Please that as long as companies pay minimum wages to their staff, it is not mandatory to give the increment to the employees. You have mistaken view that there is government rule to provide annual increment.
As per Hindu tradition, on a death of close relative generally mourning is observed for 14 days. Have the Deepavali celebration fallen during this 14-day mourning period? If yes, you could have communicated this properly. If the Deepavali celebrations were on completion of the mourning period, then there was no reason for you to back out from any office celebrations. Possibly, your seniors perceived reason of death of grandfather as excuse to abstain. That is why they gave you threat to marking you as absent.
Now the last feedback on the quality of the post. Last 3-4 lines of your post is just a mess. What you have written that you would know better. While writing a post in the professional forum like this, you have neither bothered to check the structure of the sentence nor grammar. One who does not bother about the quality of one's work then how do you expect that person to be valued by others?
Therefore, at this stage the only advice that can be given is to stop being reckless, be observant and improve the quality of your work.
From India, Bangalore