Gurgaon Gramin Bank (Now Sarva Haryana Gramin Bank), Rohtak V. ACIT, Rohtak Circle , Rohtak

ITA 4070/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9470 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 29-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH THAKUR SENIOR
• Keywords: Bad and doubtful debts; Scheme of amalgamation; Rule 8D; Set aside
• Section: 143(3); 14A; 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.4069/DEL./2018 (ASSESSMENT YEAR : 2013-14) ITA NO.4070/DEL./2018 (ASSESSMENT YEAR : 2014-15) M/S. GURGAON GRAMIN BANK, VS. ACIT, (NOW, SARVA HARYANA GRAMIN BANK), ROHTAK CIRCLE, H.O. NEAR BAJRANG BHAWAN, ROHTAK. DELHI ROAD, ROHTAK. (PAN : AAAAG5681L) ITA NO.4071/DEL./2018 (ASSESSMENT YEAR : 2014-15) ITA NO.4072/DEL./2018 (ASSESSMENT YEAR : 2013-14) M/S. HARYANA GRAMIN BANK, VS. ACIT, (NOW, SARVA HARYANA GRAMIN BANK), ROHTAK CIRCLE, H.O. NEAR BAJRANG BHAWAN, ROHTAK. DELHI ROAD, ROHTAK. (PAN : AAALH0138G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIVEK GUPTA, CA REVENUE BY : SHRI MAHESH THAKUR, SENIOR DR DATE OF HEARING : 27.07.2021 DATE OF ORDER : 30.07.2021 O R D E R ITA NOS.4069 & 4070/DEL/2018 ITA NOS.4071 & 4072/DEL/2018 2 PER BENCH : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN THE INTER-CONNECTED APPEALS, THE SAME ARE BEING DISPOSED OFF BY WAY OF COMPOSITE ORDER TO AVOID REPETITION OF DISCU SSION. 2. APPELLANT, GURGAON GRAMIN BANK (NOW SARVA HARYAN A GRAMIN BANK) (HEREINAFTER REFERRED TO AS THE ASSES SEE) BY FILING THE PRESENT APPEALS BEARING ITA NOS.4069 & 4070/DEL /2018 SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 02.04. 2018 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), ROHTAK QU A THE ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTIVELY ON THE GROUNDS INTER ALIA THAT :- ITA NO.4069/DEL/2018 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF THE LAW, THE ORDER U/S 143(3) DATED 2 7/12/2016 OF THE LD AO AND CONFIRMED BY THE LD. CIT(A), BEING PA SSED IN THE NAME OF THE NON-EXISTENCE ASSESSEE, IS VOID AB INITIO AND THEREFORE THE SAME NEEDS TO BE QUASHED. 2. THAT WITHOUT PREJUDICE TO GROUND NO 1 ABOVE AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISI ONS OF THE LAW, THE LD. AO AS WELL AS LD.CIT(A) ERRED IN MAKING/CONFIRMING THE DISALLOWANCE (RS.1,14,07,412/ - & RS.1,23,23,294/-) U/S 14A READ WITH RULE 8D OF IT A CT AGAINST THE EXEMPTED INCOME OF DIVIDEND& TAX FREE INCOME OF RS.1,57,85,000/-. ITA NO.4070/DEL/2018 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF THE LAW, THE ORDER U/S 143(3) DATED 2 7/12/2016 OF THE LD AO AND CONFIRMED BY THE LD. CIT(A), BEING PA SSED IN THE NAME OF THE NON-EXISTENCE ASSESSEE, IS VOID AB INITIO AND THEREFORE THE SAME NEEDS TO BE QUASHED. ITA NOS.4069 & 4070/DEL/2018 ITA NOS.4071 & 4072/DEL/2018 3 2. (A) THAT WITHOUT PREJUDICE TO GROUND NO 1 ABOVE AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF THE LAW, THE LD. AO AS WELL AS LD.CIT(A) ERRED I N MAKING/CONFIRMING THE DISALLOWANCE OF RS.1,23,23,29 4/- U/S 14A READ WITH RULE 8D OF IT ACT AGAINST THE EXEMPTE D INCOME OF DIVIDEND& TAX FREE INCOME OF RS.1,05,05,444/-. (B) THAT WITHOUT PREJUDICE TO GROUND NO.2(1), ABOV E, THE LD. AO AS WELL AS LD. CIT (A) IS NOT JUSTIFIED IN MAKING/CONFIRMING THE DISALLOWANCE U/S 14A READ WIT H RULE 8D OF IT ACT IN EXCESS OF THE EXEMPTED INCOME OF DI VIDEND & TAX FREE INCOME WHICH IS ONLY OF RS.1,05,05,444/-. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF THE LAW, THE LD. AO AS WELL AS LD. CI T (A) ERRED IN NOT ALLOWING THE DEDUCTION U/S 36(1)(VIIA) TO TH E EXTENT OF RS.22,00,000/- BY NOT FULLY ACCEPTING THE PROVISION FOR BAD & DOUBTFUL DEBTS MADE BY THE BANK FOR THE PURPOSE OF DEDUCTION U/S 36(1)(VIIA) OF IT ACT, 1961. 3. APPELLANT, HARYANA GRAMIN BANK (NOW SARVA HARYAN A GRAMIN BANK) (HEREINAFTER REFERRED TO AS THE ASSES SEE) BY FILING THE PRESENT APPEALS BEARING ITA NOS.4071 & 4072/DEL /2018 SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 28.03. 2018 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), ROHTAK QU A THE ASSESSMENT YEARS 2014-15 & 2013-14 RESPECTIVELY ON THE IDENTICAL GROUNDS, EXCEPT THE DIFFERENCE OF ADDITIONS/DISALLO WANCES, INTER ALIA THAT :- ITA NO.4070/DEL/2018 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF THE LAW, THE ORDER U/S 143(3) DATED 2 6/12/2016 OF THE LD AO AND CONFIRMED BY THE LD. CIT(A), BEING PA SSED IN THE NAME OF THE NON-EXISTENCE ASSESSEE, IS VOID AB INITIO AND THEREFORE THE SAME NEEDS TO BE QUASHED. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF THE LAW, THE LD. AO AS WELL AS LD. CI T (A) ERRED ITA NOS.4069 & 4070/DEL/2018 ITA NOS.4071 & 4072/DEL/2018 4 IN NOT ALLOWING THE DEDUCTION U/S 36(1)(VIIA) TO TH E EXTENT (RS.7,89,000/- & RS.46,01,000/- IN AY 2013-14 & 20 14-15) BY NOT FULLY ACCEPTING THE PROVISION FOR BAD & DOUBTFU L DEBTS MADE BY THE BANK FOR THE PURPOSE OF DEDUCTION U/S 3 6(1)(VIIA) OF IT ACT, 1961. 3. THAT WITHOUT PREJUDICE TO GROUND NO 1 ABOVE AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISI ONS OF THE LAW, THE LD. AO AS WELL AS LD.CIT(A) ERRED IN MAKING/CONFIRMING THE DISALLOWANCE (RS.1,44,32,212 & RS.1,09,98,527/- IN AY 2013-14 & 2014-15) IN RESPEC T OF AMORTIZATION OF PREMIUM PAID AT THE TIME OF PURCHAS E OF SECURITIES OVER THE REMAINING PERIOD OF SECURITIES. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE IS INTO THE BUSINESS OF BANKING ESTABLISHED UNDER THE REGIONAL RURAL BANK A CT, 1976. ASSESSEES BANKS, NAMELY, GURGAON GRAMIN BANK AND H ARYANA GRAMIN BANK WHO HAVE FILED APPEALS BEARING ITA NOS. 4069 & 4670/DEL/2018 AND ITA NOS.4071 & 4072/DEL/2018, HAV E BEEN MERGED WITH SARVA HARYANA GRAMIN BANK W.E.F. 29.11. 2013 AS PER GOVERNMENT OF INDIA NOTIFICATION BY WAY OF AMALGAMA TION OF ERSTWHILE GURGAON GRAMIN BANK HO AT GURGAON (SPONSO RED BY SYNDICATE BANK) AND ERSTWHILE HARYANA GRAMIN BANK H O AT ROHTAK (SPONSORED BY PNB) WITH 50% SHARES OF GOVERN MENT OF INDIA, 35% SHARES OF SARVA HARYANA GRAMIN BANK & 15 % SHARES OF THE HARYANA GOVERNMENT RESPECTIVELY. 5. DURING THE YEAR UNDER CONSIDERATION, ASSESSING O FFICER (AO) WHILE ASSESSING THE INCOME OF THE ASSESSEE BAN K, HARYANA GRAMIN BANK, UNDER THE HEAD BUSINESS OR PROFESSION MADE ITA NOS.4069 & 4070/DEL/2018 ITA NOS.4071 & 4072/DEL/2018 5 DISALLOWANCE OF RS.7,89,000/- & RS.46,01,000/- AND RS.1,44,33,212/- RS.1,09,98,527 ON ACCOUNT OF CLAI M OF DEDUCTION REPRESENTING PROVISIONS FOR STANDARD ASSETS AND A MORTIZATION OF PREMIUM OVER THE SECURITIES CLAIMED BY THE ASSESSEE UNDER THE HEAD HELD TO MATURITY (HTM) RESPECTIVELY AND THEREBY A SSESSED THE TOTAL INCOME OF ASSESSEE BANK AT RS.95,64,09,620/- & RS.93,87,15,890/- FOR AYS 2013-14 & 2014-15 IN IT A NOS.4072 & 4071/DEL/2018 RESPECTIVELY. 5.1 LIKEWISE, IN THE CASE OF GURGAON GRAMIN BANK, D URING THE YEAR UNDER CONSIDERATION, ASSESSING OFFICER (AO) MA DE THE DISALLOWANCES OF RS.1,14,07,412/- & RS.1,23,23,294/ - ON ACCOUNT OF DISALLOWANCE MADE U/S 14A READ WITH RULE 8D AND RS.22,00,000/- ON ACCOUNT OF CLAIM OF DEDUCTION REP RESENTING PROVISIONS FOR STANDARD ASSETS RESPECTIVELY AND T HEREBY ASSESSED THE TOTAL INCOME OF ASSESSEE BANK AT RS.1,26,66,80, 400/- & RS.95,50,68,050/- FOR AYS 2013-14 & 2014-15 IN IT A NOS.4069 & 4070/DEL/2018 RESPECTIVELY. 6. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT (A) BY WAY OF FILING THE APPEALS WHO HAS PARTLY ALLOWED TH E SAME. FEELING AGGRIEVED WITH THE IMPUGNED ORDERS PASSED BY LD. CI T (A)S, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. ITA NOS.4069 & 4070/DEL/2018 ITA NOS.4071 & 4072/DEL/2018 6 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. LD. AR FOR THE ASSESSEE BY RAISING GROUND NO.1 H AS SOUGHT TO QUASH THE ASSESSMENT PROCEEDINGS ON THE GROUND THAT THE ASSESSMENTS IN THE AFORESAID CASES HAVE BEEN FRAMED BY THE AO ON A NON-EXISTENT ENTITY AND BROUGHT ON RECORD A GAZET TE NOTIFICATION NO.2686 DATED 29.11.2013 OF GOVERNMENT OF INDIA VID E WHICH ERSTWHILE GURGAON GRAMIN BANK AND HARYANA GRAMIN BA NK HAVE BEEN AMALGAMATED WITH M/S. SARVA HARYANA GRAMIN BAN K W.E.F. 29.11.2013. LD. AR FOR THE ASSESSEE ALSO BROUGHT O N RECORD COPY OF LETTER DATED 05.12.2016, AVAILABLE AT PAGES 7 TO 10 OF THE PAPER BOOK, WHEREBY AO HAS BEEN DULY INTIMATED REGARDING AMALGAMATION OF ERSTWHILE GURGAON GRAMIN BANK AND H ARYANA GRAMIN BANK WITH M/S. SARVA HARYANA GRAMIN BANK DUR ING THE COURSE OF ASSESSMENT. LD. AR FOR THE ASSESSEE CONT ENDED THAT ASSESSMENTS FOR AYS 2013-14 & 2014-15 FRAMED IN THE NAME OF NON-EXISTENT ENTITY I.E. HARYANA GRAMIN BANK AND GU RGAON GRAMIN BANK DATED 26.12.2016 & 27.12.2016 RESPECTIVELY ARE NULLITY AND AS SUCH LIABLE TO BE QUASHED. LD. AR FOR THE ASSES SEE ALSO RELIED UPON SECTION 170(2) OF THE ACT AND ALSO RELIED UPON THE DECISION ITA NOS.4069 & 4070/DEL/2018 ITA NOS.4071 & 4072/DEL/2018 7 RENDERED BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. MARUTI SUZUKI INDIA LTD. (2019) 107 TAXMANN.COM 375 (SC). ON THE OTHER HAND, LD. DR FOR THE REVENUE RELIED UP ON THE ORDER PASSED BY THE AO AS WELL AS LD. CIT (A). 9. UNDISPUTEDLY, ASSESSMENT ORDERS IN CASES OF HARY ANA GRAMIN BANK & GURGAON GRAMIN BANK FOR AYS 2013-14 & 2014-15 WERE FRAMED ON 26.12.2016 & 27.12.2016 RESP ECTIVELY. IT IS ALSO NOT IN DISPUTE THAT FACTUM OF AMALGAMATION OF THE ASSESSEE BANKS WITH M/S. SARVA HARYANA GRAMIN BANK HAVE BEEN DULY BROUGHT TO THE NOTICE OF AO BY THE ASSESSEE BY WRIT ING A LETTER DATED 05.12.2016, WHICH IS AVAILABLE AT PAGES 7 TO 10 OF THE PAPER BOOK. 10. SECTION 170(2) OF THE ACT IS VERY CATEGORIC AS TO HOW THE ASSESSMENT IS TO BE MADE WHEN PREDECESSOR CANNOT BE FOUND. IN SUCH CASES, THE ASSESSMENT OF THE INCOME OF THE PRE VIOUS YEAR IN WHICH THE SUCCESSION TOOK PLACE UP TO THE DATE OF S UCCESSION AND OF THE PREVIOUS YEAR PRECEDING THAT YEAR SHALL BE MADE ON THE SUCCESSOR IN LIKE MANNER AND TO THE SAME EXTENT AS IT WOULD HAVE BEEN MADE ON THE PREDECESSOR, AND ALL THE PROVISION S OF THIS ACT SHALL, SO FAR AS MAY BE, APPLY ACCORDINGLY. 11. WHEN WE EXAMINE AFORESAID UNDISPUTED FACTS AND PROVISIONS CONTAINED U/S 170(2) OF THE ACT IN THE LIGHT OF THE FACT THAT ITA NOS.4069 & 4070/DEL/2018 ITA NOS.4071 & 4072/DEL/2018 8 ASSESSMENTS IN THIS CASE HAVE BEEN FRAMED ON 26.12. 2016 & 27.12.2016 WHEREAS THE ASSESSEE CEASED TO BE IN EXI STENCE W.E.F. 29.11.2013 ON ACCOUNT OF AMALGAMATION WITH M/S. SAR VA HARYANA GRAMIN BANK VIDE GAZETTE NOTIFICATION (SUPRA) AND A S SUCH, ASSESSMENT FRAMED IN THIS CASE IS NOT SUSTAINABLE H AVING BEEN FRAMED IN THE NAME OF NON-EXISTENT ENTITY, RATHER T HE AO WAS REQUIRED TO FRAME THE ASSESSMENT IN THE NAME OF AMA LGAMATED OR MERGED ENTITY. 12. HONBLE SUPREME COURT IN CASE OF CIT VS. MARUTI SUZUKI INDIA LTD. (SUPRA) DECIDED THE IDENTICAL ISSUE BY RETURNING FOLLOWING FINDINGS :- 15. THE FINAL ASSESSMENT ORDER WAS PASSED ON 31 O CTOBER 2016 IN THE NAME OF SPIL (AMALGAMATED WITH MSIL) MA KING AN ADDITION OF RS. 78.97 CRORES TO THE TOTAL INCOME OF THE ASSESSEE. WHILE PREFERRING AN APPEAL BEFORE THE TRI BUNAL, THE ASSESSEE RAISED THE OBJECTION THAT THE ASSESSMENT P ROCEEDINGS WERE CONTINUED IN THE NAME OF THE NON-EXISTENT OR M ERGED ENTITY SPIL AND THAT THE FINAL ASSESSMENT ORDER WHI CH WAS ALSO ISSUED IN THE NAME OF A NON-EXISTENT ENTITY, W OULD BE INVALID. 16. BY ITS DECISION DATED 6 APRIL 2017, THE TRIBUN AL SET ASIDE THE FINAL ASSESSMENT ORDER ON THE GROUND THAT IT WAS VOID AB INITIO, HAVING BEEN PASSED IN THE NAME OF A NON- EXISTENT ENTITY BY THE ASSESSING OFFICER. THE DECIS ION OF THE TRIBUNAL WAS AFFIRMED IN AN APPEAL UNDER SECTION 260A BY THE DELHI HIGH COURT ON 9 JANUARY 2018 FOLLOWING 9 DRP ITS EARLIER DECISION IN THE CASE OF THE ASSESSEE FO R AY 2011-12. THAT HAS GIVEN RISE TO THE PRESENT APPEAL. . 33. IN THE PRESENT CASE, DESPITE THE FACT THAT THE ASSESSING OFFICER WAS INFORMED OF THE AMALGAMATING COMPANY HA VING CEASED TO EXIST AS A RESULT OF THE APPROVED SCHEME OF ITA NOS.4069 & 4070/DEL/2018 ITA NOS.4071 & 4072/DEL/2018 9 AMALGAMATION, THE JURISDICTIONAL NOTICE WAS ISSUED ONLY IN ITS NAME. THE BASIS ON WHICH JURISDICTION WAS INVOKED W AS FUNDAMENTALLY AT ODDS WITH THE LEGAL PRINCIPLE THAT THE AMALGAMATING ENTITY CEASES TO EXIST UPON THE APPROV ED SCHEME OF AMALGAMATION. PARTICIPATION IN THE PROCEE DINGS BY THE APPELLANT IN THE CIRCUMSTANCES CANNOT OPERATE A S AN ESTOPPEL AGAINST LAW. THIS POSITION NOW HOLDS THE F IELD IN VIEW OF THE JUDGMENT OF A CO-ORDINATE BENCH OF TWO LEARN ED JUDGES WHICH DISMISSED THE APPEAL OF THE REVENUE IN SPICE ENFOTAINMENT ON 2 NOVEMBER 2017. THE DECISION IN SP ICE ENFOTAINMENT HAS BEEN FOLLOWED IN THE CASE OF THE R ESPONDENT WHILE DISMISSING THE SPECIAL LEAVE PETITION FOR AY 2011- 2012. IN DOING SO, THIS COURT HAS RELIED ON THE DEC ISION IN SPICE ENFOTAINMENT. 34. WE FIND NO REASON TO TAKE A DIFFERENT VIEW. THE RE IS A VALUE WHICH THE COURT MUST ABIDE BY IN PROMOTING TH E INTEREST OF CERTAINTY IN TAX LITIGATION. THE VIEW WHICH HAS BEEN TAKEN BY THIS COURT IN RELATION TO THE RESPONDENT FOR AY 2011-12 MUST, IN OUR VIEW BE ADOPTED IN RESPECT OF THE PRES ENT APPEAL WHICH RELATES TO AY 2012-13. NOT DOING SO WILL ONLY RESULT IN UNCERTAINTY AND DISPLACEMENT OF SETTLED EXPECTATION S. THERE IS A SIGNIFICANT VALUE WHICH MUST ATTACH TO OBSERVING THE REQUIREMENT OF CONSISTENCY AND CERTAINTY. INDIVIDUA L AFFAIRS ARE CONDUCTED AND BUSINESS DECISIONS ARE MADE IN TH E EXPECTATION OF CONSISTENCY, UNIFORMITY AND CERTAINT Y. TO DETRACT FROM THOSE PRINCIPLES IS NEITHER EXPEDIENT NOR DESIRABLE. 13. MOREOVER, THE SCHEME OF AMALGAMATION ITSELF TAK ES CARE OF ALL THE CONSEQUENCES OF THE ERSTWHILE ENTITY. IDEN TICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1073/DEL/ 2016 FOR AY 2012-13 VIDE ORDER DATED 28.08.2020 . 14. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND FO LLOWING MARUTI SUZUKI INDIA LTD. CASE (SUPRA) OF HONBLE SUPREME COURT, WE ARE OF THE CONSIDERED VIEW THAT AO AS WEL L AS LD. CIT (A) HAVE ERRED IN FRAMING / CONFIRMING THE ASSESSME NTS IN THE NAME ITA NOS.4069 & 4070/DEL/2018 ITA NOS.4071 & 4072/DEL/2018 10 OF NON-EXISTENT ENTITIES, NAMELY, HARYANA GRAMIN BA NK AND GURGAON GRAMIN BANK WHICH ARE NOT SUSTAINABLE IN TH E EYES OF LAW BEING NULLITY, HENCE ORDERED TO BE QUASHED. CONSEQ UENTLY, ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF JULY , 2021. SD/- SD/- (ANIL CHATURVEDI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH DAY OF JULY, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT (A), ROHTAK. 4.CIT 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.