The Dahod Urban Co.Op. Bank Ltd., Dahod V. The Dy.CIT.,Panchmahal Circle, Godhra

CO 325/AHD/2010

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9212 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 23-11-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA
• Assessee Lawyers: SAKAR SHARMAAR
• Keywords: Assessment record; Revised return
• Section: 143(3); 244A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , , , , BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND , SHRI T.R. MEENA, ACCOUNTANT MEMBER .. , ! ' ! ' ! ' ! ' ITA NO. 2871/AHD/2010 ASSESSMENT YEAR :2007-08 & C.O. NO. 325/AHD/2010 ASSESSMENT YEAR :2007-08 DEPUTY COMMISSIONER OF INCOME-TAX, PANCHMAHAL CIRCLE, CIVIL LINES, GODHRA-389001 DIST. PANCHMAHAL THE DAHOD URBAN CO-OP BANK LTD., ANAJ MARKET YAR, DAHOD. V/S . V/S . THE DAHOD URBAN CO-OP BANK LTD., ANAJ MARKET YAR, DAHOD. DEPUTY COMMISSIONER OF INCOME-TAX, PANCHMAHAL CIRCLE, CIVIL LINES, GODHRA- 389001 DIST. PANCHMAHAL PAN NO. A A AAT2915L (APPELLANT) .. (RESPONDENT) # $ % / BY REVENUE SHRI O. P. BHATEJA, SR.D.R. $ % /BY ASSESSEE SHRI SAKAR SHARMA, A.R. &' $ /DATE OF HEARING 28.10.2013 ()* $ /DATE OF PRONOUNCEMENT 10.01.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE REVENUE AND C.O. FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-VI, BARODA, DATED 14.07 .2010 FOR A.Y. 2007-08. THESE ARE BEING DECIDED IN THIS CONSOLIDATED ORDER FOR THE SAKE OF ITA NO. 2871/AHD/2010 & C.O. NO.325/AHD/2010 A.Y. 0 7-08 PAGE 2 CONVENIENCE. THE SOLE GROUND OF REVENUE APPEAL IS AGAINST EXCLUDING THE INTEREST INCOME OF RS. 76,93,126/- ACCRUED ON FDR W ITH PANCHMAHAL DIST. CO- OPERATIVE BANK LTD. FROM THE ASSESSED INCOME OF THE ASSESSEE. FIRST, WE TAKE ITA NO. 2871/AHD/2010 (REVENUES APP EAL) 2. THE ASSESSEE IS CO-OPERATIVE BANK ENGAGED IN THE BANKING ACTIVITY. THE LD. A.O. OBSERVED THAT THE ASSESSEE HAD CREDITE D THE INTEREST INCOME OF RS. 84,06,795/- IN THE BOOKS OF ACCOUNT BUT PUT A NOTE IN THE COMPUTATION OF INCOME THAT THE ASSESSEE DID NOT RECEIVE THE AMOUNT OF RS. 76,93,126/- FROM THE PANCHMAHAL DIST. CO-OPERATIVE BANK LTD. THE ASS ESSEE REQUESTED TO THE LD. A.O THAT THIS ASPECT IS TO BE CONSIDERED BY FOL LOWING THE DECISION OF GODHRA ELECTRICAL COMPANY 225 ITR 746 AND UCO BANK VS. CIT 237 ITR 889 AND ALSO HONBLE GUJARAT HIGH COURT DECISIONS IN CA SE OF S.R. KOSTI VS. CIT 276 ITR 165. BUT AFTER CONSIDERING THE ASSESSEES R EPLY AND ALSO FOLLOWING THE DECISION OF HONBLE SUPREME COURT OF INDIA IN CASE OF GOETEZ (IND) LTD. VS CIT 284 ITR 323 (SC), HE DID NOT ACCEPT THE CLAIM OF TH E ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. A.O., TH E ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), BARODA, WHO HAD HELD THE APPEAL BY OBSERVING AS UNDER : 4.3 I HAVE CAREFULLY CONSIDERED THE FINDINGS GIV EN IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER, CLARIFICATORY NOTE PLACED IN THE COMPUTATION OF INCOME, SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND ALSO IN THE COURSE OF APPELLATE PROCEED INGS BY THE APPELLANT. IN ORDER TO DECIDE THIS ISSUE IT IS NECE SSARY TO EXAMINE POSITION OF LAW IN THIS REGARD SINCE SUBSTANTIVE AM ENDMENTS WERE ITA NO. 2871/AHD/2010 & C.O. NO.325/AHD/2010 A.Y. 0 7-08 PAGE 3 MADE IN THE INCOME-TAX ACT, 1961 W.E.F. 1.4.1989 AS FAR AS ASSESSMENT OR INCOME UNDER THE PROVISIONS OF THE AC T IS CONCERNED. I FIND THAT AT THE TIME OF MAKING SUBSTA NTIVE AMENDMENTS BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987 W.E.F. 1.4.1989, THE CBDT HAD ISSUED CIRCULAR NO. 5 49 DATED 31/10/1989 CLARIFYING THAT ASSESSING OFFICER CANNOT ASSESS INCOME BELOW THE RETURNED INCOME. THE SAID CIRCULAR WAS IN CONSONANCE WITH THE PROVISIONS OF SECTION 143 PREVA ILING AT THE RELEVANT TIME AS ASSESSING OFFICER HAD NO POWER TO GRANT REFUND TO THE ASSESSEE IF INCOME GOES BELOW THE RETURNED INCO ME AT THE TIME OF MAKING ASSESSMENT. THE SAID CIRCULAR CAME TO BE CHALLENGED BEFORE THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT GAS CO LTD. VS. CIT 245 ITR 84 AND AFTER GO ING THROUGH THE PROVISIONS OF THE ACT, HONBLE HIGH COURT HELD SAID CIRCULAR TO BE ULTRA VIRUS AND CONTRARY TO THE PROVISIONS OF TH E ACT AND THAT THE CBDT HAD NO POWER TO ISSUE SUCH CIRCULAR. IN THE SA ID CASE, ASSESSING OFFICER THOUGH COMPUTED INCOME BELOW THE RETURNED INCOME IN THE ASSESSMENT BUT REFUSED TO GRANT REFUN D TO THE ASSESSEE WHICH WAS PAID AT THE TIME OF FILING OF RE TURN OF INCOME AND BECAME REFUNDABLE AS A CONSEQUENCE OF FINDING O F THE ASSESSING OFFICER THAT INCOME IF COMPUTED IN ACCOR DANCE WITH THE PROVISIONS OF THE ACT WOULD BE LESS THAN THE RETURN ED INCOME. I HAVE BEEN INFORMED BY THE LEARNED AUTHORIZED REPRES ENTATIVE THAT NO SLP HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST THIS DECISION OF HONBLE HIGH COURT BEFORE THE HONBLE S UPREME COURT. THUS, TWO ISSUES HAVE ATTAINED FINALITY I.E. THE ASSESSING OFFICER CAN MAKE ASSESSMENT BELOW THE RETURNED INCO ME WHEN INCOME IS COMPUTED IN ACCORDANCE WITH THE PROVISION S OF THE ACT AND CAN GRANT REFUND TO THE ASSESSEE IF INCOME GOES BELOW THE RETURNED INCOME. HOWEVER, HONBLE SUPREME COURT IN THE CASE GOETZE INDIA LTD. VS. CIT 284 ITR 323 (SC) HELD THA T THE ITA NO. 2871/AHD/2010 & C.O. NO.325/AHD/2010 A.Y. 0 7-08 PAGE 4 ASSESSING OFFICER HAS NO POWER TO ENTERTAIN ANY FRE SH CLAIM UNLESS IT IS MADE THROUGH A REVISED RETURN. I FIND THAT THE SAID DECISION PERTAINS TO A.Y. 1995-96. AT THE RELEVANT TIME LANGUAGE APPEARING IN SECTION 143(3) WAS .. DETERMINE THE SUM PAYABLE BY HIM. THUS, IN THE ASSESSMENT YEAR BEFORE THE HONBLE SUPREME COURT THE ASSESSING OFFICER WAS NOT EMPOWER ED TO ASSESS INCOME BELOW THE RETURNED INCOME BY ENTERTAI NING FRESH CLAIM WHICH WAS NOT SUPPORTED BY REVISED RETURN BEC AUSE IN SUCH A SCENARIO IF INCOME IS ASSESSED BELOW THE RETURNED INCOME THE ASSESSEE WOULD HAVE ASKED FOR REFUND OF TAXES ALREA DY PAID FOR WHICH NO AUTHORITY WAS GRANTED TO HIM BY THE STATUE . HOWEVER, SAID LANGUAGE CAME TO BE SUBSTITUTED BY THE FINANCE (NO.2) ACT, 1998 W.E.F. 1 ST OCT, 1998 WITH THE WORDS DETERMINE THE SUM PAYABLE BY HIM OR REFUND OF ANY AMOUNT DUE TO HIM IN VIEW OF SUBSTANTIVE CHANGES MADE IN THE STATUE ITSELF, I FI ND THAT THE ASSESSING OFFICER WHILE ASSESSING INCOME IN ACCORDA NCE WITH THE PROVISIONS OF THE ACT IS EMPOWERED TO GRANT REFUND ON THE BASIS ASSESSED INCOME TO THE ASSESSEE. I, THEREFORE, HOLD THAT THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF G OETZ INDIA (SUPRA) IS DISTINGUISHABLE ON FACTS AND IS NOT APPL ICABLE IN THE YEAR UNDER CONSIDERATION. I ALSO FIND THAT IN FOLLOWING CASES HONBLE TRIBUNALS HAVE HELD THAT HONBLE SUPREME COURT DECI SION IS NOT BINDING ON THE APPELLATE AUTHORIZES AND COULD BE GR ANTED TO THE ASSESSEE IF PROVISION OF LAW SO PERMIT: (A) SNC LAVIN ACRES INC VS. ACIT 15 SOT 1 (DELHI) (B) CHICAGO PNEUMATIC INDIA LTD VS. DCIT 15 SOT 252 (MUMBAI) AND (C) LABH CONSTRUCTION & INDUSTRIES LTD. VS. ACIT IN ITA NO. 2486- 2488/AHD/2003 (AHMEDABAD BENCH A) ITA NO. 2871/AHD/2010 & C.O. NO.325/AHD/2010 A.Y. 0 7-08 PAGE 5 IN DECIDING THESE CASES HONBLE TRIBUNAL RELIED UPO N CBDT CIRCULAR NO. 14 (XL-35) DATED 11/04/1955. THE SAID CIRCULAR STATES AS T WHAT SHOULD BE THE ATTITUDE OF THE DEPARTMENT WHILE GRANTING REFUND AND RELIEFS TO THE ASSESSEE. I ALSO FIND THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF CHOKSI METAL REFINARY VS. CIT 107 ITR 63 (GUJ) RELYING UPO N THE ABOVE MENTIONED CIRCULAR HELD THAT IT IS INCUMBENT ON ITO S TO FOLLOW THE AFORESAID CIRCULAR AND TO DRAW THE ATTENTION OF THE ASSESSEE CONCERNED TO ALL THE RELIEFS AND REFUNDS TO WHICH T HE ASSESSEE SEEMS TO BE ENTITLED ON THE FACTS OF THE CASE EVEN THOUGH THE ASSESSEE MIGHT HAVE OMITTED TO CLAIM REFUND OR RELI EF IN THE RETURN. I FIND THAT MERELY BECAUSE INCOME HAS BEEN RECORDED IN THE BOOKS THOUGH NOT ACCRUED TO THE ASSESSEE, IT C ANNOT BE BROUGHT TO TAX AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF GODHRA ELECTRIC CO. LTD. VS. CIT 225 ITR 76 (SC) RATIO OF WHICH IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE IF INSTRUCTION OF RBI AS RELIED UPON AND REFERRED TO IN THE SUBMISSION AR E TAKEN COGNIZANCE. I FIND THAT RBI PROVISIONS HAVE OVER RI DDING EFFECT OVER PROVISIONS OF INCOME-TAX ACT AS HELD IN THE CA SE OF BARKHA INVESTMENT AND TRADING CO. VS. CIT 281 ITR 316 (GUJ ). I ALSO FIND THAT THE APPELLANT HAD MADE A CLAIM IN THE RETURN OF INCOME BY DISCLOSING RELEVANT FACTS BY WAY OF NOTES AS IT HAD NO LEGAL ASSISTANCE AT THE TIME OF FILING OF RETURN AS TO HOW REQUIRED ADJUSTMENTS COULD BE MADE IN THE RETURN OF INCOME O NCE THE INCOME IS ACCOUNTED IN THE BOOKS. I FIND THAT ISSUE IS OTHERWISE DIRECTLY COVERED IN FAVOR OF THE APPELLANT BY THE D ECISION OF HONBLE SUPREME COURT IN THE CASE OF UCO BANK LTD. VS. CIT 237 ITR 889 (SC) READ WITH INSTRUCTION OF RBI WITH REGA RD TO ACCOUNTING TREATMENT TO RECOGNITION OF INTEREST AND PROVISION IN RESPECT OF FDR MADE WITH PANCHMAHAL DISTRICT CO-OPE RATIVE ITA NO. 2871/AHD/2010 & C.O. NO.325/AHD/2010 A.Y. 0 7-08 PAGE 6 BANK LTD. THERE BEING NO FRESH CLAIM IN THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER HAVING NOT HE LD THAT THE INTEREST ON FDR MADE WITH PANCHMAHAL DISTRCIT CO-OP ERATIVE BANK LTD. IS LIABLE TO BE TAXED UNDER THE PROVISION OF THE ACT, I AM OF THE OPINION THAT THE APPELLANT IS ENTITLE FOR TH E RELIEF OF RS. 76,96,126/- AS THIS AMOUNT IS NOT ACCRUED TO THE AP PELLANT IN THE YEAR UNDER CONSIDERATION. I, THEREFORE, DIRECT THE ASSESSING OFFICER TO EXCLUDE THIS AMOUNT OF RS. 76,93,126/- FROM THE ASSESSED INCOME. THE APPELLANT SUCCEEDS ON THIS GROUND OF AP PEAL. 4. NOW, THE REVENUE IS BEFORE US. LD. SENIOR DR RE LIED UPON THE ORDER OF THE LD. A.O. AT THE OUTSET, THE LD. COUNSEL FOR TH E APPELLANT REITERATED THE ARGUMENTS RAISED BEFORE THE LD. CIT(A). HE, FURTHE R RELIED UPON THE FOLLOWING CASES AND CIRCULARS/INSTRUCTION OF THE CBDT : (I) UCO BANK VS. CIT (1999) 237 ITR 889 (SC) (II) CBDT CIRCULAR F. NO. 201/21/84-ITA-II, DATED 0 9.10.1984 (III) CBDT INSTRUCTION NO. 1186 OF 1978 DATED 26.06 .1978 (IV) STATE BANK OF TRAVANCORE VS. CIT (1986) 158 IT R 102(SC) (V) PUNJAB & SIND BANK VS. CIT (2012) 211 TAXMAN 19 4 (DELHI H.C.) (VI) SOUTHERN TECHNOLOGIES LTD. VS. CIT (2010) 187 TAXMAN 346 (SC) (VII) T.N. POWER FINANCE INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. VS. JCIT (2006) ITR 491 (MADRAS H.C.) (VIII) ACIT CHANDIGARH VS. PANJAB STATE CO-OPERATIV E BANK LTD. (2013) 34 TAXMAN.COM 128 (CHANDIGARH TRIBUNAL) (IX) KIRITKUMAR HIRALAL DHORILA VS. WEALTH TAX OFFI CER WTA NO. 29231/AHD/ 2006, 6 TH OCTOBER, 2006. THE LD. AR FOR THE APPELLANT ARGUED THAT THE ASSESS EE DID NOT RECEIVE THIS AMOUNT AND AS PER THE DECISION OF UCO BANK (SUPRA), IT IS ALLOWABLE. THUS, HE PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A). ITA NO. 2871/AHD/2010 & C.O. NO.325/AHD/2010 A.Y. 0 7-08 PAGE 7 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE DID NOT RECEIVE RS. 76,93,126/ - FROM PANCHMAHAL DIST. CO-OPERATIVE BANK LTD. ACCORDINGLY, IT CLAIMED DEDU CTION FROM THE COMPUTATION OF INCOME BEFORE THE LD. A.O. & VARIOUS CIRCULARS ISSUED BY THE CBDT IS EMPOWERED TO ISSUE REFUND IN ANY CASE WHERE THE ASSESSEE DOES NOT CLAIM IN THE RETURN OF INCOME OR COMPUTATION OF INC OME. IN THIS CASE, FDR AS WELL AS INTEREST ON IT WERE DOUBTFUL TO RECOVER. TH E ASSESSEE DID NOT RECOVER THE INTEREST DURING THE YEAR UNDER CONSIDERATION BU T ON THE BASIS OF ACCOUNTING SYSTEM I.E. MERCANTILE, HE HAD CREDITED THE INCOME IN THE BOOKS OF ACCOUNT BUT DOES NOT MEAN IT ACCRUED AS ACTUALLY IT HAD NOT BEE N RECEIVED BY THE APPELLANT. ACCORDINGLY, IT CLAIMED DEDUCTION FROM T HE INCOME BEFORE THE LD. A.O. HOWEVER, THE DECISION TAKEN FROM THE LD. A.O. IN VIEW OF THE HONBLE SUPREME COURT DECISION IN CASE OF GOETEZ (IND) LTD. VS CIT 284 ITR 323 (SUPRA) WAS RIGHT BUT LD. CIT(A) HAD ACCEPTED THE CLAIM R IGHTLY. THUS, WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. C.O. NO. 325/AHD/2010 6. THE SOLE GROUND OF C.O. FILED BY THE APPELLANT I S AGAINST CONFIRMING THE ADDITION OF RS. 5,97,920/- MADE BY THE A.O. THE L D. A.O. OBSERVED THAT THE ASSESSEE HAD RECEIVED INTEREST U/S. 244A OF THE ACT FROM THE DEPARTMENT FOR THE A.Y. 1994-95, A.Y. -1995-96, A.Y. 1998-99 AND A .Y. 2005-06 IN TOTAL RS. 5,97,920/- WHICH WAS CREDITED IN THE BOOKS OF ACCOU NT FOR TAXATION. THE ASSESSEE ARGUED BEFORE THE LD. A.O. THAT HE WAS NOT SURE ABOUT THE INTEREST PRINCIPLE AMOUNT THEREFORE SAME WAS NOT OFFERED FOR TAXATION BUT LD. A.O. AFTER ITA NO. 2871/AHD/2010 & C.O. NO.325/AHD/2010 A.Y. 0 7-08 PAGE 8 VERIFYING ASSESSMENT RECORD, CONCLUDED THAT THE INT EREST TO THE TUNE OF RS. 5,97,920/- IS LIABLE TO BE TAXED IN THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) CONFIRMED THIS ADDITION ON THE BASIS OF WORKING AVA ILABLE WITH THE LD. A.O. AND NO ADVERSE MATERIAL WAS PLACED BY THE APPELLANT BEF ORE THE LD. CIT(A). THE LD. AR SERIOUSLY NOT ARGUED THIS ISSUE AS THE DETAILS C AN BE VERIFIED FROM THE ASSESSMENT RECORDS ITSELF. THEREFORE, WE DO NOT FOU ND ANY REASON TO INTERVENE IN THE ORDER OF THE LOWER AUTHORITIES. ACCORDINGLY, THE ADDITION IS CONFIRMED. 7. IN THE RESULT, REVENUES APPEAL AND ASSESSEES C .O. BOTH ARE DISMISSED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 10.01.2014 SD/- SD/- ( MUKUL KR. SHRAWAT) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA + + + + $ $$ $ ,- ,- ,- ,- .-* .-* .-* .-* / COPY OF ORDER FORWARDED TO:- 1. # / REVENUE 2. / ASSESSEE 3. 22 3 / CONCERNED CIT 4. 3- / CIT (A) 5. -78 ,& , , / DR, ITAT, AHMEDABAD 6. 8:; <= / GUARD FILE. BY ORDER/ + , >/ 2# , '