DCIT, Rishikesh V. Zila Sahakari Bank Ltd., Uttrakhand

ITA 2906/DEL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5493 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 23-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR RAKESH GUPTA
• Assessee Lawyers: N C UPADHYAYA
• Keywords: Principle of natural justice; Wrong claim; Revised return; TDS; Set aside
• Section: 40(a)(ia); 194C; 194A; 22

Judgement Text

1 ITA NOS. 3220 & 2906/DEL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN CIRCUIT BENCH: DEHRADUN BEFORE SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIA L MEMBER ITA NO. 3220/DDN/ 2016 ( A.Y 2011-12) (THROUGH VIDEO C ONFERENCING) ZILA SAHAKARI BANK LTD. C/O M/S RRA TAX INDIA, D-28, SOUTH EXTENSION, PART-1 NEW DELHI AAAAZ0137G (APPELLANT) VS ITO KOTDWAR (RESPONDENT) ITA NO. 2906/DEL/20 16 ( A.Y 2011-12) DCIT CIRCLE-1(4) (1), AAYAKR KARYALAYA, CISF BUILDING, IDPL GATE NO. 2, VEERBHADRA RISHIKESH (APPELLANT) VS ZILA SAHAKARI BANK LTD. C/O M/S RRA TAX INDIA, D-28, SOUTH EXTENSION, PART-1 NEW DELHI AAAAZ0137G (RESPONDENT) APPELLANT BY DR. RAKESH GUPTA, ADV & SH. DEEPESH GARG, ADV RESPONDENT BY SH. N. C. UPADHYAYA, CIT DR ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER DATED18/3/2016 PASSED BY CIT(A)-DEHRADUN FOR ASSESSMENT YEAR 2011- 12. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ITA NO. 3220/DDN/2016 ( A.Y 2011-12) DATE OF HEARING 26.08.2021 DATE OF PRONOUNCEMENT 22.09.2021 2 ITA NOS. 3220 & 2906/DEL/2016 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADD ITION TO THE EXTENT OF RS.33,50,000/- U/S 40(A)(IA) OUT OF TOTAL ADDITION OF RS. 85,90,674/- ON ESTIMATE BASIS WITHOUT OBSERVING THE FACTS AND PRIN CIPLES OF NATURAL JUSTICE. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.33,50,0 00/- OUT OF TOTAL ADDITION, BEING THE AMOUNT OF INTEREST ACTUALLY PAID BY THE B ANK TO THEIR CUSTOMERS ON THEIR DEPOSITS, IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO. 2906/DEL/2016 ( A.Y 2011-12) 1. THE LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING AMOUNT OF RS.52,40,674/- OUT OF DISALLOWANCE OF RS.85,90,674/ - MADE ON ACCOUNT OF INTEREST EXPENSES CLAIMED IN VIOLATION OF SECTION 4 0(A)(IA) WITHOUT APPRECIATING THE FACTS THAT DISALLOWANCE WAS MADE IN VIOLATION O F EXPRESSED PROVISIONS WHERE PERCENTAGE CANNOT BE APPLIED . 2. THE LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 17,66,068/- HOLDING THAT THE AD DITION HAS BEEN MADE WITHOUT ARRIVING AT THE SATISFACTION THAT THE PAYME NT HAD BEEN MADE IN VIOLATION OF SECTION 194C WITHOUT APPRECIATING THE FACTS THAT THE ASSESSEE HAS FAILED TO PROVE ITS CLAIM THAT THE PAYMENTS WERE OU T OF SCOPE OF SEC. 194C. 3. THE LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE MADE BY THE A.O. U/S 36(L)(VIIA) ON A CCOUNT OF FACTS THAT WRONG CLAIM WAS MADE IN THE ORIGINAL RETURN AND REVISED R ETURN FILED AFTER RECEIPT OF NOTICE U/S 143(2). 4. THE LD. CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF EXPENDI TURE ON ACCOUNT OF PROVISION FOR NON BANKING ASSETS WHICH IS REIMBURSA BLE BY THE GOVERNMENT IN FUTURE WITHOUT APPRECIATING THE FACT THAT SUCH REIM BURSEMENT IS NOT TAKEN AS 3 ITA NOS. 3220 & 2906/DEL/2016 INCOME IN THE YEAR OF ITS RECEIPT. 3. THE ASSESSEE IS A COOPERATIVE BANK AND DEALS IN BANKING IN THE NAME AND STYLE OF M/S ZILA SAHKARI BANK LTD. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAS PAID/ACCRUED/TREATED INTEREST ON THE FIXED/TERM DEP OSITS OF THE PUBLIC DEPOSITORS. THE ASSESSEE WAS ASKED TO PRODUCE THE DETAILS OF INTEREST PAID/ACCRUED/CREATED AMOUNTING TO RS. 10,000/- OR M ORE TO A SINGLE PERSON BY ALL BRANCHES. THE ASSESSEE WAS FURTHER ASKED AS TO WHETHER ANY TDS U/S 194A OF THE INCOME TAX ACT WAS DEDUCTED FROM SUCH P AYMENT. THE ASSESSEE FILED DETAILS OF DEPOSITORS FROM WHOM FORM 15G/15H WERE RECEIVED. THE ASSESSING OFFICER DISALLOWED RS. 17,67,068/- U/S 40 (A)(IA) OF THE ACT. THE ASSESSING OFFICER FURTHER MADE ADDITION OF RS. 5,3 3,53,105/- IN RESPECT OF DEDUCTION U/S 36(I)(VIIA) AS WELL AS MADE ADDITION OF RS. 1,17,20,000/- TOWARDS DISALLOWANCE FROM THE AMOUNT ON ACCOUNT OF NON-BANK ING ASSET PROVISIONS. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF TH E ASSESSEE. 5. AS REGARDS TO REVENUES APPEAL, THE LD. DR SUBMI TTED THAT GROUND NO. 1 RELATES TO DELETION OF AMOUNT OF RS. 52,40,674/- OU T OF DISALLOWANCE OF RS. 85,90,674/- MADE ON ACCOUNT OF INTEREST EXPENSES CL AIMED IN VIOLATION OF SECTION 40(A)(IA) WITHOUT APPRECIATING THE FACT THA T DISALLOWANCE WAS MADE IN VIOLATION OF EXPRESS PROVISIONS WERE PERCENTAGE CAN NOT BE APPLIED. AS RELATES TO GROUND NO. 2, THE LD. DR SUBMITTED THAT THE SAID DI SALLOWANCE OF RS. 17,67,068/- WAS DELETED INCORRECTLY BY THE CIT(A) T HEREBY HOLDING THAT THE ADDITION WAS MADE, WITHOUT ARRIVING AT THE SATISFAC TION THAT THE PAYMENT HAD BEEN MADE IN VIOLATION OF SECTION 194C WITHOUT APPR ECIATING THE FACT THAT THE ASSESSEE FAIL TO PROVE ITS CLAIM THAT THE PAYMENTS WERE OUT OF SCOPE OF SECTION 194C. AS REGARDS TO GROUND NO. 3, RELATING TO DELE TION OF DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 36(1) (A) ON ACCOUNT OF FACTS, THE LD. DR 4 ITA NOS. 3220 & 2906/DEL/2016 SUBMITTED THAT THE ASSESSEE MADE WRONG CLAIM IN THE ORIGINAL RETURN AS WELL AS REVISED RETURN WERE FILED AFTER THE RECEIPT OF NOTI CE U/S 143 (2). AS REGARDS TO GROUND NO. 4, THE LD. DR FURTHER SUBMITTED THAT THE CIT(A) ERRED IN LAW IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWAN CE OF EXPENDITURE ON ACCOUNT OF PROVISION FOR NON-BANKING ASSET WHICH IS REIMBURSABLE BY THE GOVERNMENT OF INDIA WITHOUT APPRECIATING THE FACT T HAT SUCH REIMBURSEMENT IS NOT TAKEN AS INCOME IN THE YEAR OF ITS RECEIPT. AS REGARDS THE ASSESSEES APPEAL, THE LD. DR SUBMITTED THAT GROUND NO. 1 OF REVENUES APPEAL IS CONTESTED WHICH IS SIMILAR TO ASSESSEES APPEAL. 6. THE LD. AR AS RELATES TO GROUND NO. 1 OF REVENUE S APPEAL AND GROUND NO. 1 TO 2 OF ASSESSES APPEAL SUBMITTED THAT THE A SSESSEE IS A ZILA SAHKARI WHICH HAS ACCOUNT HOLDERS WHO ARE PLACED IN REMOTE AREAS. THERE ARE ONLY FOUR TO FIVE PERSONS WHOSE PAN CARD DETAILS WERE NOT FUR NISHED. BUT INSTEAD OF TAKING COGNIZANCE OF THE SAID FACT, THE ASSESSING O FFICER AS WELL AS THE CIT(A) HAS TAKEN A NON-SCIENTIFIC METHOD OF ESTIMATED DISA LLOWANCE WHICH IS NOT PERMISSIBLE UNDER LAW. AS REGARDS GROUND NO. 2 TO 4 OF THE REVENUES APPEAL, THE LD. AR RELIED UPON THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE CIT (A) AS WELL AS THE ASSESSING OFFICER HAS CATEGORICALLY OBSERVED THAT ONLY SIX PERSONS WH OSE PAN CARD DETAILS WERE NOT FURNISHED BY THE ASSESSEE. THE DETAILS OF ALL T HE OTHER PERSONS ALONG WITH THEIR FORM 15-H/15-G AND COPIES OF PAN WERE PRODUCE D BEFORE THE ASSESSING OFFICER BY THE ASSESSEE. AT THE TIME OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS SCRUTINIZED EACH AND EVERY FORM AND DIS CUSSED WITH THE DGM OF THE BANKS WHO WAS PRESENTED AT THE TIME OF HEARING. AS PER THE ANNEXURE A, ATTACHED TO THE ASSESSMENT ORDER EXCEPT SIX PERSONS , THE RESET OF THE PERSONS PAN CARD DETAILS WERE GIVEN TO THE BRANCHES WITH TH E FORMS. IN FACT, THE TDS WAS MADE BY EACH BRANCH AND FILED QUARTERLY RETURNS IN FORMS 26Q, THIS FACT WAS NOT DISPUTED BY THE REVENUE. THUS, THE ESTIMATI ON OF THE ADDITIONS BY THE 5 ITA NOS. 3220 & 2906/DEL/2016 ASSESSING OFFICER IS NOT CORRECT. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND REMAND BACK THIS ISSUE TO THE FILE OF THE ASSES SING OFFICER AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSE E FOR THE PERSONS WHOSE DETAILS ARE FILED BY THE ASSESSEE. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF N ATURAL JUSTICE. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURP OSE. 8. AS REGARDS TO GROUND NO. 1 OF THE REVENUES APPE AL IS CONCERN THE SAME IS IN CONNECTION WITH GROUND NO. 1 AND 2 OF THE ASS ESSEES APPEAL, HENCE THE SAME FINDINGS WILL FOLLOW IN THE REVENUES APPEAL F OR GROUND NO. 1. 9. AS REGARDS TO GROUND NO. 2 OF THE REVENUES APPE AL, THE CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE HEAD-WISE EXPENSES W ERE GIVEN BY THE ASSESSEE BUT THE ASSESSING OFFICER HAS NOT CONSIDERED THE SA ME AND MADE THE ADDITIONS WITHOUT ANY REASON. THE ASSESSEE HAS GIVEN ALL THE DETAILS OF ADVERTISEMENT EXPENSES, GENERATOR EXPENSES, TAXI EXPENSES, COMPUT ER OFFLINE EXPENSES AND LAW CHARGES EXPENSES. THE ASSESSING OFFICER TOTALLY IGNORED THE DETAILS PROVIDED BY THE ASSESSEE. THEREFORE, THERE IS NO NEED TO INT ERFERE WITH THE FINDINGS OF THE CIT(A). HENCE, GROUND NO. 2 OF THE REVENUES APPEAL IS DISMISSED. 10. AS REGARDS TO GROUND NO. 3 OF THE REVENUES APP EAL, THE CIT(A) HAS GIVEN A FINDING THAT WHILE THE ADDITION MADE TO THE RETUR NED INCOME AS PER THE RETURN FILED ON 30.09.2011, WOULD NOT MATERIALLY AFFECT TH E DETERMINATION OF INCOME EXCEPT TO THE EXTENT OF RS. 20,00,000/- WHICH HAS B EEN CLAIMED FOR DEDUCTION U/S 36(1)(VIIA) IN THE REVISED RETURN DATED 30.03.2 013, THE RIGHT OF THE ASSESSEE TO FILE THE REVISED RETURN CANNOT BE ABRIDGED ON TH E GROUNDS THAT ADDITION HAD BEEN MADE PRIOR TO THAT DATE IN THE PREVIOUS ASSESS MENT YEAR. THUS, THE CIT(A) HAS GIVEN A RELIEF TO THE ASSESSEE TO THE EXTENT OF RS. 20,00,000/- ONLY AND BALANCE ADDITION OF RS. 5,13,53,105 WAS CONFIRMED. THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE, G ROUND NO. 3 OF THE REVENUES APPEAL IS DISMISSED. 6 ITA NOS. 3220 & 2906/DEL/2016 11. AS REGARDS TO GROUND NO. 4 OF THE REVENUES APP EAL, THE CIT(A) HAS GIVEN A FINDING THAT THE AMOUNT PAID TO THE PACS SECRETAR IES BY THE BANK DURING THE YEAR WAS RS. 1,87,69,168/- AND THE AMOUNT RECEIVED AS REIMBURSEMENT FROM THE GOVERNMENT WAS RS. 81,10,546/-. THUS, THE SALAR Y PAID BY THE BANK TO THE PACS SECRETARIES FROM ITS OWN ACCOUNT WAS RS. 1,06, 58,619/- FOR WHICH THE PROVISION OF RS. 1,10,00,000/- WAS MADE BY THE ASSE SSEE AND THE SAME IS REFLECTED IN THE BALANCE SHEET. THUS, THE CIT(A) HA S SUSTAINED THE ADDITION TO THE EXTENT OF RS. 3,41,381/-. THERE IS NO NEED TO I NTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE, GROUND NO. 4 OF THE REVENUES AP PEAL IS DISMISSED. 12. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF SEPTEMBER, 2021. SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 22/09/2021 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI