Kendrapara Urban Co-operative Bank Ltd, Kendrapada V. ACIT, Cuttack

ITA 320/CTK/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3829 (ITAT-CUTTACK)
• Duration Of Justice: 4 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Keywords: Bad and doubtful debts; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAV AN KUMAR GADALE, JUDICIAL MEMBER ITA NO320 /CTK/2013 ASSESSMENT YEAR : 2009 - 10 KENDRAPARA URBAN CO.OP. BANK LTD., . MAIN BRANCH, TINIMUHANI SQUARE, KENDRAPARA VS. ACIT CIRCLE 1(2), CUTTACK PAN/GIR NO. AAATK 8347 E (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 22 /05/ 2017 DATE OF PRONOUNCEMENT : 24 /05/ 2017 O R D E R PER PAVAN KUMAR G ADALE, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK , DATED 25 .3.2013 , FOR THE ASSESSMENT YEAR 2009 - 10 . 2. WHEN THE MATTER WAS CALLED FOR HEARING, NONE APPEARED ON BE HALF OF THE ASSESSEE NOR ANY APPLICATION FOR ADJOURNMENT WAS FILED. SINCE THE NOTICE HAS BEEN SERVED ON THE ASSESSEE AND THE APPEAL RELATES TO YEAR 2013, WE CONSIDER IT APPROPRIATE TO DISPOSE OF THE APPEAL ON THE BASIS OF MATERIA LS AVAILABLE ON RECORD AND CONSIDERING THE SUBMISSION OF LD D.R. 2 ITA NO.320 /CTK/2013 ASSESSMENT YEAR : 2009 - 10 3. T HE ASSESSEE HAS RAISED GROUND NOS.1 & 2 IN RESPECT OF ISSUE OF NOTICE U/S.14 3(2) OF THE ACT AS GROSS VIOLATION OF PROVISIONS AND ILLEGAL. WE FIND THAT THIS GROUND OF APPEAL DOES NOT EMANATES OUT OF THE ORDER OF THE CIT(A) AND THERE IS NO CONTENTION OF THE ASSESSEE ON THE OF VIOLATION OF PROVISIONS ON ILLEGALITY OF ISSUE OF NOTICE BEFORE THE ASSESSING OFFICER AND WE TREAT THIS GROUND OF APPEAL IS OUT OF PURVIEW OF CIT(A)S ORDER AND DISMISS THE SAME. 4 . THE OTHER GROUNDS RAISED BY THE ASSESSEE BEING GR OU ND NOS.3 TO 5 ARE AGAINST THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S.36(1)(VIIA) (A) OF THE ACT AND CONFIRMED BY THE CIT(A). 5 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF BANKING AND FILED THE R ETURN OF INCOME ON 29.9.2009 DISCLOSING TOTAL INCOME OF RS.24,56,450/ - . SUBSEQUENTLY, THE ASSESSEE HAD FILED REVISED RETURN ON 1.2.2011. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICES U/S.142(1) AND U/S.143(2) WERE ISSUED TO THE ASSESSEE. IN COMPLIANCE TO THE NOTICES, LD A.R.OF THE ASSESSEE PRODUCED BOOKS OF ACCOUNT AND FILED WRITTEN SUBMISSIONS AND EXPLANATIO NS AND THE CASE WAS DISCUSSED. THE ASSESSING OFFICER ON PERUSAL OF FINANCIAL STATEMENT S FOUND THAT THE ASSESSEE HAS DEBITED SEVERAL PROVISIONS IN RESPECT OF PROVISI ON FOR BAD & DOUBTFUL ASSET NPA O F RS.25,02,000/ - AND PROVISION FOR RECOVERIES OF RS.24,87,288/ - . THE ASSESSING OFFICER CONSIDERED THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE ON 21.1 1.2011 EXPLAINING THE APPLICABILITY OF SECTION 36(1) (VIIA) (A) OF THE AC T. WHEREAS THE ASSESSING OFFICER PERUSED THE 3 ITA NO.320 /CTK/2013 ASSESSMENT YEAR : 2009 - 10 PROVISIONS AND CAME TO THE CONCLUSION THAT THE PROVISIONS OF BAD AND DOUBTFUL DEBTS IN RESPECT OF SCHEDULED BANK OR NON - SCHEDULED BANK OR CO - OPERATIVE BANK IS ALLOWED 7.5% OF TOTAL INCOME AND MADE A CALCULATION AT PARA 2.2 OF THE ASSESSMENT ORDER AND UNILATERALLY CONCLUDED THAT THE ASSESSEE HAS AVAILED THESE DEDUCTIONS IN THE IMMEDIATELY PRECEDING FINANCIAL YEAR. THEREFORE, THE ASSESSEE S HOULD BE ALLOWED ONLY PROVISION FOR BAD AND DOUBTFUL DEBTS TO THE EXTENT O F RS.5,68,330/ - AND DISALLOWED THE CLAIM OF RS.51,62,958 / - AND PASSED ORDER U/S.143(3) OF THE ACT ON 23.12.2011. 6. AGGRIEVED BY ASSESSMENT ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFORE THE CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD A.R. OF THE ARGUED AND REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER WHEREAS THE CIT(A) CONSIDERED THE GROUND AND DEALT ON THE DISPUTED ISSUES BASED ON THE FINDINGS OF THE ASSESSING OFFICER AND CONTENTION OF THE ASSESSEE AND OBSERVED THAT T HE POPULATION OF PATTAMUNDAI BRANCH IS 32724 WHICH IS EXCEEDING 10,000 . LD CIT(A) ALSO PERUSED THE FINAL AUDIT REPORT OF THE ASSESSEE FOR THE YEAR 2008 - 09 IN RESPECT OF BUSINESS ACTIVITY AND OBSERVED THAT THE CASE OF THE ASSESSEE DOES NOT FALL UNDER THE P URVIEW OF SECTION 36( 1)(VIIA). HE ALSO RELIED ON THE CBDT CIRCULAR PAGE 4 OF THE IMPUGNED ORDER. SINCE THE POPULATION OF THE BRANCH IS EXCEEDING MORE THAN 10,000 IN THE RURAL BRANCH, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION FOR CLAIM OF PROVISIONS OF B AD AND DOUBTFUL DEBTS OF RS.25,02,000/ - AND ALSO THERE IS NO TECHNICAL REPORT OF PROVISION FOR RECOVERIES OF RS.24,87,288/ - WHEREAS THE PROVISIONS ARE TO BE DEAL WITH AS PER THE ACCOUNTING S TANDARD ISSUED BY 4 ITA NO.320 /CTK/2013 ASSESSMENT YEAR : 2009 - 10 ICAI. WITH THESE OBSERVATIONS, THE CIT(A) CONFI RMED THE ADDITION MADE BY THE ASSESSING OFFICER AND PARTLY ALLOWED THE APPEAL. 7 . AGGRIEVED BY THE SAID ORDER OF THE CIT(A), THE ASSESSEE HAS FILED AN APPEAL BEFORE US. SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE, WE HEARD LD D.R. IN RESP ECT OF PROVISION S OF SECTION 36( 1)(VIIA) (A) WHEREAS THE ASSESSING OFFICER HAS MADE THE ADDITION BASED ON THE VIOLATION OF PROVISIONS OF SECTION AND CLAIM S MADE IN PRECEDING FINANCIAL YEAR AND PRAYED FOR DISMISSAL OF THE APPEAL OF THE ASSESSEE. 8 . WE HAVE CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSION S OF LD D.R ON TH E GROUNDS RAISED BEFORE US. W E FIND ON PERUSAL OF THE IMPUGNED APPELLATE ORDER THAT THE CIT(A) HAS DEALT THE DISPUTED ISSUE ON A DIFFERENT PERSPECTIVE OF POPULATION OF THE RURAL BR ANCH, WHIC H EXCEEDED 10,000. THE LD CIT(A) HAS EXHAUSTIVELY DEALT ON THE CIRCULAR OF CBDT AND JUDICIAL DECISION ON THE ADVANCES OF RURAL BANKING AND FINALLY CONCLUDED THAT THE ASSESSEE HAS NOT COMPLIED WITH THE CONDITIO NS AND RELIED ON THE A UDIT REPORT IRRESPECTI VE OF THE FACT THAT THERE IS NO REMAND REPORT NOR ANY FINDINGS OF THE ASSESSING OFFICER REGARDING POPULATION OF RURAL BRANCH IN THE ASSESSMENT PROCEEDINGS. WE FIND THAT THIS IMPORTANT ASPECT WAS NOT DISCUSSED OR ANY IOTA OF FINDINGS IN THE ASSESSMENT ORD ER. WE CONSIDERING THE APPARENT FACTS AND MATERIAL ON RECORD ARE OF THE VIEW THAT THE CIT(A) HAS DEALT THE ISSUE ON A DIFFERENT FOOTING OTHER THAN THE FINDINGS GIVEN BY THE ASSESSING OFFICER. THOUGH THE POWERS OF THE CIT(A) ARE CO - TERMINUS WITH THAT OF T HE ASSESSING OFFICER, SINCE THE ASSESSEE BEING A CO - 5 ITA NO.320 /CTK/2013 ASSESSMENT YEAR : 2009 - 10 OPERATIVE BANK A ND ITS ACTIVITIES ARE MAINLY FINANCING THE FARMERS IN THE RURAL AREAS, WE IN THE INTEREST OF JUSTICE, SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE ENTIRE DISPUTED ISSUES TO THE FILE O F THE ASSESSING OFFICER TO EXAMINE THE DEDUCTION CLAIMED AS PER THE PROVISIONS OF SECTION 36(1)(VIIA) (A) OF THE ACT AND DECIDE AFRESH . FURTHER, T HE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING AND SHALL CO - OPERATE IN SUBMITTING THE INFO RMATION. 9 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 /05/2017 IN THE PRESENCE OF PARTIES. SD/ - SD/ - ( N.S SAINI ) ( PAVAN KUMAR GADALE) A CCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 24 /05/2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : KENDRAPARA URBAN CO.OP. BANK LTD.,. MAIN BRANCH, TINIMUHANI SQUARE, KENDRAPARA 2. THE RESPONDENT. ACIT CIRCLE 1(2), CUTTACK 3. THE CIT, CUTTACK 4. PR.CIT, CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//