ITO, WARD - 3(5), BARAMULLA V. KAMRAJ RURAL BANK, BARAMULLA

ITA 438/ASR/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4564 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-05-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 28-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRABHOJ OT KAUR LD
• Assessee Lawyers: NEERAJ GOEL LD
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.438(ASR)/2017 ASSESSMENT YEAR:2006-07 INCOME TAX OFFICER WARD-3(5), BARAMULLA, MADINA COMPLEX, OPP. MASOODI MOTORS NH KANISPORA, BARAMULLA-193101 VS. KAMRAZ RURAL BANK NEW COLONY, SOPORE, BARAMULLA PAN:AAACK7269A (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. PRABHOJOT KAUR (LD. DR) RESPONDENT BY: SH. NEERAJ GOEL (LD. CA) DATE OF HEARING: 02.05.2018 DATE OF PRONOUNCEMENT: 29.05.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REVENUE DEPARTMENT, ON FEELING AGGRIEVED AGAINST THE ORDER DATED 28.03.2017 IMPUGNED HEREIN PASSED BY THE LD. CIT(A)-J &K, JAMMU U/S 143(3) OF THE I.T. ACT, 1961 (HEREIN AFTER CALLED AS THE ACT) FOR THE ASST. YEAR:2006-07. 2. THE REVENUE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. WHETHER THE LD. CIT(A) WAS RIGHT IN LAW AND FAC T IN ACCEPTING THE EXPLANATION OF THE ASSESSEE ON THE BASIS OF THE FRESH EVIDENCE WITHOUT ALLOWING THE OPPORTUNITY TO EXAMIN E SAME BY THE ASSESSING OFFICER AS PER RULE 46 OF THE I.T RUL E. ITA NO.438/ASR/2017 (ASST. YEAR: 2006-07) ITO VS. KAMRAZ RURAL BANK, BARAMULLA 2 2. WHETHER THE LD. CIT(A) WAS RIGHT IN LAW AND FACT IN DELETING THE ADDITION OF RS.7,72,61,404/-OUT OF TOT AL ADDITION MADE AT RS.7,96,80,000/- MADE U/S 40(A)(IA) OF THE I.T. ACT BY ADMITTING THE EVIDENCE FILED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) AND NOT APPRECIATING THE FACT THAT IT HAS FA ILED TO FILE ANY SUCH EVIDENCE BEFORE THE AO DESPITE MANY OPPORTUNIT IES BEING AFFORDED DURING THE ASSESSMENT PROCEEDINGS. 3. THE FACTS OF THE CASE ARE ALREADY ON RECORD, WHICH ARE NOT REPEATED HEREIN FOR THE SAKE OF CONVENIENCE AND BR EVITY. HOWEVER, IN COURSE, THE RETURN DECLARING AN INCOME OF RS. (-) 5,19,46,000/- HAS BEEN FILED BY THE ASSESSEE ON 30.10.20 06 WHICH WAS PROCESSED U/S 143(1)(A) OF THE ACT ON 23 RD JANUARY, 2006. THEREAFTER, THE CASE WAS TAKEN FOR SCRUTI NY UNDER THE CASS AND NOTICE U/S 143(2) OF THE I.T. ACT W AS ISSUED. THE BANK WAS ASKED TO PRODUCE BRANCH WISE DETAILS O F DEPOSITS AND INTEREST AS WELL AS DETAILS OF TDS ON PAYME NT OF INTEREST ON TERM DEPOSITS. IN RESPONSE TO WHICH THE ASSESSEE BANK PRODUCED THE BOOKS OF ACCOUNT BEFORE THE AO WHO, W HILE EXAMINING THE SAME, NOTICED THAT THE ASSESSEE HAD MADE PAYMENT OF INTEREST ON TERM DEPOSITS AMOUNTING TO RS.7,96,80,000/- AND OBSERVED THAT ON THE SAID PAYMENT S, THE ASSESSEE BANK WAS REQUIRED TO DEDUCT TAX AT SOURCE AS PER THE PROVISIONS OF SEC. 194A OF THE I.T. ACT, HOWEV ER, THE ASSESSEE BANK HAS FAILED TO DEDUCT THE SAME. FINALLY THE A O, THEREFORE, DISALLOWED THE ABOVE SUM OF RS.7,96,80,000/ - AS PER THE PROVISION OF SEC.40(A)(IA) OF THE INCOME TAX ACT,1961. ITA NO.438/ASR/2017 (ASST. YEAR: 2006-07) ITO VS. KAMRAZ RURAL BANK, BARAMULLA 3 4. THE ASSESSEE BANK CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) WHO HAD WHILE CONSIDERING THE APPELLANTS SUBMISSIONS THAT THEY HAD PRODUCED BOOKS OF ACCOUNT AND OTHER RELEVANT DOCUMENTARY EVIDENCE BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS WHICH HAS ADMITTEDLY TEST CHECKED BY THE AO. IT WAS FURTHER OBSERVED BY THE L D. CIT(A) THAT BECAUSE OF THE NATURE OF THE ASSESSEE BANK I TSELF BEING A REGISTERED RURAL BANK LOCATED IN BARAMULLA & KUPWARA DISTRICT OF KASHMIR, THE MAXIMUM DEPOSITS BASE OF CLIENTS DEALING WITH THE BANK ARE PEOPLE LIVING BELOW POVERTY AND RESIDING IN FAR FLUNG AREA OF KUPWARA, BANDIPORA ETC. OF THE VALLEY. THUS, THE DEPOSITS FROM INDIVIDUALS ARE NO T SIGNIFICANT AND SUCH DEPOSITS WHERE THE INTEREST PAYMENTS ARE EXCEEDING OF RS.5,000/- ARE EITHER VERY FEW IN EACH B RANCH OR IN SOME BRANCHES THERE ARE NO SUCH DEPOSITS WHEREIN T HE INTEREST ACCRUALS ON DEPOSITS ARE EXCEEDING RS.5,000/- PE R YEAR. IT WAS ALSO OBSERVED BY THE LD. CIT(A) THAT AO DID NOT PROVIDE THE ASSESSEE SUFFICIENT OPPORTUNITIES TO COLLECT INFORMATION FROM ALL THE BRANCHES OF THE BANK. HOWEVE R, THE AO HAS COLLECTED THE INFORMATION REGARDING THE PAYMENT OF INTEREST AND DEDUCTION OF TDS AND HAS COMPILED BRANCH WISE DETAILS OF TOTAL INTEREST PAID EXCEEDING OF RS.5,000/- IN RESPECT OF EACH DEPOSITORS TOGETHER WITH NUMBER OF SUCH ACCOUNTS IN EACH BRANCH FOR THAT YEAR AND FINALLY THE LD . CIT(A) WHILE CONSIDERING THE RELEVANT DOCUMENTS ON RECO RD ITA NO.438/ASR/2017 (ASST. YEAR: 2006-07) ITO VS. KAMRAZ RURAL BANK, BARAMULLA 4 DISALLOWED THE AMOUNT OF RS.24,18,596/- IN RESPECT OF 2 68 IDENTIFIED ACCOUNTS AS AGAINST THE TOTAL INTEREST PAYMEN TS ON DEPOSITS OF RS.7,96,80,000/-, AS ELIGIBLE AMOUNT FOR DISALLOWANCE U/S 40(A)(IA) OF THE I.T. ACT. 5. WE HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. IN THE INSTANT CASE THE ASSESSMENT ORDER WAS PASSED ON 26 TH DECEMBER, 2008 AS IT IS ADMITTED FACTS THAT THE ASSESSEE I S A REGIONAL RURAL BANK AND CATERING TO THE PEOPLE BEL OW POVERTY LINE, WHO ARE LIVING IN FAR FLUNG AREAS OF BARAMULLA , KUPWARA AND BANDIPORA AND ARE SMALL TIME DEPOSITORS AND THE RELEVA NT BOOKS OF ACCOUNT HAVE ALREADY BEEN SUBMITTED TO THE ASSESSING O FFICER AND ON EXAMINING OF THE SAME THE AO CAME TO CONCLUSION THAT THE ASSESSEE HAD MADE PAYMENT OF INTEREST ON TERM DEPOSIT S AMOUNTING TO RS.7,96,80,000/-. IT WAS CLEARLY OBSERVED BY THE LD. CIT(A) THAT AO DID NOT PROVIDE SUFFICIENT OPPORT UNITIES THE ASSESSEE TO COLLECT INFORMATION FROM ALL THE BRANCHES OF TH E BANK. HOWEVER, THE ASSESSEE BANK HAS COLLECTED THE INFORMAT ION REGARDING THE PAYMENT OF INTEREST AND DEDUCTION OF TD S AND COMPILED BRANCHWISE DETAILS OF TOTAL INTEREST PAID EXCE EDING OF RS.5,000/- IN RESPECT OF EACH DEPOSITORS TOGETHER WITH NU MBER OF SUCH ACCOUNTS IN EACH BRANCH FOR THAT YEAR. THE ASSEEEE BAN K NOT ONLY SUBMITTED THE AFORESAID DOCUMENTS/DETAILS TO THE LD. CIT(A) BUT ALSO TO THE ASSESSING OFFICER IN REMAND PROCEE DINGS BECAUSE THE LD. CIT(A) WHILE CONSIDERING THE RELEVANT D OCUMENTS ON RECORD SOUGHT THE REMAND REPORT FROM THE ASSESSING OFF ICER, WHO ALTHOUGH RECEIVED MANY NOTICES AND REMINDERS FROM T HE ITA NO.438/ASR/2017 (ASST. YEAR: 2006-07) ITO VS. KAMRAZ RURAL BANK, BARAMULLA 5 OFFICE OF THE LD CIT(A) QUA REMAND PROCEEDINGS, AS WELL AS REQUEST FROM THE ASSESSEE BANK FOR FILING THE REMAND REP ORT, HOWEVER DID NOT FILE THE SAME AND IN THAT EVENTUALIT Y, THE LD. CIT(A) , IN THE CONSTRAINED CIRCUMSTANCES, WHILE CONSIDERING THE DOCUMENTS OF RECORD, DISALLOWED THE AMOUNT OF RS.24,18,5 96/- IN RESPECT OF 268 IDENTIFIED ACCOUNTS AS AGAINST THE TOT AL INTEREST PAYMENTS ON DEPOSITS OF RS.7,96,80,000/-, AS ELIGIBLE AM OUNT FOR DISALLOWANCE U/S 40(A)(IA) OF THE I.T. ACT. IT IS TR ITE TO SAY THAT POWER OF THE CIT(A) IS CO-TERMINUS WITH THE ASSESSIN G OFFICER AND HE IS AT LIBERTY TO CONSIDER ANY MATERIAL F OR JUST DECISION OF THE CASE. THEREFORE ON THE BASIS OF THE FACT S AS THE LD. CIT(A) SOUGHT REMAND REPORT FROM THE ASSESSING OFFICE R AND THE ASSESSEE BANK HAD PRODUCED ALL MATERIAL BEFORE THE ASSESSING OFFICER FOR ITS PERUSAL, WHICH HAVE BEEN PRODUCED BEFORE THE LD. CIT(A) , HENCE IT CAN NOT BE SAID THAT THAT NEW MATERIAL OR ADDITIONAL EVIDENCES HAVE BEEN ADMITTED/P ERUSED WITHOUT CONSIDERATION OF SAME BY THE ASSESSING OFFICER , H ENCE WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) DID NOT VIOLATE THE MANDATE OF RULE 46 OF THE I T ACT , HENCE GROUND NO. 1 AND 2 STANDS DISMISSED . 6. IN THE RESULT , THE APPEAL FILED BY THE REVENUE DEPARTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.05.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED:29.05.2018 ITA NO.438/ASR/2017 (ASST. YEAR: 2006-07) ITO VS. KAMRAZ RURAL BANK, BARAMULLA 6 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) KAMRAZ RURAL BANK, NEW COLONY, SOPORE, BARAM ULLA (2) THE ITO, WARD-3(5), BARAMULLA (3) THE CIT(A)- J&K, JAMMU (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER