ACIT, Cuttack V. The Urban Co-oprative Bank Ltd, Cuttack

ITA 444/CTK/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4440 (ITAT-CUTTACK)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2011
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 25-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-12-2010
• Court: TRIBUNAL
• Department Lawyers: PA NIGRAHI
• Assessee Lawyers: A K
• Keywords: Bad and doubtful debts

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER ITA NO.444/CTK/2010 ASSESSMENT YEAR 2007 - 08 ITA NO.446/CTK/2010 ASSESSMENT YEAR 2007 - 08 ACIT, CIRCLE 2(2), CUTTACK. .. APPELLANT - V ERSUS - THE URBAN CO - OP.BANK LTD., TINIKONIA BAGICHA, CUTTACK. .. RESPONDENT THE URBAN CO - OP.BANK LTD., TINIKONIA BAGICHA, CUTTACK. .. APPELLANT - VERSUS - ACIT, CIRCLE 2(2), CUTTACK. .. RESPONDENT FOR THE REVENUE : SHRI M.R.PANIGRAHI, DR FOR THE ASSESSEE : SHRI A.K.PANDA, AR / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER . THESE APPEALS BY THE REVENUE AS WELL AS THE ASSESSEE ARISE OUT OF THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME - TAX (APPEALS) DT.28.9.2010. 2. THE REVENUE IS AGITATING THE ACTION OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IN ALLOWING THE ASSESSEES CLAIM FOR PROVISION OF BAD AND DOUBTFUL DEBTS RELYING ON HIS PREDECESSORS ORDER ON ALLOWING THE SAME FOR THE ASSESSMENT YEAR 2006 - 07.THE REVENUE AGITATES THAT THE CLAIM FOR PROVISION OF BAD AND DOUBTFUL DEBTS IN THE CASE OF NON - SCHEDULE D BANK HAS TO BE IN ACCORDANCE WITH THE GUIDE LINES GIVEN IN THE PROVISIONS OF SECTION36(1)(VIIA).THE REVENUE AGITAT ES THAT THE LEARNED CIT(A) ERRED IN ITA NOS.444 AND 446/C TK/2010 (CROSS APPEALS) 2 FOLLOWING THE DECISION OF HONBLE APEX COURT IN THE CASE OF SOUTHERN TECHNOLOGIES LIMITED V. JT. CIT (320 ITR 577) ON THE FACTS OF THE ASSESSEESCASE .THE ASSESSEE IS IN APPEAL AGITATING THE ACTION OF THE LEARNED CIT(A) I N CONFIRMING THE AMOUNT CLAIMED AS UN - RECONCILED AMOUNT BY PLACING RELIANCE ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF RAVULU V. CIT (30 ITR 163,173) AND KARMACHARI UNION V. UNION OF INDIA (243 ITR 143). 3. WE HAVE HEARD THE RIVAL CONTENTIONS AT LENGTH AND PERUSED THE MATERIAL AVAILABLE RECORD. WE ARE OF THE CONSIDERED VIEW THAT BOTH THE ISSUES REQUIRE RECONSIDERATION BY THE ASSESSING OFFICER IN THE LIGHT OF THE FACT AS HAVE BEEN FURTHER CLARIFIED BY THE LEARNED CIT(A) IN HIS ORDER RESPECTIVELY HAVE BEEN AGITATED BY THE RIVAL PARTIES HERE BEFORE US. 4. PROVISION FOR BAD AND DOUBTFUL DEBTS REQUIRES CONSIDERATION IN THE LIGHT OF THE PROVISIONS OF SECTION 36(1)(VIIA). THE CLAIM BY THE ASSESSEE WAS NOT MADE BEFORE THE ASSESSING OFFICER IN THE LIGHT OF THE SAID PROVISIONS INSOFAR AS THE LEARNED CIT(A) HAS FOLLOWED HIS PREDECESSORS DECISION WITHOUT ANALYZING THE FACT WHEN THE PROVISION ALLOWED IN THE IMMEDIATELY PRECEDING YEAR CLAIMED AT 1,37,45,215 INCREASED TO 3,20,87,819 IN THE IMPUGNED YEAR . TH E ASSESSING OFFICER THEREFORE NOTED THAT THE PROVISIONS OF BAD AND DOUBTFUL DEBTS BEING THE DIFFERENCE AT 1,83,42,604 WAS TO BE ON THE BASIS OF THE PROVISIONS OF THE SAID SECTION AGAINST WHICH THE ASSESSEE HAS NOT FURNISHED ANY SUBSTANTIVE MATERIAL. THE L EARNED CIT(A), THE LEARNED DR HAS ARGUED, HAD DELETED THE DISALLOWANCE THROUGH A CRYPTIC AND NON - SPEAKING ORDER NOT BASED ON PROPER APPRECIATION OF FA C TS AND LAW. THE LEARNED COUNSEL FOR THE ASSESSEE HAS AGREED TO THE PRO POSITION THAT THE MATTER BE RESTORE D TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFRESH IN THE ITA NOS.444 AND 446/C TK/2010 (CROSS APPEALS) 3 LIGHT OF APPLICABILITY OF THE PROVISIONS OF THE SAID SECTION PRESCRIBED FOR THE ASSESSEE . THE APPEAL FILED BY THE REVENUE, THEREFORE, STANDS ALLOWED FOR STATISTICAL PURPOSES. 5. WITH R ESPECT TO THE UN - RECONCILED AMOUNT IT HAS BEEN SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE SAID AMOUNT REMAINS UN - RECONCILED ON ACCOUNT OF INTER BRANCH TRANSACTIONS AND THE ASSESSEE BANK IS HAVING 16 BRANCHES. AS PER THE CIRCULAR OF THE DIRE CTORATE OF CO - OPERATIVE AUDIT, ORISSA, BHUBANESWAR AN AMOUNT REMAINING UN - RECONCILED HAS TO BE KEPT FOR CHARGING TO THE PROFIT & LOSS ACCOUNT ON THE SUGGESTION OF THE RESERVE BANK OF INDIA. THE LEARNED DR, HOWEVER, OPPOSED THE ARGUMENT BY SUBMITTING THAT THE BASIC CLAIM OF THE ASSESSEE CANNOT BE ADHERED TO INSOFAR AS IT FAILED TO DECIPHER WHETHER IT IS ON REVENUE ACCOUNT O R ON CAPITAL ACCOUNT THAT REMAINED UN - RECONCILED . A PROVISION, THEREFORE, CANNOT BE CLAIMED AS LOSS TILL SUCH ITEM AS PER THE SUGGESTION OF THE RESERVE BANK OF INDIA , WHETHER HAS AN AMOUNT THAT WOULD BE RECONCILED RESULTING IN WHETHER TO BE ADJUSTED AGAINST EXPENSES OR TO BE CLAIMED FROM THE BRANCH CONCERN ED HAS BEEN ESTABLISHED. ON THE BASIS OF THE ABOVE SUBMISSIONS, WE ARE INCLINED TO HO LD THAT THE ISSUE REQUIRES RECONSIDERATION BY THE ASSESSING OFFICER FOR THE FINDING WHETHER THE UN - RECONCILED AMOUNT INVOLVES ANY SUM FROM A BRANCH WHETHER WAS TO BE ADJUSTED AGAINST EXPENDITURE OR AGAINST ANY ASSET LIABILITY HAS TO BE ESTABLISHED BEYOND DOUBT FOR CLAIMING IT AS A LOSS. THIS ASPECT THEREFORE REQUIRES VERIFICATION BY THE ASSESSING OFFICER INSOFAR AS THE RESERVE BANK OF INDIA HAVE SUGGESTED FOR PROVIDING FOR THE SAID AMOUNT IN THE PROFIT & LOSS ACCOUNT IN THE LINE OF AN IRRECOVERABLE AMOUNT WITHOUT DEFINING THE LOSS WHETHER ON CAPITAL ACCOUNT AS WELL. NEEDLESS TO SAY, AN OPPORTUNITY BE GIVEN TO THE ASSESSEE FOR CLARIFYING ITS STAND TO THE ASSESSING ITA NOS.444 AND 446/C TK/2010 (CROSS APPEALS) 4 OFFICER. THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE AS WELL AS BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 28 TH APRIL, 2011 S D/ - S D/ - ( . . . ) , ( K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 28 TH APRIL, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . THE ASSESSEE : THE URBAN CO - OP.BANK LTD., TINIKONIA BAGICHA, CUTTACK. 2 THE DEPARTMENT : ACIT, CIRCLE 2(2), CUTTACK. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTA CK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.