Relief to Bangiya Gramin Vikash Bank: Calcutta HC quashes Revisional Order since Deduction on Arrear Payment was allowed by AO after conducting Proper Inquiry [Read Order]

In a major relief to Bangiya Gramin Vikash Bank, the Calcutta High Court allowed the deduction on arrear payment payable consequent to wage revision.

The revenue has raised the issue whether the Income Tax Appellate Tribunal was justified in law or in fact in holding that the assessing officer had made due enquiries on the assessment of deduction of the sum of Rs.25,57,00,000/- on account of arrear payment which are payable consequent to wage revision and that it was an ascertained liability and was liable to be allowed as deduction.

The Tribunal considered the factual position and noted that the CIT was of the opinion that the order of the Assessing Officer dated 18th March, 2013 was erroneous and prejudicial to the interest of Revenue and certain reasons were assigned thereto. The matter concerns the provision and contingencies of Rs.25,57,00,000/- on account of arrear payment due to wage revision. Noting the same fact, a show-cause notice was issued to the assessee by the CIT dated 14th July, 2011 and the assessee submitted their reply and upon considering the reply, the Tribunal was of the view that the assumption of jurisdiction by the CIT under Section 263 of the Act was incorrect. 

Mr. Debasis Chowdhury, counsel appearing for the respondent/assessee contended that the Commissioner while invoking his power under Section 263 faults the assessing officer on the ground that he did not make proper enquiry and in the absence of any clarity as to why in the opinion of the Commissioner the enquiry was not proper, invocation of power under Section 263 was not justified.

The division bench of Justice T.S.Sivagnanam and Justice Hiranmay Bhattacharyya found that there was nothing to interfere with the order passed by the Tribunal.

“In our considered view, the said decision will apply with full force to the case on hand. We say so because the Tribunal on examining the facts found that there was no error in the manner in which the assessment was completed and no fault can be attributed to the assessing officer as to how the enquiry was conducted. Thus, we find that the order passed by the Tribunal does not call for any interference. In the result, the appeal fails and the same stands dismissed and the substantial question of law is answered against the Revenue,” the court said.

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