the account of M/s. J.J.H. Industry Ltd.
was debited with the cost of raw-materials purchased from the Swiss suppliers which she treated as a deliberate act. However, the claim was disallowed on the ground that the wrong entry should have been noticed much earlier and according to the Director's report to the shareholders, the appellant had earned a profit but if the purchases were debited the accounts should reflect a completely different picture than what was sought to be portrayed in the Director's report.
ii) In respect of the delayed provident fund contributions, the Commissioner of Income-tax (Appeals) held that the appellant was entitled to deduction in respect of contributions to the extent of Rs.3,55,156/- which were paid within the previous year though after the due date.
iii) In respect of the treatment of the profit of Rs.2,57,42,014/- upon sale of the Silvassa factory shed, the Commissioner of Income-tax (Appeals) held that the appellant had not shown that the Silvassa factory shed 8 was acquired for the purpose of making commercial production and was used to make trial production. She accordingly approved the action of the Assessing Officer.
iv) In respect of the addition of Rs.100.38 lakh on account of alleged unexplained expenditure, the Commissioner of Income-tax (Appeals) held that the entire 301.446 MT of aluminum ingots valued at Rs.247.00 lakh represented unaccounted for purchases and not the sum of Rs.100.38 lakh worked out by the Assessing Officer.
She, however, held that even if any addition was made on account of unexplained expenditure, the identical amount would have to be allowed as deduction as expenditure incurred for the purpose of the business and as such, there would be no effect in the taxable income.
O) Against the said order of the Commissioner of Income-tax (Appeals), both the appellant and the Revenue preferred appeals before the Income-tax Appellate Tribunal and by the order dated October 28, 2003 the Tribunal disposed of the appeal with the following findings:
i) In respect of the claim of deduction of Rs.8,22,42,335/-, the Tribunal held that the mistake could not be established and the matter could not be restored to the 9 Assessing Officer to enable the appellant to explain the occurrence of the mistake resulting in understatement of profits and held that the entry was a fictitious one designed to reduce the legitimate tax liability and an afterthought one.
ii) In respect of the assessment of profit of Rs.2,57,42,014/- upon sale of the Silvassa factory shed, the Tribunal upheld the order of the Commissioner of Income-tax (Appeals).
iii) With regard to the provident fund contributions, the Tribunal proceeded on the basis that the issue was concluded against the appellant by the judgment of this Court and the claim of the department as regards unexplained expenditure, the Tribunal directed the Assessing Officer to work out the actual unexplained expenditure as worked out by the Commissioner of Income-tax (Appeals) and superimpose the same on the working made by the Assessing Officer and to reconcile the same after giving the appellant giving an opportunity of being heard.
Being dissatisfied, the appellant has come up with the present appeal. 10
At the time of admission of the present appeal, a Division Bench of this Court formulated the following substantial questions of law for determination:
"I) Whether the Tribunal was justified in law in not allowing deduction of Rs.8,22,42,335/- in respect of purchases of imported raw-materials not debited as an expenditure in the accounts and its purported findings that the wrong-entry in the accounts was not established or that it was a fictitious entry or after thought designed to reduce the tax liability/under state the profit and upholding the disallowance are arbitrary, unreasonable and perverse?
"ii) Whether on a true and proper interpretation of the provisions of Sections 2(11), 32(1), 43(6) and 50 of the Income-tax Act, 1961 the sale proceeds of the Silvassa factory shed were required to be reduced from the block of assets and no short term capital gains could be computed in respect of the said transfer and the purported findings of the Tribunal that the Silvassa factory shed was not put to use and upholding the assessment of the profits of Rs.2,57,42,014/- as short term capital gains are arbitrary, unreasonable and perverse? "iii) Whether on a true and proper interpretation of the provisions of Section 43B of the Income-tax Act, 1961 as amended, the Tribunal was justified in law in holding that the appellant was 11 not entitled to deduction in respect of the Provident Fund contributions of Rs.3,55,156/- made during the previous ended March 31, 1996?"
"iv)(a) Whether the Tribunal was justified in law in remanding the issue relating to alleged unexplained expenditure to the Assessing Officer and its purported findings in that behalf are arbitrary, unreasonable and perverse?
(b) Whether and in any event, the Tribunal was justified in law in not deciding the appellant's contention that any addition on account of alleged unexplained expenditure was revenue neutral since the identical amount would have to be simultaneously allowed as business expenditure?"
Mr. Khaitan, the learned Senior Advocate appearing on behalf of the appellant, has, at the first instance, submitted that the Tribunal below committed substantial error of law in refusing the benefit of reduction simply because his client made a mistake in the accounting by making wrong entry. Mr. Khaitan submits that it was apparent that there was a mistake and such mistake was rectified in the account of the assessee in the next year. According to Mr. Khaitan there was no justification of describing the same as a deliberate mistake and depriving his client of its legitimate tax liability as the onus is upon the Revenue to establish the taxability of the assessee. 12
Secondly, Mr. Khaitan contends that the factory building at Silvasa having been renovated and been made ready for use, the Tribunal below erred in law in refusing the benefit of depreciation to his client under Section 32 of the Act.
Thirdly, Mr. Khaitan contended that on a proper interpretation of the provisions contained in Section 43B of the Act as amended it should be held that the appellant is entitled to deduction in respect of the Provident Fund Contribution of Rs.3, 55, 156/- made during the previous year ending on March 31, 1996.
Lastly, Mr. Khaitan submitted that the Tribunal should have decided the contention of the appellant that any addition on account of the alleged unexplained expenditure was revenue neutral since an identical amount would have to be simultaneously allowed as business expenditure. At any rate, Mr. Khaitan contended that there was no justification of remanding the matter without deciding the points raised by the parties.
In support of his aforesaid contentions, Mr. Khaitan placed strong reliance upon the following decisions in support of his aforesaid contention:
1) Commissioner of Income-tax Vs. 1) Mahendra Mills, 2) Arun Textile 'C' & Anr. & 3) Humphereys & Glasgow Consultants, reported in (2000) 243 ITR Page 56;13
2) Commissioner of Income-tax, Haryana & Chandigarh Vs. O.P. Khanna & Sons, reported in (1983) 140 ITR Page 558;
3) Kedernath Jute Mfg. Co. Ltd. Vs. Commissioner of Income-tax (Central), Calcutta, reported in (1971) 82 ITR Page 363;
4) Commissioner of Income-tax Vs. Bhaskar Mitter, reported in (1994) 73 T.R. Page 437;
5) Commissioner of Income-Tax, Madras Vs. V. MR. P. Firm, Muar & Otr., reported in (1965) 56 ITR Page 67;
6) Omar Salay Mohamed Sait Vs. Commissioner of Income-tax, Madras, reported in (1959) 37 ITR Page 151;
7) Commissioner of Income-tax Vs. Bharat General Reinsurance, reported in (1971) 81 ITR Page 303;
8) Commissioner of Income-tax Vs. Alom Extrusions Ltd., reported in (2009) 319 ITR Page 306;
9) Sutlej Cotton Mills Ltd. Vs. Commissioner of Income-tax, West Bengal, reported in (1979) 116 ITR Page 1;
10) Commissioner of Income-tax, Madras Vs. Shivakami Co. P. Ltd., reported in (1986) 159 ITR 71.
14Mr. Shome, the learned Senior Advocate appearing on behalf of the Revenue, has, on the other hand, has opposed the aforesaid contention of Mr. Khaitan and has substantially relied upon the reasons given by the Tribunal below and according to Mr. Shome, those findings of the Tribunal being basically findings of fact, there is no scope of any interference in this appeal under Section 260A of the Act. In support of his contention, Mr. Shome relies upon the following decisions:
1) Mohd. Ibrahim Aximulla Vs. Commissioner of Income-tax, reported in (1981) 131 ITR 680;
2) K.M. Bhatia (Quarry) Vs. Commissioner of Income-tax, reported in (1992) 193 ITR 379.
Therefore, the first question that arises for determination in this appeal is whether the learned Tribunal below committed a substantial error of law in refusing the deduction of Rs.8,22,42,335/- in respect of purchase of imported raw materials which was not debited as expenditure in the accounts.
After hearing the learned counsel for the parties and after going through the materials on records, we find that there is no dispute that the assessee imported from two Swiss companies aluminum ingots worth Rs.8,22,42,335/- and those were sold to an Indian company, viz. J. J. H. Industries Ltd. Those facts are proved by the documentary evidence and the Assessing Officer has also not disputed the fact. It appears that upon payments to the Swiss suppliers, their 15 respective accounts were debited and after sale to J. J. H., the account of J. J. H. was debited with corresponding credit to the revenue account. We find substance in the contention of Mr. Khaitan, the learned counsel for the assessee, that the account of the Swiss suppliers to which debits had been made upon payment for the imported goods should have been closed by transferring the same to the purchase account but instead of that, the accounts of the Swiss suppliers were closed by transfer to the account of J. J. H. under the head "Advance" and consequently, for the sale of the imported materials to J. J. H., the income stood accounted for but there was no debit to the purchase account by way of expenditure and instead of that, the account of J. J. H. stood debited twice, once at the time of sale and again upon the closer of Swiss suppliers' accounts. Thus, no expenditure for the purchase of the imported materials was charged in the accounts although the income upon the sale thereof was reflected in the accounts. It appears that on discovery of such mistake, the assessee passed a rectification entry in its accounts for the subsequent previous year ended September 30, 1997 and in the subsequent year, the assessee did not claim any deduction in respect of the said sum of Rs. 8,22,42,335/-.
All the authorities below refused to go into the question of rectification of the said mistake on the sole ground that it was not a bona fide mistake but a deliberate and fictitious entry and thus, should not be rectified. In our opinion, even if we assume for the sake of argument that it was a case of deliberate and fictitious entry, it is the duty of the Income-tax authority to find out the real 16 nature of the transaction behind the said entry and to pass appropriate order of assessment in accordance with law. Merely because an assessee has made a wrong or even fictitious entry in the accounts, such fact cannot be a ground for accepting such wrong or fictitious entry. In the case before us, the assessee itself has come up with revised return and thus, it is the duty of the Assessing authority to pass necessary order on the basis of the materials on record. It is well-known that the doctrine of estoppel is not applicable against the statute. If a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either liable to tax under the taxing statute or it is not. If it is not, the Income Tax Officer has no power to impose tax on the said income (Commissioner of Income Tax, Madras Vs. V. MR. P. Firm Muar = AIR 1965 SC 1216).
In the case before us, we have already pointed out the nature of the original entry in the accounts which on the face of it was not in conformity with the law of accountancy. In such a case, it is the duty of the Revenue to call for explanation from the assessee and to come to a definite conclusion as regards the real nature of the transaction and to assess the tax and to force the person really responsible for payment of the tax. But by merely describing the entry as a deliberate wrong entry, the Assessing Authority cannot enforce the apparent wrong entry against the assessee simply because by such alleged wrong entry, the assessee had shown higher amount of income.
17
As regards the decision of the Allahabad High Court in the case of Mohd. Ibrahim Azimulla (Supra), that was a case of revised return when penalty proceedings were initiated under Section 271(1)(c) of the Act for non-discloser of amount in his return. In such a case, it was found that the plea of mistake was so flimsy that no reasonable inference could be drawn except the one arrived at by the Tribunal that it was a not a case of discovery of mistake but a deliberate omission of fact which was within the knowledge of the assessee which it attempted to conceal with a view to evading tax till the end and came out with discloser only when it became sure that the game was up. In the case before us, the assessee by way of revised return wants to show that the income disclosed in the original return was the outcome of a mistake by indicating the same. In such a situation, it is the duty of the Assessing Officer to decide the actual income of the assessee based on materials in accordance with law and to assess the tax payable by it. But the Revenue cannot without deciding the question raised bind the assessee by the doctrine of estoppel. The said decision, thus, has no application to the facts of the present case.
The case of K.M. Bhatia (Supra), is also one where the Gujarat High Court was dealing with a case in which a revised return was filed admitting mistake in claiming double deduction. In such a case, the High Court held that the mistake having been accepted and no penalty having been imposed for the Assessment Years 1970-71 and 1972- 73, there was no justification for imposing penalty on the ground of concealment for the year 1971-72. We find that the said decision 18 rather goes against the Revenue and cannot have any application to the facts of the present case where the assessee asserts less income in its revised return by specifically pointing out its mistake in the original return. In such a case, it is the duty of the Assessing authority to deal with the case of mistake alleged in the revised return on merit. The decisions cited by Mr. Shome, therefore, do not help his client in any way.
We, thus, find that the Tribunal below erred in law in accepting the views of the Assessing Officer and the CIT (Appeals) on the question. In such circumstances, in our opinion, it is a fit case where the matter should be sent back on remand to the Assessing Officer for deciding the real nature of transaction after giving an opportunity to the assessee to prove their case and the Assessing Officer should arrive at a definite finding as to the outcome of the transaction on the basis of the materials on record based on revised return.
The next question is whether in the present case, the Tribunal was justified in refusing depreciation in respect of the building of the factory of the assessee at Silvasa.
We are not at all disputing the submission of Mr. Khaitan, the learned Senior Advocate appearing on behalf of the assessee, that in a given situation, even if the building was otherwise made ready for the use of the business notwithstanding the fact that due to some other reasons, the business could not run from the place, an assessee is entitled to get depreciation. But in the case 19 before us, it is the concurrent finding of all the authorities that the factory at Silvasa was closed for several years. In this connection, we find that the CIT (Appeals) gave elaborate findings on the aforesaid question which are quoted below:
"7.3 The short point, as I see it is whether the appellant had a plan to carry out commercial production in the building at Silvassa and whether trial commercial production was indeed carried out as a preamble to commercial production. In other words, the controversy turns on whether the premises at Silvassa were intended to be used for commercial production and whether they were ever used by the appellant for carrying out trial commercial production. The report of the Deputy Director of Income-tax (Inv.), Unit-11, Surat was very specific and unambiguous. The building was just a shed with no plant and machinery found to be installed therein. Obviously, it is not possible to carry out any manufacturing operation without the plant and machinery. The report further adds that the building remained closed for a long time, since the days of its construction and was never put to use. The assessing officer had on open mind. He gave the appellant an opportunity to explain why the said premises at Silvassa should be treated as depreciable asset. The appellant, in turn, sent a written submission to the assessing officer not supported by any evidence and materials. If the appellant's claim that the trial production had been indeed carried out at the Silvassa premises was to be believed then the appellant must have bought raw materials and consumables delivered at Silvassa and engaged workers to work on the factory floor. The electricity must have been bought from the State Electricity Board; if the appellant had not generated power from the 20 generator. The plant and machinery must have been bought and installed, even though some of them must have been borrowed from Calcutta Factory. The appellant would have with it the licence from the Central Excise Authority permitting it to carry out production in the premises. In support of its claim that trial commercial production was carried out in the Silvassa premise the appellant could have produced to the assessing officer the copies of invoices of raw materials and consumables delivered at Silvassa and their relevant freight bills, copies of pay roll evidencing engagement of workers, copies of electricity bills and excise licence etc. In the case of plant and machinery copies of purchase invoices and when they were borrowed from the Calcutta factory of the appellant, copies of carrier's bills, transit papers could have been placed on record. Some of the production during the trial run must have met the saleable quality in which case, such production must have been entered in the stock register and specified excise register. The production of copies of such registers would have strengthened the appellant's case. The saleable production must have been sold or despatched to Calcutta factory of the appellant would have assisted its cause better by production before the assessing officer the copies of sale invoices, carrier's bills and statutory transit documents as the case might be. Then, there are payments of rates and taxes pertaining to the factory building, registration of premises with the officers of labour commissioner and so forth. During the course of assessment as well as appeal proceedings the appellant did not supply a single item of evidences, direct or inferential or any material to show or suggest that the premises at Silvassa was indeed a factory and that trial production was carried out prior to the commencement of commercial production. The appellant claimed that it had 21 received industrial licence in 1994 for expansion of capacity to manufacture the existing goods. But there is no indication of receipt of such industrial licence in the audited accounts of the appellant for the year ended 31.3.1996. In terms of Part 11 of the Schedule VI of the Companies Act, 1956 every manufacturing company shall give in its audited accounts certain quantitative information in respect of goods manufactured, which will include the licensed capacity (where licence is in force), installed capacity and actual production in respect of each class of goods manufactured. But the audited accounts of the appellant for the year ended 31.3.1996 does not give any such information, statutorily required to be given in respect of goods purchased.
"7.4 Armed with the findings of the Deputy Director of Income-tax (Inv.) Unit-11, Surat, the assessing officer wrote to the appellant giving it an opportunity to prove its bonafide. Needless to say, the primary on us lay on the appellant to show by adequate evidence that the findings of the Deputy Director of Income-tax (Inv.) were erroneous and that on us was not discharged by merely making certain statements in the letter addressed to the assessing officer. What was required by the appellant was to show by placing adequate materials and evidence on record that the premises at Silvassa was acquired for the purpose of making commercial production and that its facilities were used to make trial production. This, however, was not done. In the circumstances, I do not find any good ground for interfering with the order of the assessing officer.
"7.5 The above being the position I have no hesitation in holding that the assessing officer was justified in treating the sum of 22 Rs.2,57,42,014/-, being the difference between the cost of acquisition/construction of building at Silvassa and consideration received by the appellant for its sale as short term capital gain of the appellant and adding the sum of its total income."
It appears that the learned Tribunal has affirmed the aforesaid finding of fact. The aforesaid find is based on consideration of all the materials on record and any reasonable individual having regard to Section 3 of the Evidence Act would accept such finding as reasonable. We are unable to describe the said finding as one based on no evidence nor can we brand the same as a perverse finding of fact justifying interference in this appeal. The aforesaid question is thus decided against the assessee.
As regards the third question formulated by the Division Bench on the question of interpretation of Section 43B of the Act as regards the claim of deduction of Rs.3,55,156/- in respect of Provident Fund contributions, we find that the said question is now covered by the decision of the Supreme Court in the case of Commissioner of Income-Tax Vs. Alom Extrusions Ltd., reported in (2009) 319 ITR 306 where the Supreme Court held that the omission of the second proviso to Section 43B of the Act by Finance Act, 2003 operated retrospectively from April 1, 1988 and thus, the assessee should get the benefit of such amendment and thus, the assessee is entitled to the benefit even by making payment after the due date. The Tribunal below thus erred in law in relying upon 23 the decision of a Division Bench of this Court in refusing benefit to the assessee on that point.
As regards the point No. iv(a) formulated by the Division Bench, we find that in remanding the matter to the Assessing Officer regarding unexplained expenditure, there is no illegality on the part of the Tribunal. We, thus, affirm the finding of the Tribunal on that point.
However, on the point No. iv(b) formulated by the Division Bench, we find that the Tribunal in remanding the matter did not at all consider the question as to whether any addition on account of the alleged unexplained expenditure was revenue neutral which was accepted by the CIT (Appeals). Since the matter has been remanded to the Assessing Officer, the said finding of the CIT (Appeals) should not be treated to have been set aside by the Tribunal on merit and should be kept open for consideration by the Assessing Officer at the time of arriving at the fresh findings on that issue.
We, therefore, allow the appeal in part by answering the first, third and question No. iv(b) formulated by the Division Bench in the negative and against the Revenue, the second question in the negative and against the assessee, question No. iv(a) in the affirmative and against the assessee.
In the facts and circumstances, there will be, however, no order as to costs. 24
(Bhaskar Bhattacharya, J.) I agree.
(Sambuddha Chakrabarti, J.) Later:
Urgent xerox certified copy of this judgment and order, if applied for, be supplied to the parties within a week subject to compliance with all requisite formalities.
(Bhaskar Bhattacharya, J.) I agree.
(Sambuddha Chakrabarti, J.)