ACIT, Kota V. Kota Sahakari Bhoomi Vikas Bank, Kota

ITA 259/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5533 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 03-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Notional interest
• Section: 143(3); 37(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO.259/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2009-10 . THE ACIT, CIRCLE-1, KOTA. CUKE VS. M/S. KOTA SAHAKARI BHOOMI VIKAS BANK, PLOT NO. 3, BEHIND INCOME TAX OFFICE, RAWATBHATA ROAD, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAAAK 0720 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI KAILASH MANGAL (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : NONE (ADJ. APPLICATION REJECTED.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11 .01.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 22/01/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OR LD. CIT (A), KOTA DATED 27 TH JANUARY, 2014 FOR THE A.Y. 2009-10. THE REVENUE H AS RAISED THE FOLLOWING GROUNDS :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT (A) HAS ERRED IN :- (1) DELETING THE ADDITION OF RS 97,00,729/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF CLAIM OF BANK DWARA VAHAN RASDHI. (2) DELETING THE ADDITION OF RS 1,23,651/- ON ACCOUNT O F PENALTY INTEREST. 2 ITA NO. 259/JP/2014 A.Y. 2009-10. ACIT VS. KOTA SAHAKARI BHOOMI VIKAS BANK, KOTA. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME ON 30.09.2009 DECLARING TOTAL INCOME AT NIL WHICH WAS PROCESSED U/S 143(1) ON 21.07.2010. THEREAFTER THE CASE WAS SCRUTINIZED UND ER SECTION 143(3) OF THE IT ACT. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED THA T THE ASSESSEE BANK DEBITED RS. 97,00,729/- IN PROFIT & LOSS ACCOUNT AS BANK DWARA VAHAN RAASHI IN RELATION TO LOANS WHICH WAS WAIVED BY THE CENTRAL GOVERNMENT. IN THI S REGARD, THE LD. A/R OF THE ASSESSEE WAS ASKED TO SUBMIT DETAILS OF EXPENDITURE UNDER THE SAID HEAD VIDE ORDER SHEET ENTRY DATED 20.10.2011 AND 31.10.2011. IN COM PLIANCE, THE LD. A/R OF THE ASSESSEE FILED ONLY INCOMPLETE DETAILS WHICH WAS NO T SUFFICIENT TO PROVE GENUINENESS OF THE EXPENDITURE. THE ASSESSEE WAS ALSO ASKED TO FUR NISH THE DETAILS OF BANK DWARA VAHAN RAASHI OF RS. 97,00,729/- WHICH HAS BEEN DEB ITED TO PROFIT & LOSS ACCOUNT. ON GOING THROUGH THE DETAILS SUBMITTED, THE AO VIDE OR DER SHEET ENTRY DATED 14.11.2011 INTIMATED THE LD. A/R THAT THE DETAILS FURNISHED AR E INSUFFICIENT, BECAUSE PENAL INTEREST IS NOTIONAL INTEREST AND RECOVERY CHARGES RE REGULARLY DEBITED BY THE BANK IN PROFIT & LOSS ACCOUNT HENCE DEDUCTION CANNOT BE GIVEN TO BANK AGA IN, THEREFORE, DEDUCTION CLAIMED AS BANK DWARA VAHAN RAASHI IS NOT ALLOWABLE. IN R EPLY, THE LD. A/R OF THE ASSESSEE SUBMITTED AS UNDER :- DJNKRK LALFKK }KJK YKHK GKFU [KKRS ESA ,D EN CSAD }KJK OGU JKF'K DKS GKFU EN ESA DE 41 IJ NF'KZR DJ J[KK GS VKSJ BL EN ESA _.KH D`KDKS LS IZKIR EWY CKT] N.M CKT O OLWY PKTSZT O;; VKFN ESA LS HKKJR 3 ITA NO. 259/JP/2014 A.Y. 2009-10. ACIT VS. KOTA SAHAKARI BHOOMI VIKAS BANK, KOTA. LJDKJ }KJK OKZ 2008&09 ESA ?KKSFKR D`FK _.K EKQH ,OA _.K JKGR ;KSTUK 2008 DS VURXZR CSAD }KJK OGU DH XBZ GKFU DH JKFK D KS N'KKZ;K X;K GSA VKI JHEKU~ }KJK LIVHDJ.K PKGK X;K GS FD N.M C;KT O OLWYH PKTSZT DKS YKHK GKFU [KKRS ESA TC VYX LS UKES FY[KK X;K GS RKS FQJ ;GKWA IJ BL DH NWV VKSJ D;KSA YH XBZ GSA BL FCUNW IJ JHEKU~ LS FUOSNU GS FD YKHK GKFU [KKRS ESA GKFU DH RJQ E 12 IJ NF'KZR DJUS DK RJHDK O LFKKU FOF/K LEE R GKSDJ YS[KK FL}KARKS VKSJ VK;DJ FO/KKU }KJK EKU; GSA BLH IZDKJ E 41 IJ CSAD }KJK OGU JKF'K DH FOLR`R LW FPR ESA TKS N.M C;KT VKSJ OLWYH PKTSZT DS LECU/K ESA [KQYK'KK V XZKUQLKJ FUOSFNR GS ;FKK _.KH D`KDKSA LS IZKIR N.M C;KT VKSJ IZKIR OLW YH PKTSZT DS :I ESA GQBZ VKEN FTLS YKHK GKFU [KKRS ESA VK; I{K ESA E'K% E 2 VKSJ E 11 IJ FN[KK;K X;K GS FQJ HKKJR LJDKJ }KJK ?KKSFKR MIJKSD R _.K EKQH VKSJ _.K JKGR ;KSTUK DS VURXZR GQBZ GKFU DK DQN VA'K DJNKRK LALFKK DKS HKH OGU DJUK FKK VR% _.KH D`KDKSA LS IZKIR C;KT] N.M C;KT OLWYH PKTSZT VKFN FTUGSA LALFKK US VIUH VK; ESA FN[KK;K GQVK GSA ESA FTL FTL D`KD DKS FTRUH FTRUH JKF'K C;KT NAM C;KT O OLWYH PKTSZT ESA DEH GKSDJ GKFU DS :I ESA FTRUK VA'K CSAD }KJK OGU FD;K X;K OKS MLH IZ DKJ LS C;KT NAM 4 ITA NO. 259/JP/2014 A.Y. 2009-10. ACIT VS. KOTA SAHAKARI BHOOMI VIKAS BANK, KOTA. C;KT O OLWYH PKTSZT DKS SUB HEAD WISE LWFPR CUKDJ FN[KK;K X;K VKSJ CSAD }KJK OGUH; BUGH LC JKF'K;KSA DK ;KSX BL O KZ :I;S 9700927@& E 41 IJ FN[KK;K X;K GSA BL IZDKJ LALFKK }KJK FN[KK BZ XBZ VK; ESA LS NWVS ;KSTUKURXZR GQBZ VK; DH DEH DKS D;KSAFD IWJH VK; FN[KK NH XBZ FKH CSAD }KJK OGU VA'K FTRUK GKFU DS I{K ESA E 41 IJ F N[KK;K X;K TKS FD FDLH HKH O;; DH LALFKK }KJK NKSGJH NWV UGHA GSA THE AO AGAIN VIDE ORDER SHEET ENTRY DATED 15.11.201 1 AND 17.11.2011 ASKED THE ASSESSEE TO SUBMIT COMPLETE DETAILS IN RESPECT OF BANK DWARA VAHAN RAASHI. ON THIS, THE LD. A/R ON 22.11.2011 SUBMITTED AS UNDER :- DJNKRK }KJK IZLRQR FD;K X;K LIVHDJ.K FUEU IZDKJ G S%& DJNKRK LALFKK DKS LUNFHKZR OKZ ESA HKKJR LJDKJ }KJK ?KKSFKR _.K EKQH@_.K JKGR ;KSTUK 2008 DH IKYUK ESA VXZKUQLKJ JKF'K IZFOBH YSAA LALFKK }KJK DQY NWV NH XBZ 133800129@& HKKJR LJDKJ }KJK LALFKK DKS IZKIR 124099400@& LALFKK }KJK OGU GQBZ JKF'K 9700729@& BL IZDKJ DSUNZ LJDKJ }KJK ?KKSFKR ;KSTUK DH IKYUK ESA DJNKRK LALFKK DKS MLDS _.KH D`KD LNL;KSA LS IZKIR _.K C; KT LFGR ESA LS NWV 5 ITA NO. 259/JP/2014 A.Y. 2009-10. ACIT VS. KOTA SAHAKARI BHOOMI VIKAS BANK, KOTA. NSUS DS DKJ.K 133800129@& DH GKFU GKSRH MLESA LS :I ;S 9700729@& GKSDJ BLS YKHK GKFU [KKRS DH GKFU EN ESA E 41 IJ F N[KK;K X;K GSA THE AO CONSIDERED THE SUBMISSIONS BUT THE SAME WAS NOT FOUND ACCEPTABLE BY HIM BY OBSERVING AS UNDER :- AR OF THE ASSESSEE SAID THAT BANK HAS ALREADY SHO WN PENAL INTEREST AND RECOVERY CHARGES AS INCOME. HOWEVER, BANK HAS NOT S UBMITTED ANY EVIDENCE WHICH CAN PROVE THAT PENAL INTEREST OR REC OVERY CHARGES RELATED TO WAIVED OFF LOAN HAS BEEN CHARGED AS INCOME IN PR EVIOUS YEARS, FURTHER BANK HAS NOT PRODUCED ANY EVIDENCE WHICH CAN JUSTIF Y DEDUCTIONS. IN WAIVER SCHEME, CENTRAL GOVERNMENT WAIVED OFF LOA N AND INTEREST ON THE LOAN, HOWEVER, PENAL INTEREST AND OTHER CHAR GES WAS NOT WAIVERED BY GOVERNMENT. AS PER BANK AUTHORITIES THESE EXPENS ES TO BE BEAR BY THE BANK, HOWEVER, IT IS NOTICED THAT PENALTY INTEREST WAS NOT TREATED BY ASSESSEE, AS INCOME IN EARLIER YEARS AND IT IS NOTI ONAL INTEREST UNTIL IT IS DEBITED IN PROFIT AND LOSS ACCOUNT HENCE DEDUCTION CANNOT BE GIVEN TO ASSESSEE. FURTHER ASSESSEE DEBITED RECOVERY CHARGES UNDER THI S HEAD. HOWEVER IT IS NOTICED THAT IN PROFIT AND LOSS ACCOU NT ASSESSEE REGULARLY DEBITED THESE RECOVERY CHARGES AS EXPENDITURE AND A SSESSEE BANK FLUNK TO PRODUCE ANY EVIDENCE THAT EXPENSES RELATED TO WAIVE D LOAN HAS NOT BEEN DEBITED IN PROFIT AND LOSS ACCOUNT, THEREFORE, ANY EXPENSES WHICH HAS ALREADY BEEN CLAIMED BY THE BANK CANNOT BE ALLOWED AGAIN AS EXPENDITURE. IN REGARD TO ABOVE DISCUSSED, REGARDING ABOVE EXPEN SE ASSESSEE HAS REPEATEDLY BEEN ASKED TO SUBMIT DETAILS AND JUS TIFICATION WITH 6 ITA NO. 259/JP/2014 A.Y. 2009-10. ACIT VS. KOTA SAHAKARI BHOOMI VIKAS BANK, KOTA. SUPPORTING EVIDENCES, HOWEVER, ASSESSEE HAS NOT SUB MITTED EVEN COMPLETE AUDIT REPORT. IN VIEW OF ABOVE RS. 97,00,7 29/- ADDED TO TOTAL INCOME OF THE ASSESSEE. 2.1. IN RESPECT OF GROUND NO. 2 REGARDING CLAIM OF DEDUCTION OF RS 1,23,651/- ON ACCOUNT OF PENALTY INTEREST, THE AO HELD THE DEDUCT ION IS NOT ALLOWABLE IN VIEW OF THE EXPLANATION BELOW SECTION 37(1) OF THE IT ACT, 1961 . THE AO, THEREFORE, ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A) WHO DELETED THE ADDITION IN RESPECT OF BOTH THE ADDITIONS BY OBSERVING AS UNDER :- I HAVE GONE THROUGH ASSESSING OFFICER FINDINGS AN D ASSESSEES SUBMISSIONS. THE ASSESSEE MAINTAINS ITS BOOKS OF ACCOUNTS ON DOU BLE ENTRY SYSTEM AND IT IS NOT POSSIBLE TO DR. (DEBIT) ONE ACCOUNT (I.E. BANK DWARA VAHAN RASHI) WITHOUT CREDITING OTHER ACCOUNT. THE ASSESSING OFFICER WITHOUT BRINGING ANYTHING ON RECORD CONCLUDED THAT PENALTY INTEREST WAS NOT TREATED AS INCOME. SIMILARLY IF RECOVERY CHARGES WERE ALREADY DEBITED THAN THE SAME CANNT BE DEBITED AGAIN WITHOUT IM-BALANCING THE ACCOUNTS. TH E ASSESSING OFFICER AGAIN DID NOT BRING ANYTHING ON RECORD TO JUSTIFY T HE FINDING. THE ASSESSING OFFICER IS, THEREFORE, DIRECTED TO DE LETE ADDITION OF RS. 97,00,729/-. 7 ITA NO. 259/JP/2014 A.Y. 2009-10. ACIT VS. KOTA SAHAKARI BHOOMI VIKAS BANK, KOTA. 3.1. IN RESPECT OF GROUND NO. 2 REGARDING PENAL INT EREST OF RS. 1,23,651/-, THE LD. CIT (A) DELETED THE ADDITION BY OBSERVING AS UNDER :- AS REGARDING THE PENAL INTEREST OF RS. 1,23,651/ - THE ASSESSING OFFICER HAS NOTED THAT THIS IS NOT ALLOWABLE IN VIEW OF EXP LANATION TO SECTION 37(1) OF THE I.T. ACT. HOWEVER, IT HAS BEEN EXPLAINED BY THE APPELLANT THAT THE APEX BANK I.E. RAJASTHAN RAJYA BHOOMI VIKAS LTD. PR OVIDES LOAN TO THE ASSESSEE. IF THERE IS ANY OVER DUE LOAN REMAINING U NPAID TO THE APEX BANK THEN IT ATTRACTS THE PENAL INTEREST THE PAYMENT OF SUCH INTEREST IS NOT A OFFENCE OR PROHIBITED BY LAW. THE AMOUNT IS PAID AS PER THE RULES AND GUIDELINES OF RAJASTHAN RAJYA BHOMI VIKAS LTD. AND IT IS OF COMPENSATORY IN NATURE. THE ASSESSEES CONTENTIONS ARE ACCEPTABL E AS THE PENAL INTEREST HAS BEEN PAID FOR DELAY IN MAKING THE REPAYMENT OF THE LOANS AS PER THE RULES AND REGULATIONS OF THE BANK AND FACT OF LIABI LITY OF PENAL INTEREST OF RS. 1,23,651/- HAS NOT BEEN DISPUTED BY THE ASSESSI NG OFFICER. IT IS NOT THE PAYMENT FOR A PURPOSE WHICH IS PROHIBITED BY LA W. THE SAID PAYMENT IS NOT FOR CONTRAVENTION OF ANY STATUTORY PROVISION S AND IS MERELY COMPENSATORY IN NATURE. SO, THE ADDITION MADE AO ON ABOVE ACCOUNT IS DELETED. 4. NOW THE ASSESSEE IS BEFORE US. 4.1. THE LD. D/R FOR THE REVENUE SUPPORTED THE ORDE R OF THE AO AND REQUESTED THAT THE ORDER LD. CIT (A) MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 4.2. ON THE OTHER HAND, THE LD. A/R VEHEMENTLY SUPP ORTED THE ORDER OF THE LD. CIT (A) AND PRAYED THAT THE ORDER OF LD. CIT (A) MAY BE CON FIRMED. 8 ITA NO. 259/JP/2014 A.Y. 2009-10. ACIT VS. KOTA SAHAKARI BHOOMI VIKAS BANK, KOTA. 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL ON RECORD. WE FIND THAT THE REASONING GIVEN BY THE AO AND LD. CIT (A) IS IN ACCORDANCE WITH LAW AND THERE IS NO ERROR WHATSOEVER. WE, THEREFORE, UPHELD THE R EASONING GIVEN BY THE AUTHORITIES BELOW. 4.4. WE FAIL TO APPRECIATE THAT HOW THE BOOKS OF AC COUNT CAN BE MAINTAINED IN THE ABSENCE OF DOUBLE ENTRY SYSTEM. IT IS NOT POSSIBLE TO DEBIT THE ACCOUNT UNLESS SOME CREDIT ENTRY IS MADE IN THE ACCOUNT. THE REASONING GIVEN BY THE LD. CIT (A) IS CORRECT AND, THEREFORE, WE HEREBY DISMISS THE APPEAL OF THE REVENUE ON THIS GROUND (GROUND NO.1). 4.5. IN RESPECT OF GROUND NO. 2 REGARDING PENAL INT EREST OF RS. 1,23,651/-, WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT (A), THEREFORE, T HE SAME IS UPHELD. THUS GROUND NO. 2 OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 22/01/2 016. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 22/01/2016 DAS/ 9 ITA NO. 259/JP/2014 A.Y. 2009-10. ACIT VS. KOTA SAHAKARI BHOOMI VIKAS BANK, KOTA. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE-1, KOTA. 2. IZR;FKHZ@ THE RESPONDENT- M/S. KOTA SAHAKARI BHOOMI VIKAS BAN K, KOTA. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 259/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 10 ITA NO. 259/JP/2014 A.Y. 2009-10. ACIT VS. KOTA SAHAKARI BHOOMI VIKAS BANK, KOTA.