M/s. District Co-Operative Central Bank Ltd., Srikakulam V. The DCIT, Visakhapatnam

CO 1/VIZ/2017

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3740 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 3 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K C DAS
• Keywords: Additional evidence; Capital receipt
• Section: 43B

Judgement Text

ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.431/VIZAG/2016 ( / ASSESSMENT YEAR: 2009-10) DCIT, CIRCLE - 4(1), VISAKHAPATNAM M/S. DISTRICT CO - OPERATIVE CENTRAL BANK LTD. SRIKAKULAM [PAN NO. AABTD0028Q ] ( ' / APPELLANT) ( ()' / RESPONDENT) C.O. 1/VIZAG/2017 (ARISING OUT OF I.T.A.NO.431/VIZAG/2016) ( / ASSESSMENT YEAR: 2009-10) M/S. DISTRICT C O - OPERATIVE CENTRAL BANK LTD. SRIKAKULAM DCIT, CIRCLE - 4(1), VISAKHAPATNAM ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI K.C. DAS, DR / RESPONDENT BY : SHRI G.V.N. HARI, AR / DATE OF HEARING : 12.04.2018 / DATE OF PRONOUNCEMENT : 25.04.2018 ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 2 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, GUNTUR VIDE ITA NO.174/11- 12 DATED 24.8.2016 FOR THE ASSESSMENT YEAR 2009-10. 2. ALL THE GROUNDS OF APPEAL IN THIS CASE ARE RELAT ED TO THE ADDITION MADE BY THE A.O. UNDER THE HEAD LIABILITIES AND PRO VISIONS AMOUNTING TO ` 2,46,55,263/-. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAS SHOWN A SUM OF ` 25,51,80,988/- AS LIABILITY AS ON 31.3.2009 UNDER THE HEAD LIABILITIES AND PROVISIONS AND OUT OF WHICH A SUM OF ` 3,48,07,610/- WERE RELATED TO THE VARIOUS ITEMS UN DER THE HEAD SUSPENSE ACCOUNT. THE A.O. HAS ASKED THE ASSESSEE TO EXPLAIN THE SUSPENSE ACCOUNT BUT THE ASSESSEE DID NOT FURNISH T HE DETAILS. THE A.O. ALSO ASKED THE ASSESSEE ANY INTEREST ACCRUED TO THE ASSESSEE IS TRANSFERRED TO SUSPENSE ACCOUNT BUT THE ASSESSEE CO ULD NOT EXPLAIN THE SAME. THEREFORE, THE A.O. TREATED THE ENTIRE AMOUN T OF ` 3,48,07,610/- OUTSTANDING IN SUSPENSE ACCOUNT AS UNEXPLAINED AND ACCORDINGLY, BROUGHT TO TAX. HOWEVER, A SUM OF ` 1,01,52,347/- WAS STATED TO BE RELATED TO THE EARLIER ASSESSMENT YEAR I.E. 2008-09 HENCE THE SAME WAS ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 3 EXCLUDED AND THE BALANCE AMOUNT OF ` 2,46,55,263/- WAS BROUGHT TO TAX AS UNPROVED LIABILITY BY THE A.O. AND ADDED TO THE TOTAL INCOME. 3. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A). BEFORE THE LD. CIT(A), THE ASSE SSEE FILED ADDITIONAL EVIDENCE I.E A DETAILED CHART CONTAINING THE DETAI LS FOR EACH AMOUNT FORMING PART OF THE ADDITION OF RS. 2,46,55,263/-. THE CIT(A) FORWARDED THE DETAILS TO THE A.O. CALLING FOR THE REMAND REPO RT AND THE A.O.HAS SUBMITTED THE REMAND REPORT. IN THE REMAND REPORT, THE A.O. HAS ACCEPTED A SUM OF ` 7,74,440/- RELATING TO THE FOLLOWING ITEMS FOR DELETION. F.R. COST `1,09,462/- PF TOTAL ` 9,796/- ESTABLISHMENT AND CONTINGENCIES ` 6,55,182/- ` 7,74,440/- 4. AFTER VERIFICATION OF THE DETAILS FILED BY THE A SSESSEE THE A.O. SUBMITTED REMAND REPORT REQUESTING THE CIT(A) FOR D ELETING THE ADDITION. ACCORDINGLY, THE CIT(A) ON THE BASIS OF THE REMAND REPORT DELETED THE ADDITION MADE BY THE A.O. 5. THE DETAILS OF THE REMAINING AMOUNT OF ADDITION ARE AS UNDER: ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 4 I. SUSPENSE BILLS & DRAFTS ` 6,35,640 II. SUSPENSE INDIVIDUALS ` 58,11,875 III. SUSPENSE SOCIETIES ` 81,63,310 IV. SUSPENSE SHORT TERM LOAN DISBURSEMENTS ` 18,26,697 V. LONG TERM LOANS DISBURSEMENTS ` 28,76,896 ` 2,33,47,196 6. BEFORE THE CIT(A), THE ASSESSEE EXPLAINED DETAIL S OF SUSPENSE ACCOUNT ITEM WISE AND THE LD. CIT(A) SENT THE DETA ILS TO THE A.O. AND THE A.O. HAS SUBMITTED THE REMAND REPORT AFTER DISC USSING WITH THE ASSESSEE AND VERIFYING THE RELEVANT DETAILS. 7. SUSPENSE BILLS AND DRAFTS ` `` ` 6,35,640/-: THE ASSESSEE STATED BEFORE THE A.O. IN THE REMAND PROCEEDINGS THAT AS AND WHEN THE DEMAND DRAFTS ARE ISSUED BY BANK, THE VALUE OF THE DRAFT ISSUED IS CREDITED TO THIS ACCOUNT AND WHEN DDS ARE PRESENTED FOR COLLECTION AND PROCEEDS ARE PAID THE SAME ARE DEBITED FROM THIS AC COUNT. THIS ACCOUNT IS STATED TO BE CONTINUOUS RUNNING ACCOUNT, EVEN IF THE VALIDITY PERIOD OF DRAFT IS EXPIRED, THE DRAFTS HAVE TO BE R EVALIDATED AND PROCEEDS ARE TO BE PAID. WHEN THE A.O. HAS ASKED FO R THE EVIDENCE FOR OUTSTANDING AS ON 31.3.2009 AND CALLED FOR THE DETA ILS, THE ASSESSEE STATED THAT, SINCE HUGE AMOUNTS ARE DEBITED AND CRE DITED TO THIS ACCOUNT ON DAY TO DAY BASIS PROVIDING THE EVIDENCES FOR PAYMENT OF ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 5 SPECIFIC AMOUNTS IN A SUBSEQUENT PERIOD IS NOT POSS IBLE. THEREFORE, THE A.O. REQUESTED THE LD.CIT(A) TO DECIDE THE ISSUE ON MERITS. 7.1 THE LD.CIT(A) CONSIDERED THE REMAND REPORT OF THE A.O. AND THE SUBMISSIONS MADE BY THE ASSESSEE DURING THE APP EAL HEARING. HE OBSERVED THAT THE SIMILAR ADDITION WAS MADE BY THE A.O. FOR THE ASSESSMENT YEAR 2008-09 AND THE SAME WAS DELETED BY THE CIT(A) IN HIS ORDER DATED 01/02/2013 IN ITA NO.229/10-11/DCIT ,CIRCLE- 4(1)/VSP/2012-13 AND IN THE SUBSEQUENT YEAR NO SUC H ADDITION WAS MADE. THE LD CIT(A) FURTHER OBSERVED THAT NONE OF THESE ITEMS WERE CHARGED TO THE P&L ACCOUNT AND ACCORDINGLY DELETED THE ADDITION. 8. SUSPENSE ACCOUNT INDIVIDUALS - ` `` ` 58,11,875/- : THE ASSESSEE EXPLAINED BEFORE THE AO IN THE REMAND PROC EEDINGS THAT THIS ACCOUNT IS A CONTINUOUS RUNNING ACCOUNT AND CONSTIT UTES THE (I) BORROWERS MARGIN MONEY FOR LONG TERM LOANS REC EIVED UPFRONT FOR RELEASING THE CUSTOMERS ALONG WITH THE LOAN AMOUNT FROM BANK. THESE ARE ALSO CALLED DOWN PAYMENTS. (II) RECEIPTS FROM CUSTOMERS TOWARDS REPAYMENT OF L OANS OR DEPOSITS FOR WHICH EXACT NUMBER DID NOT MATCH, WHICH ARE TEM PORARILY CREDITED TO THIS ACCOUNT TILL SUCH TIME MATCHING ACCOUNTS AR E FOUND AND TRANSFERRED. ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 6 (III) EMPLOYEES BENEFITS RETAINED FOR WANT OF SETTL EMENT OF COURT CASES, ENQUIRIES, ETC. (IV) THE GRANTS OR INCENTIVES OR SUBSIDIES FOR A GO VERNMENT LIKE DEBT WAIVER SCHEME, SC CORPORATION, DRDA, BC CORPORATIO N WHICH ARE CREDITED TO THIS ACCOUNT ON RECEIPT. SUBSEQUENTLY THEY ARE RELEASED TO THE BENIFICIARIES BY DEBITING THIS ACCOUNT. GENERAL LY THESE AMOUNTS ARE TO BE ADJUSTED TO THE BENEFICIARY LOAN ACCOUNT ONLY AFTER PROMPT REPAYMENT OF THE LAST INSTALMENT. TILL SUCH TIME, T HE AMOUNT WILL REMAIN UNDER THIS HEAD OF ACCOUNT SOMETIMES IF THE BENEFIC IARY IS NOT LOCATED THE SAID AMOUNT SHALL BE RETURNED TO THE GOVERNMENT . 8.1 THE ASSESSEE SUBMITTED BEFORE THE A.O. THAT THE ACCOUNT IS CONTINUOUS RUNNING ACCOUNT AND SORT OF AN INTERMEDI ATE ACCOUNT IN WHICH THE AMOUNTS OF THE ABOVE NATURE ARE CREDITED AND MAINTAINED TILL PAYMENT OF THE SAME TO THE RELEVANT BENEFICIARY. T HOUGH THE A.R. HAS FURNISHED THE RELEVANT EXTRACTS OF REGISTERS TO PRO VE THAT THE ACCOUNT IS A RUNNING ACCOUNT, THE ASSESSEE DID NOT FURNISH ACC OUNT WISE DETAILS AND WHEN THE OUTSTANDING WAS LIQUIDATED. SINCE THE TRANSACTIONS ARE REGULAR ITEMS, NO ABNORMALITIES WERE FOUND AND THE AMOUNT WAS NOT CHARGED TO P&L ACCOUNT, THE LD. CIT(A) FOLLOWING TH E ORDER OF THE ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 7 ASSESSEES CASE IN THE IMMEDIATELY PRECEDING ASSESS MENT YEAR(SUPRA) DELETED THE ADDITION. 9. SUSPENSE ACCOUNT SOCIETIES RS.81,63,310/-: THE ASSESSEE EXPLAINED THE NATURE OF THE AMOUNT OUTSTANDING IN T HE SUSPENSE ACCOUNT IN THE REMAND PROCEEDINGS BEFORE THE A.O. A S UNDER: I. AMOUNTS RECEIVED FROM GOVERNMENT TOWARDS SCHEMES LI KE DEBT WAIVERS, INTEREST REBATES, SUBSIDIES, INCENTIVES, E TC ARE CREDITED TO THIS ACCOUNT. THE SAID AMOUNTS ARE SUBSEQUENTLY TR ANSFERRED TO RESPECTIVE PACS AFTER THOROUGH VERIFICATION AND TAL LY. SHARE CAPITAL RECEIPTS ARE ALSO ROUTED THROUGH THIS ACCOUNT TILL SUCH TIME SHARES ARE ALLOTTED TO THEM. II. LOAN DOWN PAYMENT AMOUNTS WILL BE PLACED INITIALLY IN THIS HEAD AND WILL BE TRANSFERRED TO RESPECTIVE ACCOUNT ON SANCTI ON OF LOAN. THE ASSESSEE PRODUCED THE COPIES OF VOUCHERS OF TW O BRANCHES AS EXAMPLE AND STATED THAT AMOUNTS OUTSTANDING ARE PART OF REGULAR BUSINESS ACTIVITIES OF THE BANK AND FURTHER STATED THAT NATURE OF ACCOUNT WAS INTERMEDIATE ACCOUNT AND THE BALANCES ARE EITHE R TO BE TRANSFERRED TO BENEFICIARY ACCOUNT THROUGH PACS OR TO BE RETURN ED TO THE GOVERNMENT ACCOUNT. THE ASSESSEE DID NOT FURNISH T HE PARTYWISE DETAILS AND THE DATE OF LIQUIDATION, AMOUNT SQUARED UP AND BALANCE OUTSTANDING AS ON THE DATE OF SUBMISSION OF REMAND REPORT. THE CIT(A) CONSIDERED THE REMAND REPORT AND THE SUBMISS ION OF THE ASSESSEE AND OBSERVED THAT THESE ITEMS ARE NOT DEBI TED TO THE P&L ACCOUNT AND ARE IN THE NATURE OF REGULAR TRANSACTIO NS. THE LD. CIT(A) ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 8 FOLLOWED THE ORDER OF THE CIT(A) IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR I.E. 2008-09 DELETED THE A DDITION. 10. SUSPENSE ACCOUNT INSTITUTIONS - ` `` ` 5,30,588/- THE ASSESSEE EXPLAINED THE NATURE OF OUTSTANDING D URING THE REMAND PROCEEDINGS AS FOLLOWS: A) INSURANCE PREMIUMS COLLECTED FROM FARMERS ARE CREDI TED TO THIS ACCOUNT AND WILL BE REMITTED TO NAIS, HYDERABAD AFTER PREPA RATION OF INSURANCE PROPOSALS BY THE PACS BY DEBITING THIS ACCOUNT. B) JANATA PERSONAL ACCIDENT INSURANCE PREMIUM COLLECTE D FROM CUSTOMERS ARE CREDITED TO THIS ACCOUNT AND WILL BE REMITTED T O INSURANCE COMPANY BY DEBITING THIS ACCOUNT. C) COLLECTION FROM PACS TOWARDS REPAYMENT OF ICDP DUES (INTEGRATED CO- OPERATIVE DEVELOPMENT PROJECT) WILL BE INITIALLY CR EDITED TO THIS ACCOUNT AND PERIODICALLY REMITTED TO ICDP BY DEBITING THIS ACCOUNT. D) DEPOSIT TOWARDS ELECTION EXPENDITURE REMITTED BY PA CS WILL BE CREDITED TO THIS ACCOUNT AND LATER SPENT/RETURNED BY DEBITIN G THIS ACCOUNT. ASSESSEE ARGUED THAT THE AMOUNTS ARE NOT DEBITED T O THE P&L ACCOUNT AND THE ACCOUNT IS RUNNING ACCOUNT. THESE ARE IN THE NATURE OF REGULAR TRANSACTIONS AND NO ABNORMALITIES HAVE B EEN POINTED BY THE COOPERATIVE AUDIT TEAMS OR TAX AUDITORS AND ARGUED THAT NO ADDITION IS CALLED FOR. THE CIT(A) DELETED THE ADDITION HOLDING THAT THE TRANSACTIONS ARE REGULAR TRANSACTIONS AND NO ABNORMALITIES ARE FOUND. THE LD.CIT(A) FOLLOWED THE ORDER OF THE IN THE ASSESSEES OWN CAS E FOR THE EARLIER ASSESSMENT YEAR I.E. 2008-09. ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 9 11. SUSPENSE ACCOUNT SHORT TERM LOAN DISBURSEMENT - ` `` ` 18,26,697/-: THE AO IN THE REMAND REPORT SUBMITTED TO THE CIT(A ) STATED THAT THE OUTSTANDING AMOUNT UNDER THE ABOVE HEAD AS ON 31-3-2009 WAS ` 10,94,71,145/- OUT OF WHICH THE ASSESSEE CLAIMED R 5.10,76,44,448/- BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS AND ALLOWED BY THE AO. THE AR WAS ASKED TO PRODUCE THE EVIDENCE FOR PAYMEN T OF THE BALANCE OUTSTANDING AS ON 30.9.2009 FOR ` 18,26,697/- SUBSEQUENTLY. THE AR STATED THAT ON PRESENTATION OF DRAWAL STATEMENTS (LOAN PRO POSALS) BY PA CS, THE BANK SANCTIONS THE SHORT TERM LOANS AND AFTER SANCT ION, THE SAID LOAN AMOUNT IS DEBITED TO PACS LOAN ACCOUNT AND CREDITED TO SUSPENSE SHORT TERM LOAN DISBURSEMENT ACCOUNT. WHENEVER, THE BORRO WERS / FARMERS APPROACH BANK THROUGH THEIR PA CS, THE BANK DISBURS ES THE LOAN TO FARMER BORROWERS BY DEBITING THIS ACCOUNT. THIS ACCOUNT IS ALSO STATED TO BE AN INTERMEDIATE ACCOUNT MAINTAINED FOR THE PURPOSE OF HOLDING THE LOAN AMOUNTS SANCTIONED TO BENEFICIARIES TILL THE DATE OF ACTUAL DISBURSEMENT TO THEM. THE AR STATED TO THE A.O. THAT THIS ACCOUNT IS ALSO A R UNNING ACCOUNT AND SUBMITTED THE COPIES OF RELEVANT LEDGER EXTRACTS OF KOTABOMMALI BRANCH, ALONGWITH THE VOUCHERS IN SUPPORT OF DISBURSEMENT. THE AMOUNTS OUTSTANDING ARE PART OF REGULAR BUSINESS ACTIVITIES OF THE BANK . THE NATURE OF OUTSTANDING AMOUNTS UNDER THIS ACCOUNT IS NOT COVERED UNDER SEC TION 43B OF THE IT ACT. CONSIDERING THE VOLUMINOUS TRANSACTIONS OCCURRING I N THE ABOVE ACCOUNT ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 10 ACROSS NUMEROUS BRANCHES OF THE BANK, THE AO REQUES TED THE LD.CIT(A) CONSIDER THE ISSUE ON MERITS. 11.1 THE LD.CIT(A) OBSERVED THAT THE SIMILAR AD DITION WAS MADE BY THE A.O. FOR THE ASSESSMENT YEAR 2008-09 AND THE SA ME WAS DELETED BY THE CIT(A) IN HIS ORDER DATED 01/02/2013 IN ITA NO.229/10- 11/DCIT,CIRCLE-4(1)/VSP/2012-13 AND IN THE SUBSEQU ENT YEAR NO SUCH ADDITION WAS MADE. THE LD CIT(A) FURTHER OBSERVED T HAT NONE OF THESE ITEMS WERE CHARGED TO THE P&L ACCOUNT AND ACCORDING LY DELETED THE ADDITION. 12. LONG TERM LOAN DISBURSEMENT - ` `` ` 28,76,896/-: BEFORE THE LD.CIT(A) THE AO SUBMITTED THE REMAND REPORT STATIN G THAT THE LONG TERM LOANS SANCTIONED PENDING FOR DISBURSEMENTS AS ON 31 -32009 WAS RS. 1,36,45,646 OUT OF WHICH RS. 1,07,68,750 WAS CLAIME D BY THE ASSSESSEE DURING THE ASSESSMENT PROCEEDINGS AND ALLOWED BY TH E AO. THE AR HAS ASKED TO PRODUCE EVIDENCES FOR PAYMENT OF THE OUTST ANDING BALANCE AS ON 30-9-2009 OF PS. 28,76,896 SUBSEQUENTLY. THE LD.A.R STATED THAT ON PRESENTATION OF DRAWAL STATEMENTS (LOAN PROPOSALS) BY PA CS, THE BANK SANCTIONS THE LONG TERM LOANS AND AFTER SANCTION, T HE SAID LOAN AMOUNT IS DEBITED TO PACS LOAN ACCOUNT AND CREDITED TO SUSPEN SE LONG TERM LOAN DISBURSEMENT ACCOUNT. WHENEVER, THE BORROWERS / FAR MERS APPROACH BANK ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 11 THROUGH THEIR PA CS, THE BANK DISBURSES THE LOAN TO BENEFICIARIES BY DEBITING THIS ACCOUNT. THIS ACCOUNT IS ALSO STATED TO BE AN INTERMEDIATE ACCOUNT MAINTAINED FOR THE PURPOSE OF HOLDING THE LOAN AMOU NTS SANCTIONED TO BENEFICIARIES TILL THE DATE OF ACTUAL DISBURSEMENT TO THEM. THE AR FURTHER STATED THAT THIS ACCOUNT IS ALSO A RUNNING ACCOUNT AND TRANSACTIONS ARE VOLUMINOUS IN NATURE. THE AR FURNISHED THE RELEVANT COPIES OF RELEVANT LEDGER EXTRACTS OF KOTABOMMALI BRANCH, ALONGWITH TH E VOUCHERS IN SUPPORT OF DISBURSEMENT FOR VERIFICATION AS AN EXAMPLE. IT WAS EXPLAINED BY THE ASSESSEE TO THE AO THAT THE AMOUNTS OUTSTANDING ARE PART OF REGULAR BUSINESS ACTIVITIES OF THE BANK. THE NATURE OF OUTS TANDING AMOUNTS UNDER THIS ACCOUNT IS NOT COVERED UNDER SECTION 43B OF TH E IT ACT. CONSIDERING THE VOLUMINOUS TRANSACTIONS OCCURRING IN THE ABOVE ACCO UNT ACROSS NUMEROUS BRANCHES OF THE BANK, THE AO REQUESTED THE LD.CIT(A ) TO DECIDE THE ISSUE ON MERITS. 12.1 THE LD.CIT(A) CONSIDERED THE REMAND REPORT OF THE AO AND THE SUBMISSIONS MADE BEFORE HIM DURING THE APPEAL HEARI NG AND OBSERVED THAT THE SIMILAR ADDITION WAS MADE BY THE A.O. FOR THE A SSESSMENT YEAR 2008-09 AND THE SAME WAS DELETED BY THE CIT(A) IN H IS ORDER DATED 01/02/2013 IN ITA NO.229/10-11/DCIT,CIRCLE-4(1)/VSP /2012-13 AND IN THE SUBSEQUENT YEAR NO SUCH ADDITION WAS MADE. THE LD CIT(A) FURTHER ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 12 OBSERVED THAT NONE OF THESE ITEMS WERE CHARGED TO THE P&L ACCOUNT AND ACCORDINGLY DELETED THE ADDITION. 13. LONG TERM SHARE CAPITAL ` 40,32,778/-: THE AO SUBMITTED THE REMAND REPORT TO THE LD.CIT(A) STATING THAT A S UM OF RS. 40,32,778 IS SHOWN AS OUTSTANDING AS ON 31-3-2009 AND THE SAME I S FOUND TO BE OUTSTANDING AS ON 30-9-2009. THE ASSESSEE WAS ASKED TO FURNISH THE EVIDENCES FOR SQUARING UP OF THE OUTSTANDING AMOUNT BUT THE A SSESSEE EXPLAINED THAT AT THE TIME OF RECEIPT OF LOAN APPLICATION FOR LONG TE RM LOANS, THE BANK COLLECTS APPLICABLE SHARE CAPITAL AMOUNT BY CREDITING THIS A CCOUNT. ON COMPLETION OF LOAN APPRAISAL AND SANCTION, THIS AMOUNT IS TRANSFE RRED TO 'SHARE CAPITAL' ACCOUNT IN THE NAME OF THE BORROWER. IN CASE THE LO AN IS NOT SANCTIONED IT WILL BE RETURNED TO THE RESPECTIVE APPLICANT. THIS AMOUN T IS STATED TO BE REPRESENTING SHARE CAPITAL RECEIVED, BUT NOT ALLOTT ED TO INDIVIDUALS BY THE BRANCHES FOR WANT OF DETAILS. THE AR STATED THAT TH E BALANCES HAVE TO BE SQUARED UP AT THE TIME OF ALLOTMENT OF SHARES TO TH E SHARE HOLDERS. HE FURTHER STATED THAT THE TRANSACTIONS IN THE ACCOUNT ARE ALSO VOLUMINOUS AND THE ACCOUNT IS A CONTINUOUS RUNNING ACCOUNT. THE AR FURNISHED COPIES OF LEDGER EXTRACTS OF SRIKAKULAM BRANCH ALONGWITH COPI ES OF RELEVANT VOUCHERS AS EXAMPLE. THE AR STATED THAT THE AMOUNTS OUTSTAND ING ARE PART OF REGULAR BUSINESS ACTIVITIES OF THE BANK. THE NATURE OF OUTS TANDING AMOUNTS UNDER THIS ACCOUNT IS NOT COVERED UNDER SECTION 43B OF THE IT ACT. CONSIDERING THE ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 13 VOLUMINOUS TRANSACTIONS OCCURRING IN THE ABOVE ACCO UNT ACROSS NUMEROUS BRANCHES OF THE BANK, THE AO REQUESTED THE LD.CIT(A ) TO CONSIDER THE ISSUE ON MERITS. 13.1 THE LD.CIT(A) CONSIDERED THE REMAND REPORT OF THE AO AND THE SUBMISSIONS MADE BEFORE HIM DURING THE APPEAL HEARI NG AND OBSERVED THAT THE SIMILAR ADDITION WAS MADE BY THE A.O. FOR THE A SSESSMENT YEAR 2008-09 AND THE SAME WAS DELETED BY THE CIT(A) IN H IS ORDER DATED 01/02/2013 IN ITA NO.229/10-11/DCIT,CIRCLE-4(1)/VSP /2012-13 AND IN THE SUBSEQUENT YEAR NO SUCH ADDITION WAS MADE. THE LD CIT(A) FURTHER OBSERVED THAT NONE OF THESE ITEMS WERE CHARGED TO THE P&L ACCOUNT AND ACCORDINGLY DELETED THE ADDITION. 14. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE R EVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. APPEARING FOR THE REV ENUE, THE LD. D.R. ARGUED THAT THERE WAS AN AMOUNT OUTSTANDING TO THE EXTENT OF ` 2,33,47,196/- OUT OF WHICH THE CIT(A) HAS CONFIRMED THE ADDITION OF ` 3,040/- RELATING TO SUSPENSE ACCOUNT SALEABLES AND THE REMAINING ADDITION WAS DELETED. DURING THE APPEAL HEARING AN D BEFORE THE CIT(A) AND THE A.O. IN THE REMAND PROCEEDINGS, THE ASSESSE E HAS EXPLAINED THE NATURE OF TRANSACTIONS BUT NOT FURNISHED THE SP ECIFIC DETAILS ITEM WISE, PARTY WISE AND THE NATURE OF EACH TRANSACTION . THE DATE OF ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 14 TRANSACTION RECORDED, WHEN THE TRANSACTION WAS SQUA REDUP ETC. IN THE ABSENCE OF SPECIFIC INFORMATION, THE CREDITS APPEAR ING IN THE BOOKS OF ACCOUNTS UNDER THE SUSPENSE ACCOUNTS SHOULD BE TREA TED AS AN INCOME AND REQUIRED TO BE BROUGHT TO TAX. ACCORDINGLY, TH E LD. D.R. ARGUED THAT THE A.O. HAS RIGHTLY MADE THE ADDITION, HENCE REQUESTED TO CONFIRM THE SAME AND UPHOLD THE ORDER OF THE A.O. 15. ON THE OTHER HAND, THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS A COOPERATIVE BANK AND THE TRANSACTIONS APPEARING IN THE SUSPENSE ACCOUNT NEITHER DEBITED TO THE PROFIT & LOSS ACCOUN T NOR CLAIMED AS EXPENDITURE. THESE TRANSACTIONS CANNOT BE HELD TO BE BOGUS TRANSACTIONS. THE DISTRICT CENTRAL CO-OPERATIVE BA NK IS A GOVERNMENT INSTITUTION, THERE IS NO SUPPRESSION OF INCOME AND THERE IS NO INFLATION OF EXPENDITURE. SINCE THE ACCOUNTS WERE WRITTEN MA NUALLY, IT WAS A STUPENDOUS TASK TO RECONCILE THE SAME. SINCE THE T RANSACTIONS ARE GENUINE AND THERE IS NO SCOPE FOR INFLATION OF EXPE NDITURE OR SUPPRESSION OF INCOME KEEPING IN VIEW OF THE VOLUMI NOUS TRANSACTIONS LD. A.R. REQUESTED TO UPHOLD THE ORDER OF THE CIT(A ) AND DISMISSED THE APPEAL OF THE REVENUE. 16. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. AS AT ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 15 THE END OF THE YEAR, THERE WAS AN AMOUNT OUTSTANDIN G TO THE EXTENT OF ` 2,33,47,196/- WHICH REMAINED UN-RECONCILED BY THE ASSESSEE. AT THE TIME OF REMAND REPORT ALSO, THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE. THE EXPLANATION OFFERED BY THE ASSESSE E IS GENERAL IN NATURE FOR ALL THE HEADS OF SUSPENSE ACCOUNT BUT NO T FURNISHED THE SPECIFIC DETAILS. THE OUTSTANDING IN THE SUSPENSE A CCOUNT REQUIRED TO BE RECONCILED AS AT THE END OF THE YEAR AND FURNISH TH E NECESSARY DETAILS BEFORE THE A.O. IF THE ASSESSEE FAILS TO FURNISH T HE DETAILS EVEN AT THE TIME OF REMAND REPORT I.E. ON 9.8.2016 I.E. AFTER 6 YEARS WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT OUTST ANDING IS GENUINE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE A SSESSEE IS BOUND TO SUBMIT TRANSACTION WISE DETAILS WITH NATURE OF TRAN SACTIONS NAME OF THE CREDITOR, DATE OF TRANSACTION, AMOUNT PAID OR ADJUS TED, ETC BEFORE THE A.O. THEREFORE, WE ARE OF THE OPINION THAT THE ISS UE SHOULD BE REMITTED BACK TO THE FILE OF THE A.O. TO EXAMINE TH E SUSPENSE ACCOUNT IN DETAIL AND DECIDE THE ISSUE AFRESH ON MERITS. T HE ASSESSEE IS REQUIRED TO SUBMIT THE COMPLETE DETAILS WITH REGARD TO THE TRANSACTIONS UNDER EACH HEAD OF SUSPENSE ACCOUNT WITH NAME, DATE OF ENTRY, DATE OF ADJUSTMENT, ETC. ACCORDINGLY, WE SET ASIDE THE ORD ERS OF THE LOWER AUTHORITIES AND REMIT THE MATTER BACK TO THE FILE O F THE A.O. ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 16 17. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. CROSS OBJECTION NO. 1/VIZAG/2017: 18. THE ASSESSEE FILED CROSS OBJECTION SUPPORTING T HE ORDERS OF THE CIT(A). SINCE WE HAVE SET ASIDE THE APPEAL TO THE FILE OF THE A.O., THE CROSS OBJECTION FILED BY THE ASSESSEE ALSO STANDS R EMITTED BACK TO THE FILE OF THE A.O. 19. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS THE CROSS OBJECTION ARE ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25 TH APR18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 25.04.2018 VG/SPS ITA NO.431 /VIZAG/2016 & CO 1/VIZAG/2017 M/S. DISTRICT CO-OPERATIVE CENTRAL BANK LTD., SRIKA KULAM 17 )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-4(1), VISAKHAPA TNAM 2. / THE RESPONDENT M/S. DISTRICT CO-OPERATIVE CENT RAL BANK LTD., G.T. ROAD, NEAR SURYAMAHAL THEATRE, SRIKAKULAM. 3. + / THE PR. CIT-2, VISAKHAPATNAM 4. + ( ) / THE CIT (A)-2, GUNTUR 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM