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2016 (12) TMI 53 - ITAT MUMBAI

2016 (12) TMI 53 - ITAT MUMBAI - TMI - Unpaid Provision of leave encashment - revised return filed by assessee - Held that:- The claim made by the assessee ought to have been examined on merit and not shut-out in a superficial manner. Obviously, the claim of the assessee is based on the fact that there is an error in the reporting of the unpaid Provision for leave encashment in the audit report but the claim has been rejected without subjecting it to any kind of verification. - Under these .....

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ies to do so, we deem it fit and proper to set-aside the order of the CIT(A) and direct the Assessing Officer to take cognizance of the third revised return filed on 13/10/2005 and consider the plea of the assessee relating to the unpaid Provision of leave encashment on merits having regard to the material that the assessee seek to rely before him. - ITA No. 3745/Mum/2013, ITA No.5100/Mum/2013, ITA No. 4788/Mum/2013 - Dated:- 25-11-2016 - Shri G. S. Pannu, Accountant Member And Shri Amarjit Sing .....

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ch in turn, arises out of an order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 14/12/2006. The assessee has raised following Grounds of appeal:- Aggrieved by the order of the Assessing Officer (A.O) as confirmed by Commissioner of Income Tax (Appeals) [CIT(A)], your appellant prefers an appeal against the same on following grounds, which, it is prayed, may be considered without prejudice to one another. 1. On the facts and circumstan .....

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e rectification of error carried out in the computation of total income along with 3rd revised return, on account of provision for leave encashment. 3. In brief, the controversy in this appeal can be understood as follows. In this case, assessee company originally filed its return of income on 01/11/2004 declaring a total income of ₹ 3,55,79,908/-, which was duly accompanied by the statement showing computation of total income, profit and loss account, balance sheet as at 31/03/2004 and ot .....

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,87,76,433/- correcting the excess add-back made earlier on account of unpaid Provision for leave encashment. The Assessing Officer has finalized the assessment under section 143(3) dated 14/12/2006, whereby the total income has been assessed at ₹ 5,83,71,664/- after making an addition of ₹ 25,680/- to the income of ₹ 5,83,45,984/- declared by the assessee in the second revised return filed on 24/08/2005. Ostensibly, the Assessing Officer did not take cognizance of the third re .....

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1,95,69,551/-. The claim of the assessee was that the correct income computable was ₹ 3,82,76,433/- instead of ₹ 5,83,45,984/- declared in the second revised return and, hence, the filing of the third revised return on 13/10/2205. The Assessing Officer did not accept the plea of the assessee on the ground that in the Tax Audit Report filed under section 44AB of the Act the amount reported on account of unpaid Provision for leave encashment was ₹ 2,14,35,533/-. In view of the s .....

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fter considering the remand report and the submissions of assessee, he has proceeded to affirm the stand of the Assessing Officer. The CIT(A) in her concluding discussion records as under:- So even if the 3rd revised return is accepted which is permissible as it is filed within time, the claim made by the appellant in the 3rd revised return cannot be granted because it is not done property without the submission of the auditors Report or note. In the instant case, the appellant should have submi .....

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e in the computation of total income in the second revised return on account of excess add-back of unpaid Provision for leave encashment has been rejected without any justifiable reason. 6. On the other hand, Ld. Departmental Representative has placed reliance on the orders of the authorities below by pointing out that the mistake in the second revised return claimed by the assessee was inadmissible in view of the contents of the audit report filed under section 44AB of the Act. 7. We have caref .....

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) of the Act. In our considered opinion, if the original return filed by the assessee under section 139(1) of the Act is within the prescribed period, and the revised return has been filed within the period prescribed in section 139(5) of the Act, then the Assessing Officer is bound to take cognizance of that return as if it has been originally filed under section 139(1) of the Act. No doubt, revision of a return is prescribed under section 139(5) of the Act in cases where assessee discovers any .....

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er has refused to take cognizance of the third revised return filed on 13/10/2005 while computing the total income whereas in para-5 he has rejected the plea of the assessee that there was any excess add-back of unpaid Provision for leave encashment in second revised return filed on 24/08/2005. Ostensibly, the approach of the Assessing Officer in para-5 to examine the efficacy of the adjustment made to the total income in the third revised return can be justified only if he was to take cognizanc .....

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which assessee has been consistently trying to put-forth regarding the excess addback to the total income made in the second revised return on account of unpaid provision for earned leave. The claim of the assessee has been countered by the lower authorities on the ground that the tax audit report furnished by the auditor under section 44AB of the Act reflected the unpaid Provision for leave encashment at ₹ 2,14,35,533/- and not ₹ 18,65,982/- claimed by the assessee. In our considere .....

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139(5) of the Act and that the original return was filed within the period prescribed under section 139(1) of the Act, the Assessing Officer was bound to take cognizance of the revised return filed on 13/10/2005 and consider the plea of the assessee on merits having regard to the material sought to be relied upon by the assessee before him. On the failure of the lower authorities to do so, we deem it fit and proper to set-aside the order of the CIT(A) and direct the Assessing Officer to take cog .....

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ake up the cross-appeal in ITA No.4788/Mum/2013 and ITA No.5100/Mum/2013 which are directed against an order passed by CIT(A)-22, Mumbai dated 08/04/2013, which in turn, arise out of an order passed by the Assessing Officer under section 143(3) r.w.s. 263 of the Income Tax Act, 1961 (in short the Act ) dated 24/12/2006. The Grounds of appeal raised by the assessee as well as Revenue read as under:- Assessee s Grounds of Appeal:- Aggrieved by the order of the Assessing Officer (A.O) as confirmed .....

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ompute income as per 3rd revised return without considering the fact that AO proved that 3rd revised return was invalid as the signature of the Director on the tax audit report was improper" 2. "On the facts and in the circumstances of the case, the Ld. CIT(A)erred in allowing the appeal of the assessee without considering the pendency of assessee's appeal in regard to order u/s 263 for the A.Y under consideration'. 3. The appellant craves leave to add, amend, vary, omit or sub .....

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of the assessee that the Assessing Officer ought to have taken cognizance of the third revised return filed on 13/10/2005. In view of our decision in the appeal of the assessee in ITA No.3745/mum/2013, the stand of the Revenue in the present appeal is liable to be dismissed. We hold so. Resultantly, the appeal of the Revenue is dismissed. 10. In the appeal of assessee, the dispute arises from an addition of ₹ 1,34,88,803/- made by the Assessing Officer on account of adjustment under sectio .....

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