M/S. CENTRAL CO OPERATIVE BANK LTD., TONK V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-7, JAIPUR

ITA 109/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4940 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 31-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANCHAL MEENA JCIT DHK
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Recovery proceedings; Audit objection; Procedural lapse; Set aside
• Section: 143(3); 13; 145(3); 69

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA -@ ITA NO. 109/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 M/S CENTRAL CO-OPERATIVE BANK LTD., KISAN SAHAKAR BHAWAN, CIVIL LINE, TONK. CUKE VS. A.C.I.T., CIRCLE-7, JAIPUR LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AABAT 4895 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA -@ ITA NO. 162/JP/2019 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2009-10 D.C.I.T., CIRCLE-7, JAIPUR CUKE VS. M/S CENTRAL CO-OPERATIVE BANK LTD., BADWALI HAVELI, SUBHASH BAZAR, TONK. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AABAT 4895 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKS J LS @ ASSESSEE BY : SHRI K.L. MOOLCHANDANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : MS. CHANCHAL MEENA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/02/2020 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 21/02/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THESE ARE THE APPEAL AND CROSS APPEAL FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF LD. CIT(A)-1, JODHPUR (CAMP AT JAIPUR) DATED 27/11/2018 FOR THE A.Y. 2009-10 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 2 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A BANKING INSTITUTE OPERATING UNDER THE SUPERVISION OF THE COOPERATIVE DEPARTMENT OF THE STATE GOVERNMENT. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED ITS RETURN OF INCOME ALONGWITH AUDITED ACCOUNTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED VARIOUS DISCREPANCIES IN THE ASSESSEE'S BOOKS OF ACCOUNTS WHICH ARE AS UNDER:- (A) AS PER COLUMN 9(C) OF THE TAX AUDIT REPORT, THE AUDITOR HAS REMARKED THAT NO BOOKS OF ACCOUNTS HAD BEEN EXAMINED THOROUGHLY AND RELIANCE WAS PLACED ON THE AUDIT REPORT OF THE AUDITOR OF SOCIETY MR.... (B) AS PER COLUMN 11 (A) OF TAX AUDIT REPORT, THE AUDITOR HAS REMARKED THAT METHOD OF ACCOUNTING EMPLOYED IN THE PREVIOUS YEAR WAS GENERALLY MERCANTILE BUT IN SOME CASES IT HAD NOT BEEN FOLLOWED. (C) AS PER COLUMN 16(B) OF TAX AUDIT REPORT, THE AUDITOR HAS REMARKED THAT INFORMATION REGARDING ANY SUM RECEIVED FROM EMPLOYEES A TOWARDS CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR ANY OTHER FUND MENTIONED IN SECTION 2(24)(X) AND DUE DATE FOR PAYMENT AND THE ACTUAL DATE OF PAYMENT TO THE CONCERNED AUTHORITIES UNDER SECTION 36(1)(VA) WAS NOT AVAILABLE. (D) AS PER COLUMN B(B) OF THE REPORT, THE AUDITOR HAS REMARKED THAT F S. INFORMATION IN RESPECT OF ANY SUM REFERRED IN CLAUSES (A), (B),9C),(D),(E) OR OR (F) OF SECTION 43B, THE LIABILITY FOR WHICH WAS INCURRED IN THE PREVIOUS YEAR AND WAS PAID ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME OF THE PREVIOUS YEAR ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 3 UNDER SECTION 139(1), WAS NOT AVAILABLE. IT WAS FURTHER REMARKED THAT INFORMATION ON WHETHER SALES TAX, CUSTOM DUTY EXCISE OR ANY OTHER INDIRECT TAX, LEVY, CESS. IMPOST, ETC. WAS PASSED THROUGH THE PROFIT AND LOSS ACCOUNT WAS ALSO NOT AVAILABLE. (E) AS PER COLUMN 22(B) OF THE REPORT, THE AUDITOR HAS REMARKED THAT INFORMATION ON PARTICULARS OF INCOME OR EXPENDITURE OF PRIOR PERIOD CREDITED OR DEBITED TO THE PROFIT AND LOSS ACCOUNT WAS ALSO NOT AVAILABLE. (F) AS PER COLUMN 24(A)(V) OF THE REPORT, THE AUDITOR HAS REMARKED THAT NOT SPECIFIC INFORMATION WAS AVAILABLE BUT GENERALLY THE INSTANCES WHERE THE LOAN OR DEPOSIT WAS TAKEN OR ACCEPTED OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE BANK DRAFT WERE NOT PRESENT. (G) FURTHER, AS PER 27(A) OF THE REPORT, THE AUDITOR 1 REMARKED THAT IN CASE OF FDR INTEREST THERE WERE MANY IRREGULARITIES AS FAR AS COMPLYING WITH THE PROVISIONS OF CHAPTER XVII-B REGARDING DEDUCTION OF TAX AT SOURCE AND REGARDING THE PAYMENT THEREOF TO THE CREDIT OF THE CENTRAL GOVERNMENT WAS CONCERNED. BUT DUE TO LACK INFORMATION, THE AUDITOR COULD NOT FURNISH THE DETAILS. AS IS EVIDENT FROM ABOVE, THE AUDITOR OF THE ASSESSEE HAD HIMSELF BASED HIS AUDIT ON THE STATUTORY AUDIT REPORT PREPARED BY GUPTA SAXENA ACHARYA & COMPANY, JAIPUR. ON A PERUSAL OF STATUTORY AUDIT REPORT, THE FOLLOWING OBSERVATIONS WERE MADE: I. AS PER COLUMN 5 OF AUDIT REPORT PART 'B' 2008-09, THE BALANCE $ RECONCILIATION OF THE ACCOUNTS OF HEAD OFFICE AND BRANCHES HAD NOT BEEN DONE SINCE YEARS. ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 4 II. AS PER PARAGRAPH 15.1 OF THE AUDIT REPORT, THE ASSESSEE HAS NOT FOLLOWED ACCOUNTING PRINCIPLES AS PRESCRIBED BY RBI, NABARD LAWS, ETC. BOOKS OF ACCOUNT WERE NOT COMPLETED WITHIN PRESCRIBED TIME LIMITS. III. AS PER PARAGRAPH 15.7 OF THE AUDIT REPORT, THERE WERE (IRREGULARITIES IN THE MAINTENANCE OF DAY BOOK AND VOUCHERS. IV. AS PER PARAGRAPH 15.8.3 OF THE AUDIT REPORT, THE ASSESSEE'S BRANCHES HAD NOT DONE RECONCILIATIONS OF FDRS AND RDS ACCOUNTS WITH THE GENERAL LEDGER. V. AS PER PARAGRAPH 22.1 OF THE REPORT, THE ASSESSEE ALONGWITH ITS BRANCHES HAD NOT MAINTAINED ANY NPA REGISTER. VI. AS PER PARAGRAPH 25.2 4.1. OF THE REPORT, NO PHYSICAL VERIFICATION HAD BEEN DONE OF FURNITURE AND FIXTURE SINCE 1994-95. ALSO, NO STOCK REGISTER HAD BEEN MAINTAINED FOR THE SAME. THE AO ISSUED A SHOW CAUSE NOTICE TO EXPLAIN AS TO WHY IN VIEW OF ABOVE DEFECTS, THE BOOKS OF ACCOUNT MIGHT NOT BE REJECTED U/S 145(3) OF THE ACT. IN RESPONSE OF THE SAID SHOW CAUSE NOTICE, THE AR OF THE ASSESSEE FILED WRITTEN SUBMISSIONS WHICH WERE NOT ACCEPTED BY THE AO. THUS, THE AO REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE IN TERMS OF SECTION 145(3) OF THE ACT AND APPLIED NP RATE OF 11.03% AS AGAINST 1.01% DECLARED BY THE ASSESSEE. 3. BY THE IMPUGNED ORDER, THE LD CIT(A) REDUCED N.P. RATE FROM 11.03% TO 3.66% AFTER HAVING THE FOLLOWING OBSERVATION: ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 5 5.2.1. AS REGARDS THE APPLYING NP RATE WHICH RESULTS IN ADDITION OF RS, 2,09,35,774/-. I FIND THAT THE APPELLANT BANK HAD SHOWN THE NET LOSS DURING THE F.Y. 2007-08. HOWEVER, IN THE YEAR UNDER CONSIDERATION, THE TURNOVER OF THE ASSESSEE WAS LOWER AS COMPARED TO PREVIOUS FINANCIAL YEAR; IT HAD BEEN SHOWN THE NET PROFIT AT 1.01%. THE APPELLANT CONTENDED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE BANK HAS DECLARED NP RATE OF 1.01% ON CONSOLIDATED TURNOVER OF RS. 33,52,17,124/-, AS AGAINST IN THE IMMEDIATE PREVIOUS YEAR THE APPELLANT BANK HAD SHOWN LOSS ON CONSOLIDATED TURNOVER OF RS. 270,79,98,724/-, THE APPELLANT BANK HAD SHOWN BETTER NET PROFIT RATE DURING THE YEAR UNDER CONSIDERATION, THEREFORE, TRADING ADDITION ON LUMP SUM BASIS IS NOT JUSTIFIED BY APPLYING SECTION 145(3). I FIND SOME FORCE IN THE APPELLANT'S ARGUMENTS. IT IS SEEN THAT THE HOWEVER, THE TURNOVER OF THE APPELLANT HAD BEEN REDUCED FROM LAST FINANCIAL YEAR BUT THE NET PROFIT HAD BEEN INCREASED. IT FINDS THAT THE NP RATE OF THE APPELLANT BANK IN THE A.Y. 200708 WAS 6.31%, NET LOSS IN THE A.Y. 2008-09 AND NP RATE WAS 1.01% IN THE A.Y. 2009- 10. KEEPING IN VIEW THE VARIOUS CONTENTIONS MADE BY THE APPELLANT AND INCREASE IN NET PROFIT RATIO OF THE APPELLANT AS COMPARED TO LAST AY, THE NP RATE OF 11.03% APPLIED BY THE AO APPEARS ON HIGHER SIDE. AFTER CONSIDERING THE OBSERVATIONS AS DISCUSSED ABOVE, I HEREBY RESTRICTED THE NP RATE OF THE APPELLANT TO THE 3.66% I.E. AVERAGE OF THE NP RATE AS DECLARED BY THE APPELLANT DURING THE A.YS, 2007-08 AND 2009-10. IN THIS REGARD, THE APPELLANT GETS RELIEF ACCORDINGLY GROUND NOS. 1, 2, 4 AND 6 ARE TREATED AS PARTLY ALLOWED. 4. AGAINST THE ABOVE ORDER OF THE LD. CIT(A), BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEALS BEFORE THE ITAT. ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 6 5. IT WAS CONTENDED BY THE LD AR OF THE ASSESSEE THAT AS IN THE PAST, DURING THIS YEAR ALSO, TWO 'AUDITS' WERE UNDERTAKEN IN NORMAL & ROUTINE COURSE; ONE BY 'INTERNAL AUDIT' AND SECOND 'STATUTORY AUDIT' BY AN APPROVED AUDITOR; POINTING OUT THE ROUTINE AND PROCEDURAL LAPSES TO BE MET OUT IN UPDATING THE BOOKS OF THE BRANCHES AND HEAD-OFFICE OF THE BANK. THUS SUCH `AUDITS' WERE ROUTINE EXERCISE TO MONITOR AND SUPERVISE THE PROPER FUNCTIONING OF THE BANK. SOME OF THE PROCEDURE 'LAPSES' AND 'DEFECTS' AS POINTED OUT IN THE YEAR ALSO CONTINUED TO BE SAME, SO THERE IS NO VALID REASON FOR THE AO TO DEVIATE FROM THE PAST HISTORY OF THE CASE. THE ONLY REASON ASSIGNED BY AO FOR MAKING THIS ADDITION WAS THAT THE ASSESSEE WAS NON-COOPERATIVE IN THE ASSESSMENT AND RECOVERY PROCEEDINGS IN THE A.YR. 2008-09: THEREFORE, HE WAS NOT WILLING TO CONSIDER THE ABOVE EXPLANATION. OBVIOUSLY, THE AO DID NOT OPINE OR OBSERVE ANYWHERE IN THE ASSESSMENT ORDER THAT THE EXPLANATION OF THE ASSESSEE WAS 'FALSE' OR 'INCORRECT' AND THE SAME WAS NOT SATISFACTORY AS ENVISAGED IN SECTION 69 OF THE ACT. THE ADDITION HAD BEEN MADE ON THE PLEA THAT THE ASSESSEE WAS NOT CO-OPERATIVE IN THE 'ASSESSMENT AND RECOVERY PROCEEDINGS'. ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 7 6. THE LD AR HAS FURTHER ARGUED THAT THE AO HAVING REJECTED THE BOOK RESULTS U/S 145(3) OF THE ACT, HE HAD PROCEEDED TO MAKE ADDITION OF RS.2,09,35,774/- BY APPLYING NP OF 11.03% ON THE GROSS INTEREST RECEIPTS, (ON THE BASIS OF A SO-CALLED COMPARABLE CASE OF A CO-OPERATIVE SOCIETY) WITH THE FOLLOWING FINDINGS AS RECORDED IN PARA 7 AT PAGE NO.13 OF THE ASSESSMENT ORDER: ' IN VIEW OF ABOVE DISCUSSION, IT IS CLEAR THAT THE BOOKS OF ACCOUNTS AS MAINTAINED BY ASSESSEE DO NOT REFLECT THE TRUE PICTURE OF THE PROFIT/LOSS OF THE ASSESSEE AND ARE LIABLE TO BE REJECTED U/S 145(3) OF THE IT ACT. A COMPARABLE CASE BEING , ASSESSED IN CIRCLE-1 NAMELY RAJASTHAN STATE COOPERATIVE SOCIETY HAS SHOWN A NET PROFIT OF 11.03% FOR A.Y. 2009-10 AS AGAINST 1.05% SHOWN BY THE ASSESSEE. ACCORDINGLY, NET PROFIT RATE OF 11.03% IS APPLIED RESULTING INTO AN ADDITION RS.2,09,35,774/- IS MADE TO THE TOTAL INCOME OF THE ASSESSEE WHICH INCLUDES RS.33,66,311/- WHICH HAS NOT BEEN REFLECTED AS A PART OF THE INTEREST INCOME AS DISCUSSED ABOVE. FROM READING OF THE ABOVE FINDINGS, IT IS NOTED THAT THE AO HAD ESTIMATED PROFIT RESULTS @ 11.03% BY COMPARING THE RESULTS SHOWN BY A SOCIETY. IN FACT, THE CASE OF SUCH SOCIETY IS NOT A 'COMPARABLE CASE' AS IT HAD NEVER DONE BANKING OPERATIONS. THUS THE AO HAD INCORRECTLY COMPARED THE RESULTS OF THIS SOCIETY WITH THE ASSESSEE BANK. THE ADDITION OF RS.2,09,35,774/- INCLUDED THE ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 8 ALLEGED INTEREST RECEIPTS OF RS.33,66,311/- ALLEGEDLY NOT CHARGED BY THE BRANCH OFFICE OF TODARAISING. MOREOVER, THE AO HAD FAILED TO APPRECIATE THE EXACT NATURE OF THE `AUDIT OBJECTIONS' WHICH WERE OF GENERAL AND PROCEDURAL NATURE HAVING NO BEARING ON THE INCOME PART OF THE BANK. EVEN THE OBJECTION REGARDING NON- CHARGING OF THE INTEREST OF RS.33,66,311/- BY TODARAISING BRANCH WAS ALSO FOUND TO BE 'INCORRECT' AS PER 1281 NORMS AND WAS ACCORDINGLY SETTLED WITHOUT ANY INCOME EFFECT. HAVING CONSIDERED SUCH GENERAL NATURE OF OBJECTIONS, IN APPEAL, THE ID CIT (A) HAD REDUCED SUCH NP RATE TO 3.66% (FROM 11.03%) AND ALLOWED THIS GROUND PARTLY. 7. IT WAS THE ARGUMENT OF THE LD AR THAT SUCH 'AUDIT OBJECTIONS' WERE OF ROUTINE AND GENERAL NATURE HAVING NO BEARING ON THE INCOME PART OF THE BANK. FINALLY, ALL SUCH OBJECTIONS WERE SUCCESSFULLY MET OUT AND SETTLED AS PER 'MINUTES' DRAWN IN 2013. THE PROFIT RESULTS OF THE BANK SHOWN ORIGINALLY REMAINED SAME AS PER CERTIFICATE PLACED IN THE PB AT PAGE NO. I). IN THE CIRCUMSTANCES, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN REJECTING THE BOOK RESULTS U/S 145(3) OF THE ACT AND DETERMINING THE INCOME OF THE BANK BY ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 9 ESTIMATING NP RATE (11.03% BY THE AO & 3.33% BY THE 1D. CIT (A) IN ABSENCE OF ANY VALID REASON. 8. ON THE OTHER HAND, THE LD DR HAS RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN REDUCING N.P. RATE FROM 11.03% TO 3.66% WITHOUT SUBSTANTIATING THE SAME. 9. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE ASSESSEE IS A 'BANKING INSTITUTE' (HEREINAFTER REFERRED AS 'BANK') OPERATING UNDER THE SUPERVISION OF THE CO- OPERATIVE DEPTH OF STATE GOVT. THE `BANK' HAD BEEN UNDERTAKING BANKING OPERATIONS TO ACCEPT THE 'DEPOSITS' AND MAKE 'ADVANCES' FOR THE BENEFIT OF ITS MEMBERS UNDER VARIOUS SCHEMES AS SPONSORED BY THE CO-OPERATIVE DEPTH FROM TIME TO TIME. THUS, ALL THE OPERATIONS ARE BEING UNDERTAKEN AND REGULATED UNDER CLOSE SUPERVISION OF THE CO-OPERATIVE DEPTH AND ARE SUBJECTED TO PERIODICAL 'INTERNAL & STATUTORY AUDITS'. THE BANK HAD BEEN REGULARLY ASSESSED TO TAX FOR LAST MANY YEARS. EXCEPT BANKING OPERATIONS, NO ANY OTHER OPERATION OR ANY BUSINESS/COMMERCIAL ACTIVITY HAD EVER BEEN UNDERTAKEN. IN THE CIRCUMSTANCES, THE BOOK RESULTS I.E. THE 'RECEIPTS AND EXPENSES' ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 10 HAD NEVER BEEN QUESTIONED IN THE PAST; EXCEPT MAKING CERTAIN DISALLOWANCES OF THE EXPENSES FOR SPECIFIC PROCEDURAL LAPSES AND NONCOMPLIANCE OF CERTAIN LEGAL OBLIGATIONS AS PROVIDED IN THE ACT. AT NO STAGE, THE. PROVISIONS OF 145(3) OF THE ACT HAD EVER BEEN INVOKED TO ESTIMATE THE PROFITS BY APPLYING NP RATE. DURING THE YEAR, THE ASSESSEE 'BANK' HAD CONTINUED TO CARRY OUT ITS OPERATIONS IN THE SIMILAR MANNER AND STYLE AS IN THE PAST. HOWEVER, THE AO HAD OPTED TO PROCEED IN THE ASSESSMENT PROCEEDINGS ON ENTIRELY DIFFERENT LINES, IGNORING THE PAST HISTORY OF THE CASE. HOWEVER, THE A.O. AFTER CONSIDERING THE OBSERVATION OF THE AUDITOR, REJECTED BOOKS OF ACCOUNT U/S 145(3) OF THE ACT AND APPLIED NP OF 11.03% ON THE GROSS DEPOSITS. HOWEVER, THE FINDING OF THE A.O. WAS REJECTED BY THE LD. CIT(A) AFTER RECORDING HIS FINDING AT PARA 5.2 PAGE 10 TO 12 OF HIS APPELLATE ORDER WHICH READS AS UNDER: THE APPELLANT CONTENDED THAT THE AO ONLY CONSIDERED NOTING WRITTEN BY THE AUDITOR AND HAD VERIFIED THE SAME. HOWEVER. I AM NOT INCLINED TO AGREE WITH THIS ARGUMENT OF THE AR OF THE ASSESSEE. THE HONORABLE SUPREME COURT IN THE CASE OF S.N. NAMASIVAVAM CHETTIAR V. C1T 38 ITR 579 (SC) HAS HELD THAT NON-MAINTENANCE OF STOCK REGISTER AND DAY TO DAY REGISTER CAN LADEN) THE REJECTION OF ACCOUNTS. APPELLANT BANK EMPLOYED MERCANTILE METHOD OF ACCOUNTING IN THE PREVIOUS BUT IN SOME CASES IT HAD NOT BEEN FOLLOWED. IT HAD HELD IN THE CASE OF C1T V SUPER ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 11 SCIENTIFIC CLOCK CO. (1999 154 CTR (G24)424) THAT THE ASSESSEE FOR ANY PARTICULAR SOURCE OF INCOME COULD ADOPT A DIFFERENT SYSTEM OF ACCOUNTING BUT IN NO CASE CAN HE EMPLOY FOR PART OF THE TRANSACTIONS OR EVENTS RELATING TO ONE SOURCE OF INCOME OF DIFFERENT SYSTEM OF ACCOUNTING. THERE CANNOT BE PIECEMEAL METHOD OF ACCOUNTING IN RESPECT OF THE SAME BUSINESS OR THE SAME SOURCE OF INCOME OR EXPENDITURE. THEREFORE, CONSIDERING THE FACTUAL AND LEGAL POSITION AS DISCUSSED ABOVE. THE AO'S ACTION OF INVOKING, SECTION 145(3) OF THE ACT IS UPHELD. THE APPELLANT FAILS ON THIS ISSUE. 10. IT IS CLEAR FROM THE FINDING OF THE LD. CIT(A) THAT THE LD. CIT (A) HAD TURNED DOWN THIS GROUND 'SUMMARILY' UNDER MISCONCEIVED BELIEF THAT THE 'ASSESSEE BANK' WAS A 'TRADING OR MANUFACTURING CONCERN' AND HAD UPHOLD THE FINDINGS OF THE AO WHILE RELYING UPON CERTAIN JUDICIAL CITATIONS OF HONBLE SUPREME COURT & GUJARAT HIGH COURT, WHICH HAD NO BEARING ON THE FACTS OF THE PRESENT CASE. THEREFORE, I AM OF THE CONSIDERED VIEW THAT THE 'BANK' IS NOT A TRADING OR MANUFACTURING CONCERN SO IT WAS NOT REQUIRED TO MAINTAIN ANY 'STOCK REGISTER' AS OPINED BY THE LD. CIT (A). THE RECEIPTS AND ADVANCES AS MADE DURING THE BANKING OPERATIONS ARE DULY ACCOUNTED FOR AND ARE VOUCHED AND VERIFIABLE. IN THE CIRCUMSTANCES, THE OBSERVATIONS OF LD. CIT(A) REGARDING NON- MAINTENANCE OF 'STOCK' , REGISTER IS IRRELEVANT IN THE PRESENT CASE. ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 12 11. I FURTHER OBSERVE THAT THE AUTHORITIES BELOW HAD FAILED TO SPELL OUT AS TO HOW THE `GENERAL . AND COMMON' OBSERVATIONS REGARDING PROCEDURAL LAPSES MADE IN THE STATUTORY AUDIT WARRANTED REJECTION OF THE BOOKS OF BANKING COMPANY AND MAKE ADDITION BY ESTIMATING NP RATE WHICH IS GENERALLY IN THE CASE OF CONCERNED WHO ENGAGED IN TRADING AND MANUFACTURING ACTIVITIES. 12. FROM THE RECORD, I ALSO FOUND THAT THE DETAILED CHART OF 'RECEIPTS' & 'EXPENSES' AS PLACED AT PB PAGE NO.34 & 35, NO SPECIFIC DISCREPANCY WHAT-SO-EVER COULD BE POINTED OUT IN RESPECT OF SUCH RECEIPTS AND EXPENSES. 13. IN VIEW OF THE ABOVE DISCUSSION, I SET ASIDE BOTH THE ORDERS OF THE LOWER AUTHORITIES AND THE MATTER IS RESTORED BACK TO THE A.O. TO EXAMINE AFRESH IN THE LIGHT OF THE FACT THAT THE OBSERVATION OF INTERNAL AND STATUTORY AUDITOR WAS REMOVED BY THE ASSESSEE SUBSEQUENTLY AS STATED BY THE LD AR. THE A.O. SHOULD ALSO KEEP IN THE MIND THAT THE ASSESSEE BEING BANKING COMPANY AND NOT A TRADING OR MANUFACTURING CONCERNED SO AS TO ESTIMATE THE GP OR NP ON ITS SALES. THE A.O. IS TO DECIDE THE ISSUE AFRESH AFTER GIVING DUE AND EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA 109 & 162/JP/2019 M/S CENTRAL COOPERATIVE BANK LTD. VS ACIT 13 15. IN THE RESULT, BOTH THE APPEALS I.E. APPEAL OF THE ASSESSEE AND THE REVENUE AT ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2020. SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL; @ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21/02/2020 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S CENTRAL CO-OPERATIVE BANK LTD., TONK. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-7, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 109 & 162/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR