M/s The National Co-Operative Bank Ltd., Bangalore V. ACIT, Bangalore

ITA 1588/BANG/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4598 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 10-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: PRATHIBHA
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI. SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA , ACCOUNTANT MEMBER ITA NO. 1588 /BANG/201 4 ASSESSMENT YEAR : 20 0 9 - 10 M/S. THE NATIONAL CO-OPERATIVE BANK LTD., 73/1, GANDHI BAZAAR MAIN ROAD, BENGALURU 560 004. PAN : AAABT 0126 C VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3(1), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SMT. PRATHIBHA, ADVOCATE REVENUE BY : SMT. PADMA MEENAKSHI , J CIT DATE OF HEARING : 1 1 . 0 6 .201 8 DATE OF PRONOUNCEMENT : 15 . 0 6 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT (APPEALS) ERRED IN PASSING THE ORDER IN THE MANNER IN WHICH HE DID. 2. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE ACT WITHOUT APPRECIATING THE SUBMISSIONS OF THE APPELLANT THAT THE PAYMENTS WERE ALREADY MADE TO THE PARTIES AND THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WOULD NOT ATTRACT IN THE CASE OF THE APPELLANT. THUS, THE ADDITION IS LIABLE TO BE DELETED. 3. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAD MADE PROVISION FOR TAX AUDIT FEES AS PER THE GOVERNING OFFICIAL INSTRUCTIONS AND THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WILL NOT BE APPLICABLE FOR ANY PROVISION MADE AND HENCE THE LEARNED CIT (APPEALS) OUGHT TO HAVE DELETED THE SAME. ITA NO. 1588/BANG/2014 PAGE 2 OF 3 4. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TOWARDS PROVISION MADE FOR BAD AND DOUBTFUL DEBTS TO THE EXTENT OF RS.12,50,000/-. 5. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE PROVISION WAS MADE AS PER THE REQUIREMENT OF THE ACT AND THE SAME WAS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 36(1)(VIIA) OF THE ACT AND ACCORDINGLY HE OUGHT NOT TO HAVE CONFIRMED THE ADDITION AND DELETED THE SAME. 6. WITHOUT PREJUDICE, THE ADDITION AS CONFIRMED BY THE LEARNED CIT (APPEALS) IS ARBITRARY, EXCESSIVE AND OUGHT TO HAVE BEEN REDUCED SUBSTANTIALLY. 7. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE LEVY OF INTEREST UNDER SECTIONS 234C 85 234D OF THE ACT. 8. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED WITH RESPECT TO GROUND NOS. 2 AND 3 RELATING TO DISALLOWANCE OF AUDIT FEES OF RS.4,26,000/- THAT IT SHOULD HAVE BEEN ALLOWED BY THE AO AS THE ASSESSEE HAS MADE THE PROVISIONS IN ACCORDANCE WITH LAW. THE LEARNED DR ON THE OTHER HAND HAS CONTENDED THAT AO HAS DISALLOWED THE PROVISION HAVING NOTED THAT NEITHER AUDIT WORK HAS BEEN CARRIED OUT NOR THE PAYMENT TOWARDS AUDIT WORK HAS BEEN MADE. 3. HAVING CAREFULLY EXAMINED, WE FIND THAT CIT(A) HAS CONFIRMED THE DISALLOWANCE FOR THE REASON THAT THE ASSESSEE COULD NOT OFFER ANY EXPLANATION WITH REGARD TO PROVISIONS TOWARDS AUDIT FEES IN THE ABSENCE OF ANY WORK CARRIED OUT BY THE AUDITOR. NOW THE ASSESSEE IS BEFORE US BUT HE COULD NOT FURNISH THE SATISFACTORY EXPLANATION FOR CREATING PROVISION FOR AUDIT FEES. IN THE ABSENCE OF SATISFACTORY EXPLANATION, WE FIND NO MERIT IN THE CONTENTIONS OF THE ASSESSEE. ACCORDINGLY, WE CONFIRM THE DISALLOWANCE. 4. WITH REGARD TO OTHER GROUND RELATING TO DISALLOWANCE FOR PROVISION OF BAD DEBT OF RS.12,50,000/-, WE FIND THAT THE ASSESSEE HAS MADE A PROVISION OF RS.10,00,000/- FOR BAD AND DOUBTFUL DEBTS BUT CLAIMED DEDUCTION UNDER SECTION 36(1)(VIIA) AMOUNTING TO RS.22,50,000/-. THE AO HAS RESTRICTED THE CLAIM TO RS.10,00,000/- HAVING OBSERVED THAT THE ASSESSEE WAS ENTITLED ONLY TO DEDUCTION @ 7.5% OF TOTAL INCOME AND THE ITA NO. 1588/BANG/2014 PAGE 3 OF 3 PROVISION FOR STANDARD ASSET DO NOT QUALIFY FOR DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT. ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) BUT COULD NOT FURNISH SATISFACTORY EXPLANATION FOR CLAIMING DEDUCTION OF RS.22,50,000/- IN THE LIGHT OF THE FACT THAT HE MADE A PROVISION OF RS.10,00,000/-. IN THE ABSENCE OF SATISFACTORY EXPLANATIONS, THE CIT(A) HAS CONFIRMED THE DISALLOWANCE AGAINST WHICH THE ASSESSEE IS BEFORE THE TRIBUNAL. BUT DURING THE COURSE OF HEARING, THE ASSESSEE COULD NOT FURNISH SATISFACTORY EXPLANATION FOR CLAIMING DEDUCTION OF RS.22,50,000/-. IN THE ABSENCE OF SPECIFIC CLARIFICATION, WE FIND NO MERIT IN THIS GROUND OF THE ASSESSEE. WE HOWEVER CAREFULLY EXAMINED THE ORDER OF THE CIT(A) AND FIND THAT HE HAS PROPERLY ADJUDICATED THE ISSUE IN THE LIGHT OF RELEVANT PROVISIONS OF THE ACT. ACCORDINGLY, WE CONFIRM THE SAME. 5. GROUND NO. 7 IS CONSEQUENTIAL IN NATURE AND NEEDS NO INDEPENDENT ADJUDICATION. 6. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 15 TH JUNE, 2018. SD/- SD/- SD/- BANGALORE. DATED: 15 TH JUNE, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER