THE FZR CENTRAL CO-OP, BANK LIMITED, FEROZPUR V. ASSIATANT COMMISSIONER OF INCOME TAX, RANGE-III, FEROZPUR

ITA 242/ASR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3325 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 26-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. B. R. BASKARAN, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 242/ASR/2018 A SSESSMENT YEAR: 2012-13 THE FEROZEPUR CENTRAL CO-OP. BANK LTD., FEROZEPUR CITY [PAN: AAALT 0175B] VS. ASSTT. COMMISSIONER OF INCOME TAX, RANGE, (III), FEROZEPUR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P. N. ARORA (ADV .) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 27.08.2019 DATE OF PRONOUNCEMENT: 27.08.2019 ORDER PER B. R. BASKARAN, ACCOUNTANT MEMBER:- THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 05-01-2018 PASSED BY LD CIT(A), BATHINDA AND IT RELATES TO THE ASSESSMENT YEAR 2012-13. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ADDITION OF RS.230.00 LAKHS MADE BY THE AO. 2. THE FACTS RELATING TO THE ABOVE SAID ISSUE A RE STATED IN BRIEF. THE ASSESSEE IS A BANK REGISTERED AS A CO-OPERATIVE SOCIETY. FROM TH E AUDIT REPORT, THE AO NOTICED THAT THE AUDITORS HAVE MADE FOLLOWING OBSERVATIONS: - (E) INTEREST ON BORROWINGS SHOWN IN EXPENDITURE SIDE OF PROFIT AND LOSS ACCOUNT INCLUDES RS.1.80 CRORES OF INTEREST PAID ON BORROWING FROM APEX BANK WHICH RELATES TO FINANCIAL YEAR 2010-11 AND TH E SAME WAS NOT SHOWN AS ITA NO. 242/ASR/2018 (AY 2012-13) THE FEROZEPUR CENTRAL CO-OP BANK LTD. V. ASSTT. CIT 2 EXPENSE IN THE LAST YEARS STATEMENT OF ACCOUNTS. SIMILARLY INTEREST RECEIVED ON INVESTMENT AMOUNTING TO RS.50.00 LAKHS FROM THE APEX BANK WAS SHOWN EXCESS IN LAST YEAR TO THE STATEMENT OF ACCOUNT AND THE SAME HAS BEEN REVERSED IN THIS YEARS PROFIT AND LOSS ACCOUNT. D UE TO THESE TWO ENTRIES RELATING TO THE FINANCIAL YEAR 2010-11, PROFIT OF T HE BANK HAS GONE DOWN BY RS.2.30 CRORES IN THE FINANCIAL YEAR 2011-12. THE AO ASKED THE ASSESSEE TO OFFER ITS EXPLANATIONS TO THE ABOVE SAID AUDIT OBSERVATIONS. THE ASSESSEE SUBMITTED THAT ITS INCO ME FOR FINANCIAL YEAR 2010-11 WAS ASSESSED IN EXCESS BY THE ABOVE SAID AMOUNT OF RS.2.30 CRORES, SINCE THE ABOVE SAID EXPENSES WAS NOT CLAIMED AS DEDUCTION. ACCORD INGLY IT PRAYED THAT THE SAME MAY BE ALLOWED AS DEDUCTION DURING THE YEAR UNDER C ONSIDERATION. SINCE THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTI NG, THE AO DID NOT ACCEPT THE EXPLANATIONS OF THE ASSESSEE AND ACCORDINGLY DISALL OWED THE ABOVE SAID AMOUNT OF RS.2.30 CRORES, APPARENTLY BY HOLDING THAT THE SAME DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. 3. THE LD CIT(A) ALSO CONFIRMED THE ABOVE SAID DIS ALLOWANCE AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. WE HEARD THE PARTIES ON THIS ISSUE AND PERUS ED THE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS COMMI TTED MISTAKES IN THE IMMEDIATELY PRECEDING FINANCIAL YEAR BY NOT ACCOUNTING INTEREST EXPENDITURE OF RS.1.80 CRORES AND ALSO BY ACCOUNTING INTEREST INCOME IN EXCESS BY RS.50.00 LAKHS. THE ASSESSEE HAS CORRECTED THE ABOVE SAID MISTAKES DURING THE YE AR UNDER CONSIDERATION BY DEBITING THE INTEREST EXPENDITURE ACCOUNT TO THE TU NE OF RS.230 LAKHS. HENCE, ADMITTEDLY, THE ABOVE SAID EXPENDITURE OF RS.230 LA KHS DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION, BUT IT IS A PRIOR PERIOD ITEM. SINCE THE ASSESSEE IS FOLLOWING ITA NO. 242/ASR/2018 (AY 2012-13) THE FEROZEPUR CENTRAL CO-OP BANK LTD. V. ASSTT. CIT 3 MERCANTILE SYSTEM OF ACCOUNTING, IN OUR VIEW, THE T AX AUTHORITIES HAVE RIGHTLY DISALLOWED THE ABOVE SAID CLAIM DURING THE YEAR UND ER CONSIDERATION. 5. AT THE TIME OF HEARING, THE LD A.R SUBMITTED THAT THE ABOVE SAID EXPENDITURE OF RS.230 LAKHS MAY KINDLY BE DIRECTED TO BE ALLOWE D IN THE IMMEDIATELY PRECEDING YEAR, I.E., IN AY 2011-12. SINCE THE APPEAL UNDER CONSIDERATION PERTAINS TO THE ASSESSMENT YEAR 2012-13 AND CLAIM OF ASSESSEE PERTA INS TO AY 2011-12, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD MOVE APPROPRIATE PETITION BEFORE THE TAX AUTHORITIES IN THIS REGARD. SINCE THERE IS MERIT I N THE PRAYER OF THE ASSESSEE, IN THE INTEREST OF NATURAL JUSTICE AND ALSO CONSIDERING TH E FACT THAT THE ASSESSEE IS A CO- OPERATIVE BANK, WE SUGGEST THAT THE TAX AUTHORITIES MAY CONSIDER THE PETITION OF THE ASSESSEE IN A LIBERAL MANNER, IF THE ASSESSEE MOVES APPROPRIATE PETITION BEFORE THEM. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN CO URT ON AUGUST 27, 2019 SD/- SD/- (N. K. CHOUDHRY) (B. R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 27.08.2019 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: (2) THE RESPONDENT: (3) THE CIT(APPEALS) (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T TRUE COPY BY ORDER