M/s. AZAD Co-Operative Bank Limited, Gadag V. Assistant Commissioner of Income Tax, Circle-2(1), Gadag

ITA 1647/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1090 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 18-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR NISCHAL B
• Assessee Lawyers: R CHANDRASHEKAR
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH SMC-A, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNANT MEMBER ITA NO. 1647 (BANG) 2018 (ASSESSMENT YEAR : 2007 08) M/S. AZAD CO OPERATIVE BANK LTD., APP ELLANT GADAG, C/O M/S A RAGHAVENDRA RAO & ASSOCIATES, CHARTERED ACCOUNTANTS, VAKIL CHAWL, GADAG - 582101 PAN. AAAJA0485B VS THE ACIT, CIRCLE - 2 (1), HUBLI . RESPONDENT ASSESSEE BY : SHRI R. CHANDRASHEKAR, ADVOCATE REVENUE BY : DR. NISCHAL B., ADDL. CIT DR DATE OF HEARING : 11-09-2018 DATE OF PRONOUNCEMENT : 14-09-2018 O R D E R PER A. K. GARODIA, A.M.: THIS APPEAL IS FILED BY THE ASSESSEE AND IT IS DIRE CTED AGAINST THE ORDER OF CIT (A) HUBBALI DATED 12.03.2018 FOR A. Y. 2007 08. 2. THE ONLY GRIEVANCE OF THE ASSESSEE IS ABOUT CONF IRMING OF THE DISALLOWANCE MADE BY THE AO OF RS. 32.50 LACS BEING DEPOSIT WITH KCC BANK CLAIMED BY THE ASSESSEE AS BUSINESS LOSS. 3. LEARNED AR OF THE ASSESSEE SUBMITTED THE COPY OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT DATED 12.03.2014 IN ITA NO. 50 19/2011. HE SUBMITTED THAT THE SAME IS AVAILABLE ON PAGES 1 TO 6 OF THE P APER BOOK DATED 28.08.2018. HE POINTED OUT THAT AS PER THIS JUDGMENT, THE MATTE R WAS RESTORED TO THE AO FOR A FRESH DECISION AFTER PROVIDING AN OPPORTUNITY TO THE ASSESSEE TO ESTABLISH THIS FACT THAT THIS AMOUNT OF RS. 32.50 LACS HAS BEEN AC TUALLY INDICATED AS BUSINESS LOSS BY TREATING IT AS NON RECOVERABLE SO AS TO C LAIM THE BENEFIT. HE SUBMITTED THAT THIS CLAIM WAS MADE IN THE COMPUTATION OF INCO ME FILED WITH THE RETURN OF INCOME FILED BY THE ASSESSEE ON 31.10.2007 AND THIS CLAIM IS ON THE BASIS OF AN ITA NO. 1647(BANG)2018 2 INSPECTION REPORT DATED 10.08.2007 BY RBI U/S 35 OF BANKING REGULATION ACT, 1949. HE SUBMITTED A COPY OF THIS REPORT. HE SUBMIT TED THAT THEREFORE, SUCH LOSS COULD NOT BE ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS FOR THE YEAR ENDING ON 31.03.2007. AT THIS JUNCTURE, THE BENCH MADE A QUER Y AS TO WHEN THE ENTRY IS MADE IN THE BOOKS OF ACCOUNTS. IN REPLY, IT WAS SUB MITTED BY THE LEARNED AR OF THE ASSESSEE THAT AS PER HIS INSTRUCTIONS, NO SUCH ENTRY IS PASSED IN THE BOOKS TILL DATE. HE PLACED RELIANCE ON A JUDGMENT OF HON BLE APEX COURT RENDERED IN THE CASE OF KEDARNATH JUTE MFG. CO. LTD. VS. CIT AS REPORTED IN 67 ITR 56 IN SUPPORT OF THIS CONTENTION THAT BOOK ENTRY IS NOT DECISIVE. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE LOWER AUTHORITI ES. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND I FI ND THAT PARA 6 TO 9 OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THIS CA SE, ARE RELEVANT AND THEREFORE, THESE PARAS ARE REPRODUCED HEREIN BELOW: - 6. IN THAT REGARD, THOUGH THE LEARNED COUNSEL FOR T HE APPELLANT RELIED UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN T HE CASE OF KEDARNATH JUTE MFG. CO. LTD., VS. COMMISSIONER OF I NCOME TAX REPORTED IN (1971) 82 ITR 352 (SC), ON THE LEGAL AS PECT THAT THE ENTRY NEED NOT REFLECTED IN THE BOOKS, WHAT IS NECESSARY TO BE NOTICED IS THAT, FROM THE OBSERVATIONS MADE IN THE ORDER DATED 21.4. 2010 PASSED BY THE APPELLATE AUTHORITY AND IN THE ASSESSMENT ORDER IT IS SEEN THAT THE FACTUAL ASPECT WITH REGARD TO THE AMOUNT BEING ACTU ALLY WRITTEN OF AS BUSINESS LOSS HAS NOT BEEN ESTABLISHED. 7. IN THAT VIEW THE QUESTION OF LAW AT THIS JUNCTUR E WOULD NOT ARISE FOR CONSIDERATION UNTIL THE APPELLANT ESTABLISHES BEFOR E THE ASSESSING AUTHORITY THAT THE AMOUNT HAS BEEN ACTUALLY TREATED AS THE BUSINESS LOSS BASED ON THE INSTRUCTIONS ISSUED BY THE RBI DU E TO THE SAID AMOUNT BEING CLASSIFIED AS NON-RECOVERABLE'. 8. IN THAT VIEW OF THE MATTE' WE ARE OF THE OPINION THAT THE MATTER WOULD REQUIRE RECONSIDERATION BY THE ASSESSING OFFI CER BY PROVIDING AN OPPORTUNITY TO THE APPELLANT TO ESTABLISH THE FA CT THAT THE SAID AMOUNT OF RS.32.50 LAKHS HAS BEEN ACTUALLY INDICATE D AS BUSINESS LOSS BY TREATING IT AS 'NON-RECOVERABLE' SO AS TO CLAIM THE BENEFIT. 9. IN THAT VIEW, THE ORDERS PASSED BY THE APPELLATE TRIBUNAL IMPUGNED HEREIN AS ALSO THE ASSESSMENT ORDER (ANNEXURE-B) AR E SET ASIDE. THE MATTER IS REMITTED BACK TO THE ASSESSING OFFICER TO RECONSIDER THE MATTER AFRESH. OPPORTUNITY SHALL BE GRANTED TO THE APPELLANT TO ITA NO. 1647(BANG)2018 3 PRODUCE ALL THE DOCUMENTS AND THEREAFTER RECONSIDER ATION BE MADE BASED ON THE DOCUMENTS PLACED BEFORE IT. 5. FROM THE ABOVE PARAS OF THIS JUDGMENT OF HONBLE KARNATAKA HIGH COURT, IT COMES OUT THAT EVEN IF NO ENTRY HAS BEEN PASSED IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAS TO ESTABLISH THAT THE AMOUNT IN QUESTI ON WAS ACTUALLY TREATED AS BUSINESS LOSS AND IN PARA 6 OF THE JUDGMENT REPRODU CED ABOVE, THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF KEDARNAT H JUTE MFG. CO. LTD. VS. CIT (SUPRA) WAS ALSO CONSIDERED. THE ASSESSEE HAS F AILED TO ESTABLISH THIS FACTUAL ASPECT THAT THE AMOUNT IN QUESTION WAS ACTU ALLY TREATED AS BUSINESS LOSS BECAUSE NO EVIDENCE IN THIS REGARD HAS BEEN PLACED BEFORE THE LOWER AUTHORITIES OR BEFORE ME. HENCE, I FIND TO REASON T O INTERFERE IN THE ORDER OF CIT (A). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE D ATE MENTIONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 14 TH SEPTEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.