M/s. Chennai Central Co-operative Bank Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1229/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0730 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation; Principle of natural justice; Bad and doubtful debts; Revised return
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE , ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1229/MDS/2012 ( ASSESSMENT YEAR : 2007-08) M/S. CHENNAI CENTRAL CO-OPERATIVE BANK LTD., M/S.SUBBARAYA AIYAR PADMANABHAN & RAMAMANI ADVOCATES 75A, DR.RADHAKRISHNAN SALAI, MYLAPORE, CHENNAI-600 004. PAN: AAAAC0982C VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE-VIII, CHENNAI. (APPELLANT) (RESPONDENT) APPELLANT BY : MR. R.VIJAYARAGHAVAN, ADVOCATE RESPONDENT BY : MR . SHAJI P.JACOB, ADDL. CIT DATE OF HEARING : 21 ST FEBRUARY, 2013 DATE OF PRONOUNCEMENT : 27 TH FEBRUARY, 2013 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE IMPUGNING THE ORDER OF THE COMMISSIONER OF INCOME TAX, CHENN AI-VIII DATED 28.03.2012 PASSED UNDER SECTION 263 OF THE IN COME TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CO- OPERATIVE BANK. THE ASSESSEE FILED ITS RETURN OF IN COME FOR THE ASSESSMENT YEAR 2007-08 DECLARING ITS TOTAL INCOME OF ITA NO.1229/MDS/2012 2 ` 37,55,85,736/-. THE ASSESSEE CLAIMED REFUND OF ` 4,28,56,920/-. THEREAFTER, THE ASSESSEE FILED REVIS ED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 11.8.2008 DECLARING TOTAL INCOME OF ` 7,01,54,758/- CLAIMING REFUND OF ` 13,63,18,800/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSESSEE ON 24.8.2009. IN THE REVISED RETURN THE A SSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80P(2)(D) TO T HE TUNE OF ` 29,86,33,976/-. THE ASSESSEE HAD ALSO CLAIMED HIGHE R DEPRECIATION IN THE REVISED RETURN TO THE TUNE OF ` 70,85,711/-, WHEREAS, IN THE ORIGINAL RETURN THE ASSESSEE HAD CL AIMED DEPRECIATION OF ` 25,46,663/-. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 30.12.2009 REJECTED BOTH THE CLAIMS OF THE ASSESSEE. 3. THE CIT(A) INVOKED ITS JURISDICTION UNDER SECTIO N 263 AND ISSUED NOTICE DATED 20.03.2012 TO THE ASSESSEE ON THE GROUND THAT IN THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.3.2007 A SUM OF ` 2,22,69,097/- HAS BEEN SHOWN AS BAD DEBTS WRITTEN OFF IN THE PROFIT AND LOSS ACCOUNT AG AINST A SUM ITA NO.1229/MDS/2012 3 OF ` 41,95,33,293/- UNDER THE HEAD BAD AND DOUBTFUL DEB TS RESERVE IN THE BALANCE SHEET FOR THE YEAR ENDED ON 31.3.2007. AS PER THE PROVISIONS OF SECTION 36(1)( VII) OF THE ACT, THE AMOUNT OF ANY BAD DEBTS WHICH IS WRITTEN O FF AS IRRECOVERABLE IN THE ACCOUNT OF THE ASSESSEE FOR TH E PREVIOUS YEAR SHALL BE ALLOWED AS DEDUCTION AND ALSO THAT AS PER THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT THE AM OUNT OF DEDUCTION RELATING TO ANY DEBT OR PART THEREOF SHA LL BE LIMITED TO THE AMOUNT BY WHICH SUCH DEBT OR PART THEREOF E XCEEDS THE CREDIT BALANCE IN THE PROVISION FOR BAD AND DOUBTFU L DEBTS ACCOUNT MADE UNDER THAT CLAUSE. IN THE CASE OF THE ASSESSEE, THE ASSESSEE HAS CLAIMED A SUM OF ` 2,22,69,097- AS BAD DEBTS UNDER SECTION 36(1)(VII) OF THE ACT AGAINST A SUM OF ` 41,95,33,293/- UNDER THE HEAD BAD AND DOUBTFUL DEBTS RESERVE SHOWN IN THE BALANCE SHEET. THUS THE CREDIT BALANCE UNDER THE HEAD BAD AND DOUBTFUL DEBTS RESE RVE OF ` 41,95,33,293/- EXCEEDS THE QUANTUM OF BAD DEBTS O F ` 2,22,69,097/- WRITTEN OFF IN THE PROFIT AND LOSS A CCOUNT FOR THE YEAR DATED 31.3.2007. HENCE, THE ASSESSEE IS NOT EN TITLED TO CLAIM ANY DEDUCTION ON ACCOUNT OF BAD DEBTS AMOUNTI NG TO ITA NO.1229/MDS/2012 4 ` 2,22,69,097/- UNDER SECTION 36(1)(VII) OF THE ACT FOR THE ASSESSMENT YEAR 2007-08. THE CIT(A) HELD THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THIS ASPECT WH ILE FINALIZING THE ORDER UNDER SECTION 143(3) OF THE AC T. THEREFORE, THE ASSESSMENT ORDER IS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF THE REVENUE. THE CIT DIRECTED TH E ASSESSING OFFICER TO REDO THE ASSESSMENT BY NOT ALLOWING THE CLAIM OF BAD DEBTS WRITTEN OFF IN THE PROFIT AND LOSS ACCOUN T AMOUNTING TO ` 2,22,69,097/- AS NARRATED ABOVE. 4. THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO RED O THE ASSESSMENT WITHOUT AFFORDING ANY OPPORTUNITY OF HEA RING TO THE ASSESSEE. THE ASSESSEE SHOULD BE GIVEN AN OPPOR TUNITY TO EXPLAIN THE ENTRIES MADE IN ITS BOOKS OF ACCOUNT . THE ORDER OF CIT IS PREJUDICIAL TO THE INTEREST OF THE ASSESS EE AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. THE COUN SEL FOR THE ASSESSEE PRAYED THAT THE TRIBUNAL MAY DIRECT THE A SSESSING OFFICER TO GRANT AN OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE PASSING THE FRESH ASSESSMENT ORDER. ITA NO.1229/MDS/2012 5 5. ON THE OTHER HAND, THE DR APPEARING ON BEHALF OF THE REVENUE STRONGLY SUPPORTED THE ORDER OF THE CIT. HO WEVER, THE DR STATED THAT THE REVENUE HAS NO OBJECTION, I F THE MATTER IS REMITTED BACK TO THE ASSESSING OFFICER TO PASS FRESH ASSESSMENT ORDER, IN ACCORDANCE WITH LAW. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE S IDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELO W. A PERUSAL OF THE ORDER OF THE CIT SHOWS THAT THE ISSU E WHICH HAS BEEN TAKEN UP BY THE CIT BY INVOKING JURISDICTION U NDER SECTION 263 HAS NOT BEEN DISCUSSED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER. THE COUNSEL APP EARING ON BEHALF OF THE ASSESSEE HAS ALSO NOT SERIOUSLY AS SAILED THE ORDER OF THE CIT ON MERITS. HOWEVER, IN THE INTERE ST OF JUSTICE, IT WOULD BE APPROPRIATE, IF WE DIRECT THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER, IN ACCORDANCE WITH L AW, AFTER AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE. ORDERED ACCORDINGLY. ITA NO.1229/MDS/2012 6 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON WEDNESDAY , THE 27 TH DAY OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE ) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 27 TH FEBRUARY, 2013. SOMU COPY TO: (1) APPELLANT (4) CI T(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.