M/s jila Sahakari Kendriya Bank, , Khargone V. ACIT-2, Indore

ITA 496/Ind/2018

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6661 (ITAT-INDORE)
• Duration Of Justice: 6 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-05-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 19-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAM KUMAR YADAV
• Keywords: Revision of order; Corroborative evidences; Assessment record; Capital expenditure; Set aside
• Section: 37; 263; 43B; 143(3); 142(1); 234B; 143(1); 143(2); 43

Judgement Text

आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No. 496/Ind/2018 (Assessment Year: 2013-14 M/s Jila Sahakari Bank Maryadit, Khargone Vs. Principal CIT-2, Indore (Appellant / Assessee) (Respondent/ Revenue) PAN: AAATJ0529K Assessee by Shri Subhash Jain, AR Revenue by Shri Ram Kumar Yadav, CIT Date of Hearing 29.05.2024 Date of Pronouncement 05.06.2024 O R D E R Per Vijay Pal Rao, JM : This appeal by the assessee is directed against the revision order dated 22.03.2018 of Ld. Principal Commissioner of Income Tax-2 (Ld. PCIT) Indore passed u/s 263 of the Income Tax Act for the Assessment Year 2013-14. The assessee has raised following grounds of appeals. ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 2 1. On the facts and the circumstances of the case, the order passed under section 263 of the IT Act 1961 is illegal, invalid and bad in law. 2. On the facts and the circumstances of the case, the Hon’ble Pr. Commissioner of Income Tax-II erre3d in holding that the order passed in the case of assessee u/s 263 of I.T. Act, 1961 on 06.01.2016 is erroneous and prejudicial in the interest of revenue. 3. On the facts and the circumstances of the case, the Hon’ble Commissioner of Income Tax-II erred in setting aside the following point issues to be decided afresh by A.O for making enquiries/investigation/re-examined. S.No Head of Account Amount 1 Dividend Equilisation fund 15000000 2 Computer Fund 40000000 3 Furniture and Fixtures Fund 30000000 4 Development Fund 5000000 5 Loan Inbalance fund 30000000 6 Risk Fund provisions 10000000 7 One Time Settlement Provision 4700000 8 President Rahat Fund 1000000 Total 135700000 I LAN networking and Electric Expenses 2719790 Total 138419790 4. On the facts and the circumstances of the case, the Hon’ble Commissioner of Income Tax-II erred in directing the A.O in make enquire or investigationn about the allowability of the expenses as well as nature all of above provision Rs.138419798/- debited to profit and loss account. 4. 5. On the facts and the circumstances of the case, the Hon’ble Commissioner of Income Tax-II erred in holding that order dt. 06.01.2016 for A.Y 2014-15 is erroneous while there was no such order for the A.Y 2014-15. Thus the order passed without booking to the relevant year record as well as earlier year assessment in which ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 3 all pointed out claim were examined and allowed being revenue nature. 6. On the facts and the circumstances of the case, the Hon’ble Commissioner of Income Tax-II erred s erroneous while there was no such order for the A.Y 2014-15. Thus the order passed without looking to the relevant year record as well as earlier year assessment in which all pointed out claims were examined and allowed being revenue nature. 7.On the facts and the circumstances of the case, the Hon’ble Commissioner of Income Tax-II was not allowed any reasonable opportunity to the appellant to present the case on the issue hence order passed by the Ld. Pr. CIT u/s 263 was vitiated in law. 8.That the appellant reserves its right to add to amend to alter or to modify any of the ground and to pursue any other or further grounds as may be required” 2. The assessee is a co-operative bank carrying business of banking. The assessment u/s 143(3) of the Income Tax Act was completed on 06.01.2016 on the total income of Rs.14,76,12,320/- accepting the return of income. Thereafter the Ld. PCIT going through the assessment record observed that certain expenditure which were in the nature of capital expenses and certain provisions of contingencies were allowed by Ld. A.O without verification and enquiries. Accordingly a show cause notice u/s 263 of the Income Tax Act dated 28.12.2017 was issued by Ld. PCIT on two issues namely (i) not disallowing the capital expenditure on account of LAN networking and electrical expenses to the tune of Rs.27,19,790/- and (ii) provisions of contingencies debited to the ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 4 profit and loss account to the extent of Rs.13,57,000/-. In response to the show cause notice the assessee filed its reply dated 9.1.2018 and objected to the invocation of provisions of Section 263. The main contention of the assessee in response to the show cause notice was that the Ld. A.O has conducted a due enquiry during the scrutiny assessment and therefore the order of the Ld. A.O cannot be held as erroneous or prejudicial to the interest of revenue. The Ld. PCIT was not convinced with the reply of the assessee and held that the case was selected for complete scrutiny and one of the points of scrutiny was other expenses claimed in the Profit and Loss account but the Ld. Assessing Officer has not raised any query regarding the capital expenditure as well as provisions to the tune of Rs.13.57 crores. Thus the Ld. PCIT has concluded that the order passed by the Ld. A.O without conducting due enquiry on these issues is erroneous as well as prejudicial to the interest of revenue. Accordingly the order of the Ld. A.O was set aside with the direction to reexamine all the points as taken up in the proceedings u/s 263 of the Income Tax Act after making necessary enquiry as well as investigation. Aggrieved by the impugned order assessee has filed an appeal before us. 3. Before the Tribunal Ld. AR has submitted that the Ld. A.O has issued show cause notice u/s 1421) of the Income Tax Act dated 12.10.2015 which was duly replied by the assessee with supporting evidences vide reply dated 08.12.2015. He has ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 5 pointed out that the assessee has explained each and every point in its reply which were taken up by the Ld. PCIT in the show cause notice issued u/s 263 of the Income Tax Act. Thus he has contended that only after the Ld. A.O was satisfied with the reply of the assessee on the claim of provisions of section 36(i)(viii) was accepted by the Ld. A.O. When the Ld. A.O has conducted a due enquiry and accepted the claim of the assessee then it is not necessary that the Ld. A.O should give an elaborate finding on the issue. Ld. PCIT has no jurisdiction to invoke the provisions of Section 263 of the Income Tax Act on an issue which was duly investigated by the Ld. A.O in the assessment proceedings and taken a possible view. Merely because the Ld. A.O has not given elaborate finding the assessment order cannot be declared to be erroneous and prejudice to the interest of the revenue. In support of his contention he relied upon the decision of Delhi Bench in the case of Solora International Ltd V/s Addl. CIT 2 SOT 705. He has relied upon the decision of Hon’ble Bombay High Court in the case of CIT V/s Nirav Modi 71 Taxman.com 272. Ld. AR has then referred to the computation of income placed at page No.8 of the synopsis and submitted that the assessee has made suo-moto disallowance in respect of LAN networking and electrical expenses of Rs.27,19,000/- and therefore, there cannot be a question of allowability of the same by the Ld. A.O and consequently the order of the Ld. AO cannot be held as erroneous on this issue. Ld. AR then relied upon the decision of Rajkot Bench dated 30.06.2022 in ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 6 the case of M/s Pramukh Realty Vs PCIT as well as the decision of Delhi Benches dated 01.09.2019 in the case of Dwarikadish Buildwell Pvt. Ltd v/s CIT in ITA No.3097/Del/2014 and submitted that the Tribunal has held that if the CIT is of the view that the A.O did not undertake any enquiry, it becomes incumbent on the part of PCIT to conduct such enquiry. If PCIT does not conduct such basic exercise then the PCIT is not justified in setting aside the order u/s 263 of the Income Tax Act. Thus Ld. AR has submitted that case of the assessee does not fall in the category of complete lack of enquiry when the Ld. A.O has passed the order after conducting a due enquiry and satisfaction of the claim of the assessee then the same cannot be held as erroneous and prejudicial to the interest of revenue. The Ld. A.O after considering the reply as well as judicial precedence on the allowability of various statutory provisions provided u/s 43 and 43A of M.P Co- operative Act allowed all provisions of the assessee bank. Hence, the Ld. AR has submitted that when the Ld. A.O has taken a possible view the Ld. PCIT is not permitted to invoke the provisions of Section 263 of the Income Tax Act merely because he does not agree with the view of the Ld. A.O. Accordingly he has pleaded that the impugned order of Ld. PCIT is not sustainable and the same is liable to be set aside/quashed. 4. On the other hand Ld. DR has submitted that the order of the Ld. A.O is completely silent on any of the issues as taken up by Pr. ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 7 CIT in the proceedings u/s 263 of the Income Tax Act. The Ld. A.O has accepted the return income without making any enquiry about the allowability of provisions claimed as deduction by the assessee. This is a case of complete lack of enquiry on the part of Ld. A.O. He has relied upon the impugned order of the Ld. PCIT. 5. We have considered the rival submissions as well as relevant material on record. The Ld. A.O has passed scrutiny assessment u/s 143(3) of the Income Tax Act dated 06.01.2016 as under:- ASSESSMENT ORDER Return of income, in this case was filed on 30.09.2013 through e- filing vide acknowledgement No. 807652231300913 showing net Income of Rs. 14,76,12,320/-. The assessee engaged in the banking & related services and Insurance commission. The return filed has been processed u/s 143(1) of the I.T. Act, 1961. The case was selected for scrutiny and statutory notice u/s 143(2) was issued on 02.09.2014 from ITO-5(3), Indore and the same were sent to the assessee through speed post. Due to change of jurisdiction, case had been transferred to this office on 24-12-2014. Notices u/s 142(1) has been issued from time to time as per requirement during the course of assessment proceeding. A copy of all the notices issued by this office is placed on record. 2. In response to notices u/s 143(2) and 142(1) of Income tax Act, 1961, Shri R.K. Acharya manager in account section and counsel of the assessee Shri Subhash Jain attended the proceedings from time to time with whom case has been discussed. Assessee filed written reply with details as required. Assessee show inability to produce books of account due to CBS system. 3. After discussion and considering the material placed on record, the total return income of the assessee i.e. of Rs. 14,76,12,320/- is hereby accepted and assessed on that income. Charge interest as per ITNS-150 which is ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 8 part of this order. Interest u/s 234B and 234C is being charged. Issue notice of demand. 6. Thus it is clear that the case of the assessee was selected for complete scrutiny and notice u/s 143(2) of the Income Tax Act was issued on 02.09.2014. The Ld. A.O has mentioned that the notice u/s 142(1) was issued however, no details of the date of notice or queries raised by the Ld. A.O are mentioned in the assessment order. The assessee has filed copy of notice issued u/s 142(1) dated 12.10.2015 and as per query No.10 the Ld. A.O asked the assessee to furnish the details of payment made with regard to provisions covered u/s 143B of the Act shown in the balance sheet. For ready reference we reproduce the query raised by the Ld. A.O in the notice issued u/s 142(1) as under:- “10. Produce details of payments made with regard to provisions and/or covered u/s 43B of the I.T. Act shown in the balance sheet if any” 7. Thus only relevant query was raised by the Ld. A.O in respect the expenses covered u/s 43B of the Act in query No.10 and no other query was raised regarding the allowability of various provisions claimed by the assessee. The Ld. PCIT has given the details of those provisions in the show cause notice in para 3 as under:- “3.On the facts and the circumstances of the case, the Hon’ble Commissioner of Income Tax-II erred in setting aside the following point issues to be decided afresh by A.O for making enquiries/investigation/re- examined. S.No Head of Account Amount 1 Dividend Equilisation fund 15000000 ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 9 2 Computer Fund 40000000 3 Furniture and Fixtures Fund 30000000 4 Development Fund 5000000 5 Loan Inbalance fund 30000000 6 Risk Fund provisions 10000000 7 One Time Settlement Provision 4700000 8 President Rahat Fund 1000000 Total 135700000 8. Thus it is clear that as many as 8 items of claim of provisions were questioned by the Ld. PCIT in the show cause notice about the allowability of same u/s 37 of the Act. Though the assessee has referred to its reply dated 08.12.2015 however, the assessment order is completely silent about any such reply. Accordingly Bench directed the Ld. A.O to produce the assessment record and the Ld. DR has filed the report of the Ld. A.O dated 14.05.2024 thereby the Ld. A.O has stated that due to transfer and merger of the jurisdiction of ACIT, Khadwa with ACIT 4(1), Indore the assessment record shifted from Khandwa to Indore is not traceable despite the efforts made at Indore as well as Khandwa offices. Therefore, it is not clear whether the reply as referred by the Ld. AR was actually available with the Ld. Assessing Officer or not as there is no acknowledgement or receipt on the said reply place before us. Even otherwise certain provisions regarding computer, furniture and fixtures may not be otherwise allowable claim if said expenditure has been incurred for bringing a new asset in existence being in capital nature. Since the assessment order is completely silent and it does not exhibit any thought process of the Ld. A.O on any of the ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 10 issues raised by the Ld. PCIT therefore, the order of the AO is without application of mind. We are not expressing any view on the merits of the allowability of this claim but it is manifested from the record that the Ld. A.O has not undertaken any exercise to consider the issue of allowability of these claims. Therefore so far as the claim of provisions allowed by the Ld.A.O there is a complete lack of the enquiry on the part of the Ld. A.O which renders the assessment order erroneous so far as it is prejudice to the interest of the revenue. The Ld. AR relied upon various decisions in support to the contention that once the Ld.A.O has conducted an enquiry and accepted the claim of the assessee then the order of the Ld. A.O cannot be held as erroneous merely because the Ld. A.O has not given an elaborate findings while accepting the claim and further once the Ld.A.O has taken a possible view, Ld. PCIT cannot invoke the provision of Section 263 of the I.T. Act merely because he does not agree with the view taken by the Ld. A.O. The other decisions relied upon by the Ld. AR are on the point that once the A.O has conducted an enquiry and allowed the claim then the Ld. PCIT in the proceedings u/s 263 of the I.T. Act cannot set aside the order of Ld. A.O for re-adjudication. All these decisions would not help the case of the assessee before us because there is a complete lack of enquiry on the part of Ld. A.O particularly on the issue of allowability of claim of the provisions. Therefore we do not find any error or illegality in the impugned order of Ld. PCIT to the extent of issue of allowability of the claim of provisions is concerned. As ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 11 regards the point of capital expenditure on account of LAN network and electrical expenses we find that in the computation of total income the assessee has made disallowance of the said amount of Rs.27,19,000/- but this fact was not brought to the notice of the Ld. PCIT by the assessee in its reply to the show cause notice issued u/s 263 of the I.T. Act. We further noted that even the assessee has not made any reference of the alleged reply dated 08.12.2015 in the reply to the show cause notice issued u/s 263 of the I.T. Act. Therefore the Ld. A.O is directed to verify this fact from the record as to whether the assessee has made suo moto disallowance on account of LAN networking and electrical expenses or not. Hence the impugned order of the Ld. PCIT is upheld. 9. In the result the appeals of the assessee is dismissed. Order pronounced in the open court on 05.06.2024. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore,_05 .06.2024 Dev/Sr. PS ITANo.496/Ind/2018 Jila Sahakari Kendriya Bank Mydt 12 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore