The Anand People's Co.Op.Bank Ltd., Anand V. The Income Tax Officer, Ward- 1, Anand

ITA 3199/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6289 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 09-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANTONY PARIATH
• Assessee Lawyers: URVASHI SHODAH
• Keywords: Business income; Tangible material
• Section: 143(3); 80P; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NOS. 3199 TO 3202/AHD/2015 (ASSESSMENT YEARS: 2006-07, 2007-08, 2008-09 & 2011-12) THE ANAND PEOPLES CO OP BANK LTD., PEOPLES PALACE, SARDARGANJ ROAD, ANAND 388 001 APPELLANT VS. ITO, WARD - 1, ANAND RESPONDENT PAN: AAAAT2812Q /BY ASSESSEE : SMT. URVASHI SHODAH, A.R. /BY REVENUE : SHRI ANTONY PARIATH, SR. D.R. /DATE OF HEARING : 17.01.2018 /DATE OF PRONOUNCEMENT : 23.01.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE FOUR ASSESSEES APPEALS FOR ASSESSMENT YEARS 2006-07 TO 2008-09 & 2011-12 ARISE AGAINST THE CIT(A)-4, VADODARAS SEPA RATE ORDERS; ALL DATED 04.06.2015 IN CASE NO. CAB/4-291/2014-15, CAB/4-292 /2014-15, CAB/4- 286/2014-15 & CAB/4-287/2014-15, AFFIRMING ASSESSIN G OFFICERS IDENTICAL ACTION INTER ALIA UPHOLDING VALIDITY OF REOPENING IN FORME R THREE AS WELL AS TREATING INTEREST INCOME FROM BANK DEPOSITS AND ADVANCES AMOUNTING TO RS.12,92,211/-, RS.27,02,950/-, RS.34,52,628/- AND RS.42,91,387/-; RESPECTIVELY AS INCOME FROM OTHER SOURCES THAN BUSINESS INCOME , IN PROCEEDI NGS U/S. 143(3) R.W.S. 147 AND U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT IN THE LAST ASSESSMENT YEAR. ITA NOS. 3199 TO 3202/AHD/15 [THE ANAND PEOPLES CO OP BANK LTD. VS. ITO] A.YS. 2006-07 TO 2008-09 & 2011-12 - 2 - 2. WE NOTICE AT THE OUTSET THAT THESE FOUR APPEALS SUFFER FROM IDENTICAL DELAY OF 20DAYS IN FILING. LEARNED COUNSEL FILES PERSONAL D ECLARATION THAT THE SAID DELAY IS ATTRIBUTABLE TO THE FACT THAT HER OFFICE HAD COMMIT TED A MISTAKE IN NOTING DATE OF RECEIPT APPELLATE ORDERS UNDER CHALLENGE. THE REVE NUE IS FAIR ENOUGH IN NOT CONTESTING THE CORRECTNESS OF SAID AVERMENTS. WE TH EREFORE CONDONE THE IMPUGNED DELAY OF 20 DAYS IN FILING OF THESE FOUR APPEALS AS SAME IS NEITHER INTENTIONAL NOR DELIBERATE. ALL FOUR CASES ARE THEREFORE TAKEN UP FOR HEARING HEREUNDER. 3. WE ADVERT TO THE FORMER ISSUE OF VALIDITY OF REO PENING IN FIRST THREE ASSESSMENT YEARS. THE ASSESSEE INTER ALIA PLEADS T HAT SECTION 148 NOTICES STOOD ISSUED ON 19.02.2013, 27.02.2013 AND 08.11.2012. I TS CASE THEREFORE IS THAT THE SAME ARE BEYOND A PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR WITHOUT THERE BEING ANY FAILURE ON ITS PART IN DISC LOSING ALL TRUE FACTS PERTAINING TO SECTION 80P DEDUCTION IN QUESTION. THE ASSESSEE FU RTHER SUBMITS THAT THERE HAS NOT BEEN ANY TANGIBLE MATERIAL IN SUPPORT OF THE IDENTI CAL IMPUGNED REOPENING REASONS. WE FIND NO MERIT IN THE INSTANT LEGAL PLEA. IT EME RGES THAT THE ASSESSING OFFICERS SOLE IDENTICAL REASON RECORDED FOR INITIATING SECTI ON 148 PROCEEDINGS IS THAT THE ASSESSEES BANKING LICENSE STOOD CANCELLED BY THE M ARKET REGULATOR THE RESERVE BANK OF INDIA ON 25.10.2005 U/S.22 OF THE BANK REGU LATIONS ACT, 1949. HE THEREFORE WAS OF THE VIEW THAT SINCE THE ASSESSEE H AD NEITHER FILED ANY RETURN IN FIRST ASSESSMENT YEAR 2006-07 AND ERRONEOUSLY CLAIMED LOS SES UNDER THE HEAD BUSINESS INCOME IN LATTER TWO ASSESSMENT YEARS QUA THIS ISS UE, ITS INCOME LIABLE TO BE ASSESSED AS ESCAPED ASSESSMENT. THERE IS NO DISPUT E SO FAR AS THE CLINCHING FACT OF ASSESSEES BANKING LICENSE BEING CANCELLED IS CONCE RNED. LEARNED COUNSEL FAILS TO DISPUTE THAT ASSESSEE HAD NOT DISCLOSED THE SAME AT THE TIME OF SCRUTINY. WE THEREFORE EXPRESS OUR CONCURRENCE WITH BOTH THE LOW ER AUTHORITIES INITIATING THE IMPUGNED REOPENING PROCEEDINGS AGAINST THE ASSESSEE AS THERE EXISTED THE ABOVE TANGIBLE MATERIAL INDICATING THAT IT WAS NOT ENTITL ED FOR SECTION 80P DEDUCTION AS WELL AS IN GETTING THE IMPUGNED INTEREST INCOME BEI NG ASSESSED UNDER THE HEAD BUSINESS INCOME SINCE DERIVED FROM BANK DEPOSITS. THE ASSESSEES FORMER SUBSTANTIVE GROUND IN FIRST THREE ASSESSMENT YEARS IS ACCORDINGLY DECLINED. ITA NOS. 3199 TO 3202/AHD/15 [THE ANAND PEOPLES CO OP BANK LTD. VS. ITO] A.YS. 2006-07 TO 2008-09 & 2011-12 - 3 - 4. WE NOW ADVERT TO THE LATTER ISSUE ON MERITS AS T O WHETHER BOTH THE LOWER AUTHORITIES HAVE CORRECTLY ASSESSED ASSESSEES INTE REST INCOME DERIVED FROM BANK DEPOSITS AND ADVANCED UNDER HEAD INCOME FROM OTHER SOURCES THAN BUSINESS INCOME. THERE IS NO QUARREL ABOUT THE FACT THAT T HE ASSESSEE HAS DERIVED THE IMPUGNED INTEREST INCOME FROM BANK DEPOSITS AND ADV ANCES. BOTH THE LOWER AUTHORITIES FOLLOW THEIR RESPECTIVE ORDERS FOR ASSE SSMENT YEAR 2009-10 IN ASSESSEES CASE ITSELF IN TREATING THE ABOVE INCOME TO BE ONE FROM OTHER SOURCES. THE SAID ISSUE TRAVELLED BEFORE THIS TRIBUNAL AS WELL BY WAY OF ITA NO.2730/AHD/2012. A CO-ORDINATE BENCH QUOTED HONBLE JURISDICTIONAL HIG H COURTS JUDGMENT IN MORVI MERCANTILE BANK LTD. V. CIT [1976] 104 ITR 568 (GUJ ) TO AFFIRM THE SAID FINDINGS UNDER CHALLENGE. 5. WE HAVE HEARD RIVAL CONTENTIONS. CASE FILE PERU SED QUA THE INSTANT ISSUE ON MERITS. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEME NTLY CONTENDS THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE RIGHTL Y ASSESSED ASSESSEES INTEREST INCOME IN QUESTION UNDER THE HEAD INCOME FROM OTHE R SOURCES AS ASSESSEES BANKING LICENSE STANDS CANCELLED. HE ALSO QUOTES A BOVE JUDICIAL PRECEDENT IN SUPPORT OF THE SAID ACTION FOR URGING US TO FOLLOW JUDICIAL CONSISTENCY. WE HOWEVER FIND THAT HONBLE JURISDICTIONAL HIGH COURTS JUDGM ENT HEREINABOVE DID NOT DEAL WITH THE CASE WHEREIN THE INCOME IN QUESTION HAD BEEN RE ALIZED FROM THE RELEVANT BUSINESS CUSTOMERS. IT RATHER TRANSPIRES THAT THE SAID COOPERATIVE BANK LIQUIDATOR HAD REALIZED ITS ASSETS AND CONSEQUENTIAL INCOME TH EREFROM HAD BEEN CLAIMED AS INCOME FROM BUSINESS. IN VIEW OF THESE FACTS THA T THEIR LORDSHIPS SETTLED THE ISSUE TO UPHOLD REVENUES ACTION TREATING INCOME FROM SAI D REALIZATION AS UNDER THE HEAD INCOME FROM OTHER SOURCES. WE FIND THAT THE SAME IS NOT THE CASE HERE. THE ASSESSEES PLEA THROUGHOUT IS THAT IT HAS RECEIVED BACK ITS BUSINESS ADVANCES FROM ITS CUSTOMERS WITH INTEREST WHICH IN TURN STOOD DEPOSIT ED IN BANK(S) FETCHING THE INTEREST INCOME IN QUESTION. WE FIND IN THE VERY BA CKDROP THAT A CO-ORDINATE BENCH IN ITA NO.2678/AHD/2015 M/S. CHAROTAR NAGRIK SAHAKA RI BANK LTD. VS. ITO DECIDED ON 28.11.2017 HAS REMITTED AN IDENTICAL ISS UE BACK TO THE ASSESSING OFFICER WITH NECESSARY DIRECTIONS TO THE ASSESSEE AS WELL T O SUBMIT NECESSARY BIFURCATION OF ITA NOS. 3199 TO 3202/AHD/15 [THE ANAND PEOPLES CO OP BANK LTD. VS. ITO] A.YS. 2006-07 TO 2008-09 & 2011-12 - 4 - THE ORIGINAL INTEREST RECEIVED FROM CUSTOMERS AS WE LL AS THE INTEREST INCOME PAID BY THE BANK ON THE SAME BEING DEPOSITED IN ITS BANK AC COUNT. WE FOLLOW THE VERY COURSE OF ACTION HEREIN AS WELL TO LEAVE IT OPEN FO R THE ASSESSING OFFICER TO FINALIZE CONSEQUENTIAL COMPUTATION IN VIEW OF THE RELEVANT B IFURCATION DETAILS SUBMITTED BY THE ASSESSEE IN CONSEQUENTIAL PROCEEDINGS. WE MAKE IT CLEAR THAT THE RELEVANT INTEREST INCOME PAID BY ASSESSEES CUSTOMERS WOULD BE TAKEN AS BUSINESS INCOME. THE REST OF THE INCOME AFTER THE SAME BEING DEPOSIT ED IN BANK ACCOUNTS WOULD BE TAKEN AS INCOME FROM OTHER SOURCES. NEEDLESS TO SAY CORRESPONDING EXPENDITURE BOTH UNDER BUSINESS HEAD AS WELL AS THE ONE U/S.57 OF THE ACT WOULD ALSO BE COMPUTED AND ALLOWED AS PER LAW. THIS LATTER ISSUE IS ACCEPTED IN ASSESSEES FAVOR BUT FOR STATISTICAL PURPOSES. 6. THE ASSESSEES THREE APPEALS ITA NOS. 3199, 3200 & 3201/AHD/2015 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES WHEREAS LAS T APPEAL ITA NO.3202/AHD/2015 IS ALLOWED FOR STATISTICAL PURPOSES. [PRONOUNCED IN THE OPEN COURT ON THIS THE 23 RD DAY OF JANUARY, 2018.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 23/01/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / . / .