The Dahod Urban Co. Operative Bank Ltd., Dahod V. The Dy.Commissioner of Income Tax, Anand

ITA 397/AHD/2022

AI Insights

The case involves The Dahod Urban Co-Operative Bank Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The appeal was related to the intimation passed under section 143(1) of the Income Tax Act, 1961 for the Assessment Year 2020-21. The primary issues were the disallowance of Rs. 1,11,00,000/- as a contingent liability and Rs. 5,57,910/- related to employees' late contribution to provident fund under section 36(1)(va) of the Act. The Tribunal found that the disallowance of Rs. 1,11,00,000/- was already accounted for by the assessee in their return and directed the Assessing Officer to verify and possibly delete the addition. For the second issue regarding the late payment of ESI, the Tribunal set aside the matter for further verification by the Assessing Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114141 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 19-10-2022
• Other Referred Cases: CIT vs. Gujarat State Road Transport Corporation
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts; Set aside
• Section: 37; 143(3); 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Smt. Annapurna Guptas, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The Dahod Urban Co- operative Bank Ltd., Sheth Girdharlal Bhawan, Anaj Market Yard, Dahod Railyatri Road, Dahod-389151 Gujarat, India PAN: AAAAT2915L (Appellant) Vs Assistant Director of Income-tax, CPC, Bengaluru (Respondent) Assessee Represented: Shri Sakar Sharma, A.R. Revenue Represented: Shri Dileep Kumar, Sr.D.R. Date of hearing : 23-03-2023 Date of pronouncement : 17-05-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the Appellate order dated 30.05.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “NFAC”), arising out of the intimation passed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2020-21. ITA No. 397/Ahd/2022 Assessment Year 2020-21 I.T.A No. 397/Ahd/2022 A.Y. 2020-21 Page No The Dahod Urban Co.Op. Bank Ltd. vs. DCIT 2 2. The registry has directed that there is a delay of 83 days in filing the appeal. The assesse in its affidavit submitted that the appellate order was received by email on 30.05.2022. However the same was gone unnoticed by the Manager looking after the taxation matters who was authorized to access the email. It is in the meantime, regular assessment u/s. 143(3) was going on by issuance of notice u/s. 143(2) for the very same assessment year 2020-21. Thus the assessee was of the wrong impression, the disallowances made u/s. 143(1) will get rectified in the 143(3) proceedings. However after the proper advice from the Chartered Accountant stationed at Ahmedabad, the appeal was filed with a delay of 83 days and requested to condone the delay on account of bonafide reasons stated supra. The Ld. Sr. D.R. has no objection in condoning the delay of 83 days in filing the appeal. Thus the delay of 83 days in filing the above appeal is hereby condoned and the appeal is taken up for adjudication. 2.1 The brief facts of the case is that the assessee is a Co-operative Bank carrying on banking activities at Dahod, District Gujarat. The assessee filed its Return of income for the Assessment Year 2020-21 on 28.11.2020 declaring total income of Rs.9,06,15,230/-. The assessee received a communication from Computer Processing Centre, Bangalore (CPC) proposing to make adjustment of Rs.1,11,00,000/- as being in the nature of contingent liability. The assessee replied that this amount has already disallowed as per item no. 6t of Part –OI and as per sr. no. A14 of Schedule BP of the return filed. The assessee further submitted it had erred in not reporting this amount of Rs. 1,11,00,000/- at sr. no. 7h of Part A-OI (contingent liability disallowable u/s. 37) and instead reported the same at sr. no. 6t of I.T.A No. 397/Ahd/2022 A.Y. 2020-21 Page No The Dahod Urban Co.Op. Bank Ltd. vs. DCIT 3 Part A-OI (amount disallowable u/s. 36). However in Form 3CD the Chartered Accountant reported the amount of Rs. 1,11,00,000/- disallowable u/s. 37 as being in the nature of contingent liability. However the CPC is not satisfied with the reply given by the assessee and made the disallowance of Rs. 1,11,00,000/- as well as Rs.5,57,910/- in relation to employees’ late contribution to provident fund u/s. 36(1)(va) of the Act. Thus in the intimation dated 03.11.2021, the CPC made a total addition of Rs.1,16,57,910/-. 3. Aggrieved against the same, the assessee filed an appeal before Ld. NFAC. The Ld. NFAC set aside the first issue namely disallowance of Rs. 1,11,00,000/- with a direction to the assessee to furnish complete online Income Tax Return, Form 3CD and all relevant details to show that amount of Rs.1,11,00,000/- is not in the nature of provision for bad and doubtful debts (87,00,000/-) and also not in the nature of amount transferred to any reserve (Rs. 24,00,000/-) and that this amount is actually in the nature of contingent liability. If the claim of the appellant is found correct, the disallowance of Rs.1,11,00,000/- made by CPC stands deleted as the same has already been disallowed by the assessee in the return. If found contrary, the stand of CPC in making this disallowance is upheld. Thus the A.O. was directed to pass a speaking order while giving effect to this appellate order. 3.1. On the second issue namely late payment of PF & ESI of Rs.5,57,910/-. The Ld. CIT(A) after considering the detailed discussion and Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation confirmed the disallowance made by CPC I.T.A No. 397/Ahd/2022 A.Y. 2020-21 Page No The Dahod Urban Co.Op. Bank Ltd. vs. DCIT 4 and thereby dismissed the second ground. Thus the appeal filed by the assessee was partly allowed. 4. Aggrieved against the same, the assesse is in appeal before us raising the following Grounds of Appeal: 1. The Ld. CIT(A)-NFAC erred on facts and in law upholding the action of ADIT, CPC making prima facie adjustment u/s 143(1) based on tax auditor's report and in ignoring the computation of income appearing in the return of income. 2. The Ld. CIT(A)-NFAC erred on facts and in law in not deleting the prima facie adjustment of Rs. 1,11,00,000/- [i.e. 87,00,000/- Rs. 24,00,000/-] despite availability of complete information evidencing that paid amount had already been disallowed while furnishing return of income and in directing the Assessing Officer to decide the issue afresh after due verification. This has resulted into taxation of same amount twice. 3. The Ld. CIT (A)-NFAC erred on facts and in law in confirming the addition of Rs. 5,57,915/- being disallowance of employee's contribution to provident fund by invoking provisions of section 36(1)(va) without appreciating that the appellant paid the said sum to the credit of the fund on or before the due date specified under the respective law by reading the provisions amended by Finance Act, 2021 differently and incorrectly. 5. Ld. Counsel appearing for the assessee filed before us a Paper Book consisting of the Income Tax Return, Computation of total income, Audit Report in Form 3CA and 3CD alognwith financial statements and challan for payment of ESI. Ground No. 1 is general in nature, hence require no adjudication. As far as ground no. 2, the ld. Counsel taken us through the computation of total income wherein special reserve of Rs.24,00,000/- and BDDR reserve of Rs.87,00,000/- disallowed and added as the income of the assessee. Thus by wrongly reporting at sr. no. 7h of Part A-OI of ITR, the CPC made disallowance instead of reporting at sr. no. 7h of Part A-OI of the ITR. This will amount to double addition which is liable to be deleted. 6. Per contra, the ld. Sr. D.R. appearing for the Revenue submitted that ld. CIT(A) has already directed to verify the same, if the stand of I.T.A No. 397/Ahd/2022 A.Y. 2020-21 Page No The Dahod Urban Co.Op. Bank Ltd. vs. DCIT 5 the assessee is found to be correct delete the addition or if found contrary, confirm the disallowance. Further the A.O. was directed to pass a speaking order while giving effect to this order. Therefore the assessee is not aggrieved against this directions and ground no. 2 is liable to be dismissed. 7. We have given our thoughtful consideration and perused the materials available on record. The Ld. CIT(A) has already given a direction to the A.O. to pass a speaking order while giving the effect to the appellate order, whether the disallowance of Rs. 1,11,00,000/- is already disallowed by the assessee in the return or not. The Ld. Counsel taken us through the computation of total income wherein the suo moto disallowance of special reserve of Rs. 24,00,000/- and BDDR reserve of Rs. 87,00,000/- made by the assessee which is also reflecting in Form 3CD in “particulars of any liability of a contingent nature” (which is available at page no. 85 of the Paper Book). Further the above sums are reflected in the Profit and Loss account of the assessee (which is placed at page no. 100 of the Paper Book). Thus we are of the considered opinion, mere wrong reporting in ITR’s at sr. no. 7h instead of sr. no. 7t of Part A-OI of the ITR, the assessee should not be disallowed the said amount of Rs. 1,11,00,000/-. Further in the Form 3CD and statement of computation of total income, the assessee itself disallowed the same. Therefore the disallowance made by CPC of Rs. 1,11,00,000/- is liable to be deleted. Thus the ground no. 2 raised by the assessee is hereby allowed. 8. Regarding ground no. 3 late payment of ESI of Rs. 5,57,915/-, the Ld. Counsel taken us through the Paper Book whereas payments I.T.A No. 397/Ahd/2022 A.Y. 2020-21 Page No The Dahod Urban Co.Op. Bank Ltd. vs. DCIT 6 details made at page nos. 101 to 105 and submitted the details as follows: Reconciliation of Rs. 5,57,915/- disallowed and confirmed by CIT(A)/NFAC: PB Page No Amount Amount reversed Due Date Date of Payment/revers al Net Amount 103 7462 0 15-05-20 07-04-20 7462 104 325260 [266844+58416] 0 15-05-20 07-04-20 325260 105 13750 0 15-05-20 08-04-20 13750 101 211442 [13776+197666] 211442 03-04-2020 0 Total 557914 346472 8.1. The Ld. Counsel claimed that there is no late payment of ESI, so the disallowance made u/s. 36(1)(va) by CPC is unjustifiable. In our considered view, this aspect is not properly verified by Ld. NFAC and dismissed the ground based on judicial pronouncements of various High Court judgments. In the interest of justice, we set aside this issue to the file of the A.O. to verify the same and pass orders in accordance with law. Thus the ground no. 3 raised by the assessee is partly allowed. 9. In the result, the appeal filed by the Assessee is allowed for statistical purpose. Order pronounced in the open court on 17-05-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 17/05/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- I.T.A No. 397/Ahd/2022 A.Y. 2020-21 Page No The Dahod Urban Co.Op. Bank Ltd. vs. DCIT 7 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद