IDBI BANK LTD, MUMBAI V. ACIT, LTU., MUMBAI

ITA 2877/MUM/2022

AI Insights

M/s. IDBI Bank Ltd. appealed against the order of the National Faceless Appeal Centre (NFAC) which confirmed the addition of a substantial amount to the bank's income for the assessment year 2016-17. The addition was based on the interest income from non-performing assets (NPA) which the bank argued was incorrectly computed. The bank sought rectification under section 154 of the Income Tax Act, claiming that the correct amount of interest income was significantly lower than what was added by the assessing officer. The CIT(A) dismissed the bank's appeal, leading to the current appeal before the Tribunal. The Tribunal found that the CIT(A) had not adequately examined the additional information provided by the bank, which justified a rectification of the mistake.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301155 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-01-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 10-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 154; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “C”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.2877/M/2022 Assessment Year: 2016-17 M/s. IDBI Bank Ltd., 22 nd Floor, IDBI Tower, WTC Complex, Cuffee Parade, Mumbai – 400 005 PAN: AABC18842G Vs. ACIT/DCIT-LTU, 29 th Floor, Centre No.1, World Trade Centre, Cuffe Parade, Mumbai – 400 005 (Appellant) (Respondent) Present for: Assessee by : Shri C. Naresh, C.A. Revenue by : Shri K.C. Salvamani, CIT D.R. Date of Hearing : 16 . 01 . 2023 Date of Pronouncement : 20 . 01 . 2023 O R D E R Per : Kuldip Singh, Judicial Member: The appellant, M/s. IDBI Bank Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 16.09.2022 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2016-17 on the grounds inter-alia that :- “1. On the facts and in the circumstances of the case and in law, the Ld. CTTCA), NFAC has erred in not granting opportunity to the Appellant Bank to present the case through video conferencing as specified under faceless appeal scheme. 2020 provided us. 250(6B) of the Income Tax Act. 1961 ("the Act"). ITA No.2877/M/2022 M/s. IDBI Bank Ltd. 2 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) NFAC erred in holding that an apparent mistake in computing the amount of interest in respect of accounts which were overdue for the period of more than 90 but less than 180 days is not a mistake apparent from records u/s 154 of the Act 3. On the facts and in the circumstances of the case and in law, the CIT(A) NEAC erred in relying on various decisions which are not applicable to the facts of the appellants case Your appellant craves leave to add, to amend and or vary the grounds of appeal before or during the time of hearing.” 2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : assessee being a bank is governed by the prudential norms on income recognition as laid down by Reserve Bank of India (RBI). During the assessment proceedings it was noticed that the interest income pertaining to the non performing asset (NPA) comprising of NPA of advances, leases and investment and overdue interest on investment and bills discounted are not recognised on actuarial basis. The assessee was called upon to furnish the detail of such interest and explanation. The assessee brought on record the fact that difference in the income to be excluded as per rule 6EA and as per RBI guidelines comes to Rs.8,67,32,51,773/- which amount was added to the total income of the assessee in the assessment order. 3. The assessee by filing application sought rectification that amount of interest income on NPA income to the extent of Rs.8,67,32,51,773/- which was added to the total income of the assessee in respect of such amount where the period of irregularity has exceeded 90 days but not exceeded 180 days. The assessee sought to rectify certain error while submitting the working of the interest income on NPA and correct amount of impugned interest comes to Rs.78,68,92,574/- instead of Rs.8,67,32,51,773/-. The Assessing Officer (AO) ultimately reached the conclusion that ITA No.2877/M/2022 M/s. IDBI Bank Ltd. 3 addition was made on this issue on the basis of details/data provided by the assessee, however the assessee failed to furnish any quantitative details about the working of accrued interest in accounts categorised as NPA where the period of irregularity exceeds 90 days but less than 180 days as per rule 6EA of IT rules. When the assessee has himself given the amount of Rs.8,67,32,51,773/- the same is not a mistake apparent on record and thereby dismissed the rectification application. 4. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal. 5. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 6. Undisputedly in case of NPA account rule prescribed for irregularity at 180 days. While maintaining the books of accounts the assessee followed RBI guidelines but at the same time it is a fact on record that when the assessee furnished additional information mistake crept in which is otherwise liable to be rectified under section 154 of the Act. 7. Before the Ld. CIT(A) the assessee has furnished the list of accounts for arriving at the figure of 78.69 crore as also the ITA No.2877/M/2022 M/s. IDBI Bank Ltd. 4 statement of account for sample account, the assessee also brought on record certificate from the CA explaining the reason for the difference. 8. When all these facts are examined in the light of the settled principle of law that only real income and not notional income can be taxed, mistake crept in as to charging the amount of Rs.867.32 crore to tax as against the correct amount of Rs.789.67 crores the rectification petition filed by the assessee was liable to be allowed. All these facts go to prove that when the assessee has brought on record additional information which go to prove that mistake apparent on record has crept in but all these documents have not been examined by the Ld. CITA(A) who has rather passed the order mechanically by dismissing the appeal. 9. In these circumstances we are of the considered view that to impart justice and to decide the issue once for all, the issue is required to be re-visited by the Ld. CIT(A) by examining the submissions made by the assessee in para 8 and 9 of the assessee's submissions extracted at page 4 of the impugned order passed by the Ld. CIT(A). Consequently, the case is remitted back to the Ld. CIT(A) to decide afresh after providing opportunity of being heard to the assessee. 10. Resultantly, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 20.01.2023. Sd/- Sd/- (S. RIFAUR RAHMAN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 20.01.2023. * Kishore, Sr. P.S. ITA No.2877/M/2022 M/s. IDBI Bank Ltd. 5 Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.