DCIT, CIRCLE-2(2), SURAT V. THE SURAT DISTRICT CO-OP. BANK LTD, SURAT

ITA 153/SRT/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 2495 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-12-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 29-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 154; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकरअपीलसं./ITA No.153/SRT/2020 (Ǔनधा[रणवष[ / Assessment Years: (2016-17) (Physical Court Hearing) The DCIT, Circle-2(2), Surat. Vs. The Surat District Co-Operative Bank Ltd.,1, Kanpith Lal Gate, Surat-395001, Gujarat. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAAAT2985Q (Appellant) (Respondent) Assessee by : Shri Akshay Modi, CA Revenue by : Shri H. P. Meena, CIT(DR) स ु नवाईकȧतारȣख/ Date of Hearing : 24/12/2021 घोषणाकȧतारȣख/Date of Pronouncement : 31/01/2022 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned appeal filed by the Revenue, pertaining to Assessment Year (AY) 2016-17, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-1, Surat [in short “the ld. CIT(A)”] in Appeal No. CIT(A), Surat-1/10295/2017-18 dated 24.02.2020 which in turn arise out of an assessment order passed by Assessing Officer under section 143(1) of the Income Tax Act, 1961 [hereinafter referred to as the “Act”]. 2. Grounds of appeal raised by the Revenue are as follows: “(i)On the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in deleting the disallowance of provision for ex-gratia payments of Rs.4,50,00,000/- which has been added back by the DCIT, CPC, Bangalore as it has not been adjusted/added to the total income. (ii) On the facts and circumstances of the case and in Law, the Ld. CIT(A) has erred in deleting the disallowance of provision for ex-gratia payments of Rs.4,50,00,000/- which has been added back by the DCIT, CPC, Bengaluru being not adjusted/added to the total income, without properly verifying it from the audited Balance Sheet as well as profit Loss account uploaded on e-filing portal by the assessee and without placing any concrete evidence on this issue. Page | 2 ITA No.153/SRT/2020 Assessment Year. 2016-17 The Surat Dist. Co-op. Bank Ltd. (iii) Without prejudice to grounds No. (i) & (ii), if CIT(A) has verified certain other records/details etc. for grant of questioned relief, whether he has erred in not following provision of Rule 46A of the I.T. Rules, 1962. (iv) On the facts and circumstances of the case and in Law, the Ld.CIT(A), Surat ought to have upheld the order of the Assessing Officer i.e. DCIT, CPC, Bengaluru. It is, therefore, prayed that the order of the Ld. CIT(A)-1 Surat may be set-aside and that of the Assessing Officer's i.e DCIT,CPC, Bengaluru order may be restored. (v) On the facts and circumstances of the case and in law, the appellant craves its right to add, alter, amend, deleted, any of the ground or grounds of appeal.” 3. Brief facts qua the issue are that the assessee is a co-operative bank engaged in the banking business. It has filed its return of income on 07.10.2016 declaring total income at Rs.31,16,31,500/-. While processing the Return of Income u/s 143(1) of IT Act, Learned DCIT, CPC Bangalore, disallowed the amount of provision for ex-gratia of Rs.4,50,00,000/- debited to Profit and Loss account for the year under consideration and increased the income under the head “income from Other Sources” by the same amount. 4. Aggrieved by the stand of the learned DCIT, CPC Bangalore (Assessing Officer), the assessee carried the matter in appeal before the CIT(A) with success. The Revenue is not satisfied and is in further appeal before this Tribunal. 5. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. Learned DR for the Revenue submits that return of Income-tax was verified and it is noticed that there is total disallowance already made by the assessee amounting to Rs.41,09,82,100/-. However, bifurcation of amount of Rs.41,09,82,100/- mentioned in the order of Ld. CIT(A) is not verifiable from the material available on record. As per the CIT(A), Rs.41,09,82,100/- includes impugned "provision for ex-gratia payments of Rs.4,50,00,000/- which is not verifiable from the audited Balance Sheet as well as Profit and Loss account uploaded on e-filing portal by the assessee. Further, nowhere Ld. CIT(A) clarified how the amount of Rs.41,09,82,100/- which had already been added back has within it the "provision for ex-gratia payments" of Rs.4,50,00,000/- Page | 3 ITA No.153/SRT/2020 Assessment Year. 2016-17 The Surat Dist. Co-op. Bank Ltd. included. The CIT(A) in his order has said that he has examined records and cross checked the audit report, without providing an opportunity to the assessing officer to verify total of Rs.41,09,82,100/- which is shown to have added back. That is, ld CIT(A) did not provide an opportunity to examine the fact that Rs.4,50,00,000/-, as Provision for ex-gratia payment is included in the amount of Rs.41,09,82,100/-. Therefore, Ld. CIT(A) has erred in not following provision of Rule 46A of the Income Tax Rules, 1962. The learned DR also argued that such type of mistakes can be corrected by filing a rectification application under section 154 of the Act and the assessee need not to knock the door of ld CIT(A). 6. On the other hand, Shri Suresh K. Kabra, Learned Counsel for the assessee, defended the order passed by the ld CIT(A). 7. We note that ld. CIT(A) deleted the addition made by the Assessing Officer observing as follows: “8. Discussion & Decision of the Appellate Authority 8.1 Perusal of details on record, indicates prima facie, that the impugned Provision for Ex-gratia payment has been added back to income by the assessee Co-Bank in its computation in ITR filed. However, to double check the same, a letter dtd. 29.07.2019 was written to the DCIT, Cr-2(2) Surat (Ld. AO) as under; “This appeal is against the disallowance/ addition mad by CPC, Bangalore on account of 'provision for Ex-gratia of Rs.4,50,000/-. However, the appellant claims that it has voluntarily/ Suo motu added back the said provision in the return of income filed online. Hence the impugned disallowance made by CPC amount to double deduction. Perusal of the ITR (printout form ITD system) sch. Bp. Col. 1 and also Sch. BP, col no 23, shows that prima facie the appellant is factually correct. You are hereby directed, to examine the ITR available on line and also allow the AR to appear before you and explain the same. You may subsequently furnish your factual report on or before 13.08.2019.” 8.2.Unfortunately there has been no response from the Id. AO since the matter involves high pitched assessments, calling for high priority/expeditions disposal. I have decided not to wait further for the report, instead, I have proceeded to do examination of records & cross check with the audit report. I find that in the ITR, the assessee has made following adjustments to net profit in arriving of total income. Net profit as per ITR (ITD) Schedule BP Col. 1 12,50,00,000 Add back sch. BP col. No. 23 41,09,82,100 1 Provision Rs.17,39,80,824/- 2 Loss on sale of securities Rs.9,52,800/- 3 Loss on sale of vehicles Rs.10,48,978/- 4 Provision for income tax Rs.19,00,00,000/- 5 Provision for Ex-gratia payment Rs.4,50,00,000/- Page | 4 ITA No.153/SRT/2020 Assessment Year. 2016-17 The Surat Dist. Co-op. Bank Ltd. After many such additions/deductions 41,09,82,100/- In view of the above it is clear that assessee has added back the impugned “Provision for ex-gratia payments of Rs.4,50,00,000. Strangely the CPC has considered 4 items added back (above table) but not considered the 5 th item added back. In view of the clear facts and evidences, the impugned disallowance is incorrect and amounts to double taxation. Accordingly, it is directed to be deleted.” 8. Having gone through the above order of CIT(A), we noticed that CIT(A) has provided an opportunity to the assessing officer to examine the mistake committed by the DCIT, CPC Bangalore (Assessing Officer), hence there is no violation of provisions of Rule 46A of the Income Tax Rules. Besides, it should also be noted that powers of the CIT(A) are coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Hence, we do not agree with ld DR to the effect that there is violation of provisions of Rule 46A of the Income Tax Rules. The second contention raised by the ld DR is that such type of typographical error can be rectified under section 154 of the Act. We note that clause (a) of section 246(1) provides that assessee can file appeal against the order passed by assessing officer under section 143(1) of the Act before CIT(A). The assessee can object the arithmetical adjustments made by the assessing officer under section 143(1) of the Act by filing an appeal before ld CIT(A). 9. Based on this factual position, as narrated above, we do not find any infirmity in the order of ld. CIT(A). That being so, we decline to interfere in the order passed by the ld. CIT(A), his order on this issue is hereby accepted and grounds of appeal raised by Revenue are dismissed. 10. In the result, appeal filed by the Revenue is dismissed. Order is pronounced on 31/01/2022 by placing result on notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat / Ǒदनांक/ Date: 31/01/2022 SAMANTA Page | 5 ITA No.153/SRT/2020 Assessment Year. 2016-17 The Surat Dist. Co-op. Bank Ltd. Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat Page | 6 ITA No.153/SRT/2020 Assessment Year. 2016-17 The Surat Dist. Co-op. Bank Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER & DR. A. L. SAINI, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 153/SRT/2020 (Ǔनधा[रण वष[ / Assessment Year: 2016-17) The DCIT, Circle-2(2), Surat. बनाम/ Vs. The Surat District Co-Operative Bank Ltd.,1, Kanpith Lal Gate, Surat-395001, Gujarat. èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAAAT2985Q (अपीलाथȸ /Appellant) .. (Ĥ×यथȸ / Respondent) अपीलाथȸ ओर से /Appellant by : Shri Akshay Modi, CA Ĥ×यथȸ कȧ ओर से / Respondent by : Shri H. P. Meena, CIT(DR) CORRIGENDUM PER Dr. A. L. SAINI, AM: It has been brought to our notice by Shri Akshay Modi, Learned, CA of the assessee who represented the assessee at the time of hearing of appeal in ITA No.153/SRT/2020, that there are certain mistake in recording of his attendance. The attendance of Shri S. K. Kabra, CA recorded instead of his attendance. Similarly, in para no. 6 of the order, the name of Shri S. K. Kabra, CA has referred. This mistake in the order is just an error of recording the attendance of counsel, which may be corrected by way of necessary corrigendum. 2. On perusal of case record and the attendance recorded on 24.12.2021, we find that the case was argued/attended by Shri Akshay Modi, CA and not by Shri S. K. Kabra, CA, therefore the name of counsel is to be read as Shri Akshay Modi, CA, in cause title. 3. In para no. 6, the name of Shri Akshay Modi, CA be read in place of Shri S. K. Kabra, CA. Therefore, para no.6 of the order should be read as follows: Page | 7 ITA No.153/SRT/2020 Assessment Year. 2016-17 The Surat Dist. Co-op. Bank Ltd. “6. On the other hand, Shri Akshay Modi, Learned Counsel for the assessee, defended the order passed by the ld CIT(A).” 4. Both above mistakes were typographical errors, which are apparent on record, hence Bench has corrected these typographical errors, suo motu. Sd/- Sd/- (PAWAN SINGH) (DR. A. L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat; Dated: 02/02/2022 आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आय ु Èत / Concerned CIT 4. आयकर आय ु Èत(अपील) / The CIT(A) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण / DR, ITAT, 6. गाड[ फाईल / Guard file. By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT Surat