UNION BANK OF INDIA, MUMBAI V. ACIT LTU, MUMBAI

ITA 4157/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59911 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2004-2005
• Appeal Filed On: 19-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBACHAN RAM
• Keywords: Rectification of order
• Section: 143(3); 14A; 115JB; 154; 11

Judgement Text

ITA NOS. 4155 TO 4161 OF 2011 UNION BANK OF INDIA, MUMBAI PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 4155 TO 4161/MUM/2011 (ASSESSMENT YEARS: 2002-03 TO 2006-07) UNION BANK OF INDIA VS ACIT- LTU UNION BANK BHAVAN, 6 TH FLOOR 28 TH FLOOR, CENTRE-1 CENTRAL ACCTTS. DEPARTMENT WORLD TRADE CENTRE 239 VIDHAN BHAVAN MARG NARIMAN POINT, MUMBAI 400021 CUFF PARADE MUMBAI 400005 PAN AAACU 0564 G (APPELLANT) (RESPONDENT) APPELLANT BY: MR. C. NARESH RESPONDENT BY: MR. SUBACHAN RAM, DR DATE OF HEARING: 20/03/2012 DATE OF PRONOUNCEMENT: 27/03/2012 O R D E R PER BENCH: THESE ARE BATCH OF APPEALS ON SIMILAR ISSUE FILED B Y THE ASSESSEE AGAINST THE ORDERS OF THE ACIT (LTT) MUMBA I, WHICH WERE IN TURN, CONFIRMED BY THE CIT (A) RESPECTIVELY. DUR ING THE COURSE OF THE PRESENT APPELLATE PROCEEDINGS, THE ASSESSEE DID NOT PRESS FOR THESE APPEALS (ITA NOS.4155, 4156, 4158, 4159 & 416 1) ON THE FOLLOWING REASONS: ITA NO.4155/M/2011 ASSESSMENT YEAR 2002-03: THIS APPEAL IS NOT PRESSED SINCE THE HON'BLE ITAT I N ORDER IN ITA NO.4702 TO 4706/M/2010 DATED 30.6.2011 HELD THAT TH E PROVISIONS OF RULE 8D ARE NOT APPLICABLE. ITA NO.4156/M/2011 ASSESSMENT YEAR 2003-04: THIS APPEAL IS NOT PRESSED SINCE THE HON'BLE ITAT I N ORDER IN ITA NO.4702 TO 4706/M/2010 DATED 30.6.2011 HELD THAT TH E PROVISIONS OF RULE 8D ARE NOT APPLICABLE. ITA NOS. 4155 TO 4161 OF 2011 UNION BANK OF INDIA, MUMBAI PAGE 2 OF 5 ITA NO.4158/M/2011 ASSESSMENT YEAR 2004-05: THIS APPEAL IS NOT PRESSED SINCE THE HON'BLE ITAT I N ORDER IN ITA NO.4702 TO 4706/M/2010 DATED 30.6.2011 HELD THAT TH E PROVISIONS OF RULE 8D ARE NOT APPLICABLE. ITA NO.4159/M/2011 ASSESSMENT YEAR 2005-06: THIS APPEAL IS NOT PRESSED SINCE THE HON'BLE ITAT I N ORDER IN ITA NO.4702 TO 4706/M/2010 DATED 30.6.2011 HELD THAT TH E PROVISIONS OF RULE 8D ARE NOT APPLICABLE. ITA NO.4161/M/2011 ASSESSMENT YEAR 2006-07: THIS APPEAL IS NOT PRESSED SINCE THE HON'BLE ITAT I N ORDER IN ITA NO.4702 TO 4706/M/2010 DATED 30.6.2011 HELD THAT TH E PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO THE APPELLAN T. 2. THE ABOVE APPEALS ARE ALLOWED TO BE WITHDRAWN ACCOR DINGLY, FOR WHICH WE HAVE NO OBJECTION. 3. ITA NOS.4157 & 4160/MUM/2011: (ASSESSMENT YEAR: 2004-05 & 2005-06): IN THESE TWO APPEALS, THE ISSUE IS ABOUT THE ACTION OF THE ASSESSING OFFICER IN MODIFYING UNDER SECTION 154 OF THE BOOK PROFITS UNDER SECTION 115JB BY DISALLOWING THE PROVISIONS FOR WAGE ARREARS, OTHERS ETC. CONSEQUENT TO THE AMENDME NT BROUGHT OUT BY THE FINANCE ACT, 2009 TO CLAUSE-1 OF SECTION 115 JB RETROSPECTIVE W.E.F. 1.4.2011.IT WAS THE CONTENTION OF THE ASSESS ING OFFICER THAT SINCE THE LAW WAS AMENDED RETROSPECTIVELY, THE PROV ISIONS FOR DIMINUTION VALUE OF ASSETS OR LIABILITIES ARE TO BE DISALLOWED UNDER SECTION 115JB. IT WAS THE CONTENTION OF THE ASSESSE E IN RESPECT TO NOTICE UNDER SECTION 154 THAT THE PROVISIONS FOR RE STRUCTURED ACCOUNTS, WAGE ARREARS, PROVISIONS FOR STANDARD ASS ETS ARE NOT THE PROVISIONS FOR UNASCERTAINED LIABILITIES AND THEREF ORE, THE SAME CANNOT BE DISALLOWED UNDER SECTION 154. THE ASSESSI NG OFFICER HOWEVER, HAS ADDED BACK THE AMOUNT UNDER SECTION 11 5JB PERTAINING TO PROVISIONS FOR RESTRUCTURED ACCOUNTS, STANDARD ASSETS, OTHERS AND WAGE ARREARS. BEFORE THE CIT (A) IT WAS CONTENDED THAT THESE ASSETS ARE ASCERTAINED LIABILITIES WHICH CANN OT BE CONSIDERED UNDER SECTION 115JB AND THE ISSUES ON WHICH THE ADD ITIONS WERE ITA NOS. 4155 TO 4161 OF 2011 UNION BANK OF INDIA, MUMBAI PAGE 3 OF 5 MADE COULD CONCEIVABLE, THERE WERE TWO OPINIONS AND THESE CAN BE RESORTED ONLY BY A LONG RUN PROCESSING OF REASONING AND, THEREFORE, THEY CANNOT BE DISALLOWED BY INVOKING THE PROVISION S OF SECTION 154. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER ORIGINALLY ALLOWED THE AMOUNT. THEREFORE, PROVISIONS OF SECTIO N 115JB WERE NOT INVOKED AND THE SAME CANNOT BE RESORTED TO UNDE R SECTION 154 WITHOUT EXAMINING THE NATURE OF THE AMOUNTS. 4. THE CIT (A) HOWEVER, DID NOT AGREE AND UPHELD THE S AME AND THE ADDITIONS MADE. THEREFORE, THE ASSESSEE IS IN A PPEAL. IT SEEMS THERE IS NO CROSS APPEALS FROM THE REVENUE ON THE A MOUNTS ALLOWED BY THE CIT (A). THE ISSUES IN BOTH THE YEARS BEING COMMON. THESE ARE CONSIDERED TO BE ALLOWED. 5. IN THE COURSE OF PRESENT PROCEEDINGS, THE ASSESSEE FILED ADDITIONAL GROUND UNDER RULE 211 OF THE ITAT RULES SUBMITTED THAT THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO THE ASSESSEE BANKING COMPANY RELYING ON THE JUDGMENT OF THE ITAT IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 IN ITA NO.4706/ MUM/2010 DATED 30.6.2011 WHICH RELATES TO THE APPLI CABILITY OF SECTION 115JB. IT WAS SUBMITTED THAT THE ACCOUNTS O F THE APPELLANT ARE PREPARED IN ACCORDANCE WITH THE SCHEDULE III OF THE BANKING REGULATIONS ACT AND NOT IN ACCORDANCE WITH THE SCHE DULE VI OF THE COMPANIES ACT AND FOLLOWING THE DECISION OF THE ITA T IN THE CASE OF KRUG THAI BANK THE COORDINATE BENCH IN ASSESSEES O WN CASE UPHELD THE CONTENTION THAT THE PROVISIONS OF SECTIO N 115JB ARE NOT APPLICABLE TO THE ASSESSEE BANK. IT WAS FURTHER SUB MITTED THAT ON THE ISSUE OF PROVISIONS WHICH ARE TO BE CONSIDERED FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F VIJAY BANK, IT IS NECESSARY FOR THE ASSESSING OFFICER TO EXAMINE T HE ASCERTAINED LIABILITIES AND SIMPLY BECAUSE THERE WERE PROVISION S IN THE BOOKS, THE SAME CANNOT BE ADDED BACK UNDER SECTION 115JB. IT WAS RELIED THAT THE HON'BLE KARNATAKA HIGH COURT IN THE CASE O F CIT VS. YOKOGAWA INDIA LTD IN ITA NO.1062 OF 2008 WHEREIN I T WAS HELD THAT THE PROVISIONS IS REDUCED FROM THE VALUE OF THE ASS ETS, THE SAME CANNOT BE ADDED BACK BASED ON EXPLANATION-1 TO SECT ION 115JB. IT ITA NOS. 4155 TO 4161 OF 2011 UNION BANK OF INDIA, MUMBAI PAGE 4 OF 5 WAS ALSO FURTHER SUBMITTED THAT THE ASSESSING OFFIC ER WAS WRONG IN INVOKING THE PROVISIONS OF SECTION 14A WHILE WORKIN G OUT DISALLOWANCE UNDER SECTION 115JB. IT WAS SUBMITTED THAT THE ISSUES ARE IN NATURE AND THEREFORE, RESORTING TO SECTIO N 154 IS NOT CORRECT. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE IN REPLY HO WEVER, SUBMITTED THAT CONSEQUENT TO THE AMENDMENTS, THESE RECTIFICATION ORDERS HAVE BEEN PASSED WHICH ARE TO BE UPHELD. 7. WE HAVE CONSIDERED THE ISSUE. THERE IS NO DOUBT THA T THE ASSESSMENT ORDERS UNDER SECTION 143(3) WERE PASSED IN THESE YEARS UNDER WHICH TOTAL INCOME WAS DETERMINED UNDER NORMA L PROVISIONS AND BOOK PROVISIONS OF SECTION 115JB WERE NOT INVOK ED. THE ISSUES WHICH ARE CONSIDERED IN NORMAL ASSESSMENT ARE STILL PENDING BEFORE THE ITAT FOR ADJUDICATION, WHEREAS THE ASSESSING OF FICER UNDER THE GUISE OF SECTION 154 DISALLOWED CERTAIN AMOUNTS REV ISING THE BOOK PROFITS. HOWEVER, EVEN AFTER MAKING THESE ADJUSTMEN TS, THE TAX UNDER NORMAL PROVISIONS WAS DETERMINED AT ` .328.07 CRORES, WHEREAS THE TAX UNDER SECTION 115JB WAS DETERMINED AT ` .72.02 CRORES FOR ASSESSMENT YEARS 2004-05 AND TAX UNDER N ORMAL PROVISIONS WAS DETERMINED AT ` 150.91 CRORES UNDER NORMAL PROVISIONS AND TAX UNDER SECTION 115JB AT ` .28.06 CRORES UNDER SECTION115JB. ULTIMATELY THE TAXES WERE DETERMINED UNDER NORMAL PROVISIONS WITHOUT EXERCISING THE PROVISIONS OF SEC TION 115JB. IN THAT VIEW, THE ENTIRE EXERCISES OF MODIFYING THE OR DERS IS REDUNDANT AS EVEN AFTER SUCH ADJUSTMENT, THE TAX DETERMINED U NDER THE NORMAL PROVISIONS IS MORE THAN THE TAX THAT ARE BEI NG DETERMINED BY THIS ORDER UNDER SECTION 154. 8. BE THAT AS IT MAY, JUST BECAUSE A RETROSPECTIVE AME NDMENT HAS BEEN CARRIED OUT ON THE STATUE, THE ASSESSMENT CANNOT BE MODIFIED WITHOUT EXAMINING WHETHER THE PROVISIONS S O MADE ARE TO BE DISALLOWED OR NOT. THIS REQUIRES DETAILED EXAMIN ATION AND IN FACT AS FOR THE SUBMISSIONS MADE BEFORE THE AUTHORITIES, THE ASSESSEE HAD APPEARED BEFORE THE ASSESSING OFFICER FURNISHIN G VARIOUS DETAILS AND HOW THE AMOUNTS CANNOT BE DISALLOWED. SINCE THI S REQUIRES ITA NOS. 4155 TO 4161 OF 2011 UNION BANK OF INDIA, MUMBAI PAGE 5 OF 5 ELABORATE EXAMINATION ON A LONG RUN PROCESS, WE ARE OF THE OPINION THAT THE ORDERS CANNOT BE MODIFIED BY INVOKING THE PROVISIONS OF SECTION 154. NOT ONLY THAT THE COORDINATE BENCH IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2006-07 HAS HELD THAT THE P ROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO THE ASSESSEE BA NK. IN VIEW OF THIS, WE HOLD THAT THE ORDER UNDER SECTION 154 PASS ED BY THE ASSESSING OFFICER IS NOT CORRECT AND THEREFORE, THE SAME WAS SET ASIDE. ACCORDINGLY ASSESSEES GROUNDS IN THE ABOVE 2 YEARS ARE ALLOWED. 9. IN THE RESULT, ASSESSEES APPEALS IN ITA NOS.4157 & 4160/MUM/2011 FOR THE ASSESSMENT YEARS 2004-05 & 20 05-06 ARE ALLOWED, WHEREAS THE FIVE OTHER APPEALS IN ITA NOS. 4155, 4156, 4158, 4159 & 4161 ARE TREATED AS WITHDRAWN. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MARCH, 2012. SD/- SD/- ( R.S.PADVEKAR ) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 27 TH MARCH, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI