ACIT, Circle - 40, Kolkata , Kolkata V. The West Bengal State Co-operative Bank Ltd., , Kolkata

ITA 2204/KOL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0148 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-03-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 17-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOWDHURY ADD
• Assessee Lawyers: N C MONDAL
• Keywords: Bad and doubtful debts; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI A.T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.2204/KOL/2017 ( / ASSESSMENT YEAR: 2012-13) ACIT, CIRCLE-40, KOLKATA 2 ND FLOOR, 3, GOVT. PLACE(W), KOLKATA 1. VS. THE WEST BENGAL STATE CO- OPERATIVE BANK LTD. 24A, WATERLOO STREET, KOLKATA 700 069. ./ ./PAN/GIR NO. : AAAAT 7072 N (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI ROBIN CHOWDHURY, ADD. CIT SR. DR RESPONDENT BY :SHRI N. C. MONDAL, FCA / DATE OF HEARING : 05/03/2018 /DATE OF PRONOUNCEMENT : 29/03/2018 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAINI NG TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST AN ORDER PASSED B Y THE COMMISSIONER OF INCOME TAX(APPEALS)-12, KOLKATA, IN APPEAL NO.39/CI T(A)-12/KOL/CIR- 40/2015-16 DATED 04.07.2017, WHICH IN TURN ARISES O UT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), DATED 28.03.2015. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ S AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 36(1)(VIIA) OF THE ACT, WITHOUT PROPER APPRECIATION OF THE FACTS OF THE CAS E ON THIS ISSUE. 2. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE, LD. C IT(A) ERRED IN HOLDING THAT THE AMOUNT OF DEDUCTION WAS WITHIN THE LIMIT PRESCRIBED UNDER SECTION 36(1)(VIIA) OF THE THE WEST BENGAL STATE CO-OPERATIVE BANK LTD. ITA NO.2204/KOL/2017 ASSESSMENT YEAR: 2012-13 PAGE | PAGE | PAGE | PAGE | 2 22 2 ACT, WITHOUT GIVING A.O. AN OPPORTUNITY UNDER REMAN D, WHICH IS IN CONTRAVENTION OF THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962. 3. THAT THE APPELLANT CRAVES THE LEAVES TO ADD, ALTER , MODIFY, INCLUDE OR DELETE ANY GROUNDS OF APPEAL. 3.THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 31.03.2013 DE CLARING A TOTAL INCOME OF RS. NIL. THE ASSESSEES CASE WAS SELECTE D FOR SCRUTINY AND THE ASSESSING OFFICER COMPLETED ASSESSMENT U/S 143(3) A FTER MAKING ADDITION ON ACCOUNT OF PROVISIONS FOR BAD DEBTS AGAINST NON- PERFORMING ASSETS(NPA) AT RS.26,01,43,339/-. DURING ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER OBSERVED THAT ASSESSEE BANK HAS DEBITED AN AMOUNT OF RS. 64,76,38,398/- IN THE PROFIT &LOSS ACCOUNT UNDER TH E HEAD OTHER EXPENSES. SCHEDULE 19, WHICH FORMS A PART OF THE TAX AUDIT RE PORT, QUANTIFIES THE NATURE AND SUB-HEADS OF THE EXPENSES AND FROM THIS SCHEDUL E IT WAS NOTED BY AO THAT BAD DEBT OF RS.26,01,43,339/- HAD BEEN DEBITED . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO F URNISH COMPREHENSIVE DETAILS ALONG WITH NATURE OF SUCH PAY MENTS. IN RESPONSE, THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THA T ASSESSEE HAD MADE A PROVISION FOR BAD DEBT AGAINST NPA AND AS BANK IS S CHEDULED BY THE RBI IN SL. NO.250 OF THE LIST OF SCHEDULE BANKS AND THE SA ME IS ADMISSIBLE DEDUCTION U/S 36(1)(VIIA) OF THE ACT. THE ASSESSEE IS IN THE BUSINESS OF BANKING HAVING 47 BRANCHES IN DIFFERENT PLACES. THE ASSESSING OFFICER OBSERVED THAT NO LIST OF NON-PERFORMING ASSETS HAS BEEN FURNISHED BY THE ASSESSEE BANK. THEREFORE, HE DISALLOWED THE AMOUNT OF BAD DEBTS TO THE TUNE OF RS.26,01,43,339/-. 4.AGGRIEVED BY THE ADDITION MADE BY THE ASSESSING O FFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELET ED THE ADDITION MADE BY THE ASSESSING OFFICER. NOT BEING SATISFIED WITH THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR FOR THE REVENUE HAS THE WEST BENGAL STATE CO-OPERATIVE BANK LTD. ITA NO.2204/KOL/2017 ASSESSMENT YEAR: 2012-13 PAGE | PAGE | PAGE | PAGE | 3 33 3 SUBMITTED BEFORE US THAT ON THE FACTS AND CIRCUMSTA NCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE AMOUNT OF DEDU CTION WAS WITHIN THE LIMIT PRESCRIBED U/S 36(1)(VIIA) OF THE ACT AND WITHOUT G IVING AN OPPORTUNITY TO THE ASSESSING OFFICER ON THIS ISSUE. MOREOVER, THE LD. CIT(A) HAS NOT TAKEN ANY REMAND REPORT FROM THE ASSESSING OFFICER AND ACCEPT ED THE FRESH EVIDENCE IN CONTRAVENTION OF THE PROVISIONS OF RULE 46A OF T HE I.T. RULE, 1962. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE HAS SUBMITTED BEFORE US THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSE SSEE BANK HAS SUBMITTED THE XEROX COPY OF GENERAL LEDGER OF PROVI SION FOR BAD DEBTS AGAINST NPA. THE COUNSEL POINTED OUT THAT SINCE TH E ASSESSEE HAS SUBMITTED GENERAL LEDGER OF PROVISION FOR BAD DEBTS AGAINST NPA TO THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS , THEREFORE, IT IS NOT A FRESH EVIDENCE BEFORE THE LD. CIT(A). HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE HAS AGREED THAT ASSESSEE BANK DID NOT SUBM IT THE LIST OF ENTIRE BAD DEBTS AGAINST NPA, THAT IS, THE LIST OF NON-PER FORMING ASSETS WERE NOT FURNISHED BEFORE THE ASSESSING OFFICER ITEM WISE. T HE LD. COUNSEL FOR THE ASSESSEE HAS ALSO AGREED THAT THIS ISSUE MAY BE EXA MINED BY THE ASSESSING OFFICER AFRESH. 6.WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE RIVA L SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE NOTE THAT ASSESSEE HAS FAIRLY AGREED BEFORE THE BENCH THAT THE LIST OF PROVISIONS FOR BAD DEBTS AGAINST NPA, ITEM-WISE WERE NOT FURNISHED BEFORE THE ASSESS ING OFFICER. DURING THE ASSESSMENT PROCEEDINGS, ONLY GENERAL LEDGER ACCOUNT OF PROVISIONS FOR BAD DEBTS AGAINST NPA WAS FURNISHED WHICH DOES NOT CONT AIN ITEM-WISE LIST OF NON-PERFORMING ASSETS. WE NOTE THAT THE LD. CIT(A) OBSERVED THAT ASSESSEE IS A SCHEDULED BANK AND IS ENTITLED FOR DEDUCTION U/S 36(1)(VIIA) OF TH E I. T. ACT, 1961. IT WAS ALSO THE WEST BENGAL STATE CO-OPERATIVE BANK LTD. ITA NO.2204/KOL/2017 ASSESSMENT YEAR: 2012-13 PAGE | PAGE | PAGE | PAGE | 4 44 4 FOUND FROM THE RECORD THAT THE ASSESSEE HAS SUBMITT ED 9 RURAL BRANCHES INCLUDING LAST PUBLISHED CENSUS AND CALCULATIONS SH OWING DEDUCTION AVAILABLE TO THE ASSESSEE U/S 36(1)(VIIA) OF THE AC T AND ASSESSEES CLAIM OF RS.26,01,43,339/-WAS WITHIN THE LIMIT PRESCRIBED U/ S 36(1)(VIIA) OF THE ACT. THEREFORE, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE ON ACCOUNT OF PROVISIONS FOR BAD DEBTS AGAINST NPA AT RS. 26,01,4 3,339/-. WE NOTE THAT LD CIT(A) HAS NEITHER EXAMINED ITEM-WISE LIST OF NPA N OR HE HAS GIVEN AN OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE SAME. THE LD CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BASED ON LEDGER A CCOUNT SUBMITTED BY THE ASSESSEE BANK, WHICH IS NOT SUFFICIENT. THEREFORE, WE ARE OF THE VIEW THAT THIS ISSUE REQUI RES A FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER AND WE NOTE THAT T HE LD. DR FOR THE REVENUE AND LD COUNSEL FOR THE ASSESSEE, BOTH HAVE AGREED THAT THE SAID ISSUE IS TO BE EXAMINED BY THE ASSESSING OFFICER. A CCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF ASSESSING OFFICER TO EXAMINE THE LIST OF NPA ITEM-WISE. WE AL SO DIRECT THE ASSESSEE- BANK TO SUBMIT LIST OF NPA ITEM WISE BEFORE THE ASS ESSING OFFICER TO SUBSTANTIATE THE AMOUNT OF CLAIM. HOWEVER, THE ASSE SSEE REQUESTED THE BENCH THAT THE LIST OF PROVISIONS FOR BAD DEBTS AGA INST NPA IS MORE THAN 1,000 PAGES, THEREFORE, ASSESSEE-BANK MAY BE PERMIT TED TO FILE THE LIST OF PROVISIONS FOR BAD DEBT AGAINST NPA ITEM-WISE IN SO FT COPY FORMAT I.E. IN PEN DRIVE OR CD DRIVE. WE AGREE WITH THE CONTENTION OF THE ASSESSEE THAT DUE TO VOLUMINOUS ACCOUNTS IN THE PROVISIONS FOR BAD DEBTS AGAINST NPA IT IS PREFERABLY TO SUBMIT TO THE ASSESSING OFFICER THE D ETAIL OF THE SAME IN THE FORM OF PEN DRIVE/CD DRIVE, IN SOFT COPY FORMAT. HO WEVER, IF THE AO DESIRES TO EXAMINE ANY SPECIFIC DOCUMENTS AMONG THE SOFT CO PY PROVIDED BY THE ASSESSEE, THEN HE IS AT LIBERTY TO DO SO, IN ACCORD ANCE WITH LAW. WE DIRECT THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE A SSESSEE FOR PROVISIONS OF BAD DEBTS AGAINST NPA AND ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. THE WEST BENGAL STATE CO-OPERATIVE BANK LTD. ITA NO.2204/KOL/2017 ASSESSMENT YEAR: 2012-13 PAGE | PAGE | PAGE | PAGE | 5 55 5 7. WE HAVE GIVEN SIMILAR DIRECTION TO ASSESSING OFF ICER FOR ASSESSMENT YEAR 2011-12 VIDE I.T.A. NO. 1642/KOL/2016 ORDER DATED 2 8.03.2018 8.IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 29.03.201 8. SD/- (A.T. VARKEY) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED 29/03/2018 SB, SR. PS / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER ASSISTANT REGISTRAR I.T.A.T, KOLKATA BENCHES, KOLKATA . . 1. $%& / THE APPELLANT ACIT, CIRCLE-40, KOLKATA 2. '(& / THE RESPONDENT-THE WEST BENGAL STATE CO-OPERATIVE BANK LTD. 3. ) ( $% ) / THE CIT(A), 4. ) / CIT 5. *+,'--./ , $%$./ , / DR, ITAT, KOLKATA 6. ,012 / GUARD FILE. (*%'-