2022 (2) TMI 871 - AT - Income Tax

Cumulative figures of provisions for various liability of earlier years - CIT(A) allowed the assessee's appeal by directing the Ld. A.O. to delete the addition on the ground that this amount was not charged to the P L account and in fact represented cumulative figure of provisions for various liability of earlier years - HELD THAT - CIT(A) has correctly allowed the appeal by directing the Ld. A.O. to reduce a sum of ₹ 34,07,60,000/-, as the Ld. A.O. has wrongly taken the figure of ₹ 1303,77,23,000/- instead of ₹ 1337,84,83,000/-. In view of above facts, we do not find any infirmity in the order of the Ld. CIT(A) and therefore the same is upheld by dismissing the appeal of the revenue.

Summary

Issues: Appeal against order allowing relief on provisions for various liabilities.

Analysis:
The appeal was filed by the revenue against the order of the Commissioner of Income Tax (Appeals) for the AY 2008-09. The main issue raised was regarding the relief granted by the CIT(A) in relation to provisions for various liabilities. The revenue contested the CIT(A)'s decision to allow relief of ?34,07,60,000, arguing that the amount represented cumulative figures of provisions for earlier years.

The registry highlighted that the appeal was time-barred by 318 days. However, considering the impact of the COVID-19 pandemic on filing deadlines, the period during the pandemic was excluded from the limitation period calculation, allowing the appeal to be treated as filed within the limitation period.

The facts revealed that the assessee, a public sector undertaking engaged in coal mining, had provisions for liabilities amounting to ?13,37,84,83,000 in the balance sheet. The Assessing Officer (AO) added this amount to the assessee's income during assessment, despite the assessee having already added back a sum of ?1246.57 lakhs related to provisions created during the year. The AO's decision was challenged, and the CIT(A) directed the AO to delete the addition, stating that the amount in question represented cumulative provisions for liabilities from earlier years.

Subsequently, the AO only reduced ?13,03,77,23,000 instead of the correct amount of ?13,37,84,83,000 from the assessed income, resulting in an additional ?34,07,60,000 not being adjusted. The assessee appealed this decision, and the CIT(A) directed the AO to further reduce ?34,07,60,000 from the assessed income.

Upon review, the Appellate Tribunal observed that the CIT(A) had correctly directed the AO to reduce the sum of ?34,07,60,000. It was noted that the AO had erroneously considered a lower figure, highlighting the need for the correct adjustment. Consequently, the Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal.

In conclusion, the appeal of the revenue was dismissed, affirming the order of the CIT(A) in reducing the amount of ?34,07,60,000 from the assessed income.