The Kolkata Bench of Income Tax Appellate Tribunal(ITAT) restored the matter to the Assessing Officer (AO) for reconsideration of the incorrect deduction in leave encashment disallowance.
TDK India Pvt. Ltd.,appellant-assessee,created a provision of Rs. 1,54,03,861 for leave encashment and paid Rs. 3,68,324 during the relevant financial year. While filing the return, it disallowed Rs. 1,50,83,315 but mistakenly deducted Rs. 3,20,546 instead of Rs. 3,68,324 under Section 43B(f) of the Act. The return was processed under Section 143(1) with an adjustment, but no opportunity was given to explain the issue.
In the Dispute Resolution Panel(DRP) proceedings, the panel directed the AO to verify the assessee’s claim and grant relief as per law. The assessee had mistakenly deducted Rs. 3,20,546 instead of Rs. 3,68,324 while reporting disallowance under Section 43B(f) and had created a provision of Rs. 1,54,03,861 with payments of Rs. 3,68,324.
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However, the AO did not verify the details or provide an opportunity to explain before passing the final assessment order and upheld the adjustment.
The two member bench comprising Pradip Kumar Choubey(Judicial Member) and Rajesh Kumar(Accountant Member) found that the issue needed verification by the AO and restored it for reconsideration. It directed the AO to decide the matter after giving the assessee a fair opportunity to substantiate the claim for leave encashment payment.
In short,the appeal filed by the assessee was allowed for statistical purposes.
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