The Gurdaspur Central Coop Bank Ltd, Gurdaspur V. The Dy. Commissioner of Income-tax, Circle- VI, Pathankot

ITA 681/ASR/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4556 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-03-2018
• Assessment Year: 2014-2015
• Appeal Filed On: 27-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRABHJOT KAUR
• Assessee Lawyers: VIBH ORE GUPTA CAS
• Keywords: Application of stay; Additional evidence; Onus to prove
• 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 I.T.A. NO. 681/ASR/2017 (AND STAY APPLICATION NO. 01/ASR/2018) AS SESSMENT YEAR: 2014-15 THE GURDASPUR CENTRAL COOPERATIVE BANK, SADAR BAZAR, GURDASPUR [PAN: AAAAT 0711A] VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-VI, PATHANKOT (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VINAMAR GUPTA & VIBH ORE GUPTA (CAS.) RESPONDENT BY: SMT. PRABHJOT KAUR CIT (D.R.) DATE OF HEARING: 07.03.2018 DATE OF PRONOUNCEMENT: 24.05.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR ('CIT(A)', FOR SHORT) DATED 10.08.2017, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS AS SESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) DATED 26.12.2016 FOR ASSESSMENT YEAR (AY) 2014-15. 2. THE DISALLOWANCE UNDER CHALLENGE IN THE INSTANT CASE IS U/S. 40(A)((IA), EFFECTED AT RS.38,63,16,050, ON THE GROUND OF NON-D EDUCTION OF TAX OF SOURCE U/S. 194A BY THE ASSESSEE, A COOPERATIVE BANK. THE AUTHO RIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, WOULD AT THE OUTSET TAKE US THROUGH THE FOLLOWING TABULAR ITA NO.681/2017 & SANO.1/18(AY 2014-15) THE GURDASPUR CENTRAL C O-OP. BANK V. DY. CIT 2 CHART WHEREBY THE ASSESSEE SEEKS TO RECONCILE THE T OTAL INTEREST PAID ON ITS VARIOUS DEPOSIT ACCOUNTS WITH THAT ON WHICH TAX STANDS DEDU CTED AT SOURCE OR IS NOT REQUIRED TO UNDER LAW, I.E., PER THE DIFFERENT EXCEPTING CLA USES OF SECTION 194A PROVIDING SAVING TO THE PROVISION UNDER SPECIFIC CIRCUMSTANCE S AND, SUBMITTING, ON THAT BASIS, THAT NO DISALLOWANCE U/S. 40(A)(IA) IS CALLED FOR: PARTICULARS A MOUNT (RS.) TOTAL INTEREST PAID 394488470 INTEREST NOT DISALLOWED -8172420 TOTAL INTEREST DISALLOWED 386,316,050 SAVING ACCOUNT INTEREST 128,724,57 7 RD INTEREST 1 ,705,554 FDR INTEREST BELOW 10,000 66,007, 012 196,437,143 189,878,907 FDR INTEREST ON WHICH TAX DEDUCTED 21 ,917,552 ALREADY ALLOWED BY DEPARTMENT -8, 172,420 13,745,132 176,133,775 INTEREST PAID TO SOCIETIES -2,900,746 173,233,029 INTEREST WRONGLY POSTED HARIAL BRANCH (INTEREST REVERSAL ON NPA WRONGLY POS TED) 4,245,414 HARCHOWAL BRANCH (HO INTEREST) 338,239 LANGAH JATTAN (H.O. INTEREST) 565,694 GHASITPUR (H.O. INTEREST) 3,406,2 66 8,555,613 FDR INTEREST FOR WHICH 15G/15H OBTAINED 164,677,416 ON A QUERY BY THE BENCH AS TO WHY, IN THAT CASE, TH E SAME WAS NOT FURNISHED BEFORE THE REVENUE AUTHORITIES, WHOSE ORDERS ARE SANS ANY FINDINGS QUA THE EXCEPTING CLAUSES, RESULTING IN A HUGE DISALLOWANCE (AS WELL AS ITS CONFIRMATION, AND WHICH WOULD ONLY BE ON THE BASIS OF THE MATERIAL ON RECOR D), HE CONCEDED TO THE ASSESSEE HAVING NOT FURNISHED QUARTERLY RETURNS OF TAX DEDUC TION AT SOURCE (TDS), EVEN AS ITA NO.681/2017 & SANO.1/18(AY 2014-15) THE GURDASPUR CENTRAL C O-OP. BANK V. DY. CIT 3 THE INFORMATION AFORE-SAID, ALBEIT BRANCH-WISE, WAS FURNISHED BEFORE THE LD. CIT(A), AND TOWARD WHICH HE WOULD TAKE US TO PB PGS . 35-36. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 IT IS APPARENT THAT THE ASSESSEE HAS NOT MADE P ROPER REPRESENTATION BEFORE THE REVENUE AUTHORITIES, ELSE THEIR ORDERS WOULD BEAR T HE RELEVANT FINDINGS, BEING ESSENTIALLY FINDINGS OF FACT. AT THE SAME TIME, THE REVENUE HAS ALSO NOT EXERCISED DUE DILIGENCE IN THE MATTER IN-AS-MUCH AS EVEN THE INFORMATION CONTAINED IN THE TAX AUDIT REPORT U/S. 44AB, FURNISHED ALONG WITH THE RE TURNS OF INCOME, HAS NOT BEEN TAKEN INTO ACCOUNT EVEN AS THAT BY THE INTERNAL AUD ITOR - WHO WAS AGAIN CONSTRAINED FOR WANT OF SOME INFORMATION TO BE PROVIDED BY THE ASSESSEE, HAS BEEN, AND WHICH AMOUNTS TO PICK AND CHOOSE. SURE, THE ASSESSEE IS L IABLE TO ANSWER AND EXPLAIN THE DIFFERENCES IN THE TWO REPORTS, WHERE AND TO THE EX TENT IT OBTAINS. FURTHER, TRUE, THE ASSESSEE DID NOT COLLATE THE INFORMATION IN AN AGGR EGATE MANNER, AS IT HAS BEFORE US, BUT THEN IT COULD, AND RATHER OUGHT TO HAVE BEEN, C ALLED UPON TO DO SO. LEVY OF TAX COULD, AFTER ALL, BE ONLY ON THE BASIS OF THE FACTS OF THE CASE AND IN ACCORDANCE WITH THE LAW. WHILE THE ASSESSING OFFICER (AO) COULD BE CONSTRAINED FOR TIME, BEING BOUND TO COMPLETE THE ASSESSMENT IN A GIVE TIME FRA ME AND, THEREFORE, TAKE COGNIZANCE OF ONLY THE MATERIAL/INFORMATION THAT ST ANDS BROUGHT ON RECORD BY THE ASSESSEE, THE SAME CANNOT BE SAID OF AN APPELLATE A UTHORITY - THE PURVIEW OF WHICH IS THE CORRECT ASSESSMENT OF THE ASSESSEES INCOME AND, CONSEQUENTLY, THE CORRECT DETERMINATION OF HIS TAX LIABILITY UNDER LAW. THE L D. CIT(A), ENJOYING COTERMINOUS POWERS, SHOULD HAVE ENDEAVORED TO CAUSE TO BRING ON RECORD ALL THE RELEVANT AND MATERIAL FACTS. THE ASSESSEE HAS NOT HELPED ITS CA USE BY NOT ADOPTING A PROACTIVE; RATHER, ITS CONDUCT REFLECTS A LACKADAISICAL, APPRO ACH. THE MATTER, THEREFORE, FOR APPROPRIATE VERIFICATION AND DETERMINATION, SHALL H AVE TO TRAVEL BACK TO THE FILE OF THE AO. THOUGH NORMALLY WE WOULD BE INCLINED TO IMP OSE A COST ON THE ASSESSEE, ITA NO.681/2017 & SANO.1/18(AY 2014-15) THE GURDASPUR CENTRAL C O-OP. BANK V. DY. CIT 4 WE REFRAIN FROM DOING SO IN THE PRESENT CASE AS, AS IS APPARENT, IT HAS ALREADY BEEN SUBJECT TO CONSIDERABLE HARDSHIP ON ACCOUNT OF COER CIVE STEPS FOR RECOVERY (OF THE DEMAND) INITIATED BY THE REVENUE, AS EXPLAINED BY T HE LD. AR WHILE MAKING SUBMISSIONS QUA STAY, ALSO POSTED FOR HEARING ALONGWITH. 3.2 BE THAT AS IT MAY, WE SHALL, HAVING HEARD THE P ARTIES AT LENGTH, ALSO ISSUE APPROPRIATE DIRECTIONS QUA THE CLAIMS BY THE ASSESSEE PER THE RECONCILIATION STATEMENT, TO ENABLE A PROPER DETERMINATION AND RES OLUTION OF THE MATTER IN THE SET ASIDE PROCEEDINGS: (A) INTEREST BELOW RUPEES TEN THOUSAND : THE SAME IS EXCLUDED FOR TDS U/S. 194A(3)(I); THE LIMIT, AS WE SEE IT, HAVING BEEN ENHANCED FROM RS. 5,000/- BY FINANCE ACT, 2007 W.E.F. 01/6/2007. THERE IS A VAST DIFFERENCE BETWEEN THE FIGURE TAKEN IN THIS RE SPECT BY THE AO, AND THAT CLAIMED BY THE ASSESSEE PER ITS RECONCILIATION STATEMENT. T HE FORMER FIGURE WOULD AGAIN ONLY BE AS PER THE ASSESSEES TDS RETURNS. THE FIGU RE REPORTED PER THE AUDIT REPORT U/S. 44AB CAN REASONABLY BE REGARDED AS CONCLUSIVE, SUBJECT OF COURSE TO THE VERIFICATION WHERE AND TO THE EXTENT CONSIDERED P ROPER, BY THE ASSESSING OFFICER. IN THIS REGARD, WE MAY THOUGH ADD, THE OBLIGATION T O DEDUCT TAX AT SOURCE (AS PER LAW) IS ON THE ASSESSEE-BANK, I.E., TAKEN AS ONE, S INGLE ENTITY, SO THAT EVEN IF THE LIMIT OF RS.10,000/- IS BREACHED QUA A PARTICULAR DEPOSITOR (IDENTIFIED BY PAN) ACROSS DIFFERENT BRANCHES OF THE BANK, THE LIABILIT Y TO DEDUCT TAX AT SOURCE WOULD ARISE. THIS, AGAIN, IS SUBJECT TO ANY CIRCULAR OR I NSTRUCTION BY THE BOARD, WHERE SO, PROVIDING ANY RELIEF IN THIS RESPECT IN-AS-MUCH BEN EFICIAL CIRCULARS BY THE BOARD ARE BINDING ON THE REVENUE AUTHORITIES ( NAVNIT LAL C. JHAVERI V. AACIT [1965] 56 ITR 198 (SC)). WE SAY SO AS THE COMPLIANCE OF THE PROVI SION ENTAILS THE TEDIUM OF THE AGGREGATION OF DATA (FOR THE YEAR) BY THE BANK ACRO SS ITS BRANCHES, BY ANY MEANS A STUPENDOUS TASK, UNLESS OF COURSE THE ACCOUNTS ARE MAINTAINED IN A COMPUTERIZED ITA NO.681/2017 & SANO.1/18(AY 2014-15) THE GURDASPUR CENTRAL C O-OP. BANK V. DY. CIT 5 ENVIRONMENT WHICH, RATHER, IS A NORM. THE AGGREGATI ON ACROSS BRANCHES WOULD, WE MAY ADD, APPLY ONLY TO INTEREST OTHER THAN ON TIME DEPOSITS (DEFINED PER EXPLANATION 1 TO S. 194A), FOR WHICH THE LIMIT OF RS. 10,000/- I S TO BE RECKONED ON BRANCH-WISE BASIS. (B) INTEREST SUBJECT TO RECEIPT OF FORMS 15G/15H : THIS EXCLUSION, PER SECTION 197A(1A), IS QUA A DEPOSITOR/S FURNISHING A DECLARATION TO THE BANK THAT NO TAX AT SOURCE BE DE DUCTED AS NO TAX LIABILITY OBTAINS ON HIS TOTAL INCOME - INCLUDING THE BANK INTEREST U NDER REFERENCE, FOR THE YEAR. SURELY, THE SAID DECLARATION, TO BE VALID, IS TO BE FURNISHED TO THE BANK BEFORE THE LAST WORKING DAY OF THE YEAR (31 ST MARCH, OF THE RELEVANT PREVIOUS YEAR), ON WHICH THE BANK CLOSES ITS ACCOUNTS, AND IS IN FACT NOT O PEN TO THE PUBLIC. THE SAME ARE REQUIRED TO BE FURNISHED BY THE ASSESSEE (BANK) TO THE REVENUE BY THE SEVENTH DAY OF APRIL OF THE FOLLOWING YEAR (I.E., THE ASSESSMEN T YEAR), THE DUE DATE. ADMITTEDLY, NO PROOF OF FURNISHING THE SAME WAS ADDUCED, SO THA T NO CREDIT FOR THE SAME CAME TO BE ALLOWED. THE ASSESSEE HAS BEFORE US PLACED RE LIANCE ON DECISIONS BY THE TRIBUNAL TO THE EFFECT THAT NON-FURNISHING OF PROOF OF DEPOSIT OF THE DECLARATIONS IS AN INDEPENDENT DEFAULT, AND DOES NOT LEAD TO THE IN FERENCE OF THE ASSESSEE HAVING NOT OBTAINED THE RELEVANT DECLARATIONS BEFORE THE Y EAR-END, SAVING DEDUCTION OF TAX AT SOURCE. TRUE, THOUGH IT IS HIGHLY UNLIKELY AND I NEXPLICABLE THAT AN ASSESSEE IN RECEIPT OF THE DECLARATIONS WOULD NOT FURNISH THE S AME, AS REQUIRED BY LAW, TO THE REVENUE BY THE DUE DATE, YET, WITHOUT DOUBT, THE TW O, I.E., BEING IN RECEIPT OF THE DECLARATIONS FROM THE DEPOSITORS AND FURNISHING THE SAME TO THE REVENUE, ARE INDEPENDENT OF EACH OTHER. OUR CONCERN EXTENDS TO T HE FORMER. THE DECISIONS DO NOT ASSIST THE ASSESSEES CASE IN ANY MANNER AS, IN EFF ECT, EVEN WHERE FURNISHED TO THE REVENUE BY THE DUE DATE, THE SAME CANNOT BE REGARDE D AS AN EVIDENCE OF THE ASSESSEE BEING IN RECEIPT OF THE RELEVANT DECLARATI ON BEFORE THE CLOSE OF THE YEAR. IN ITA NO.681/2017 & SANO.1/18(AY 2014-15) THE GURDASPUR CENTRAL C O-OP. BANK V. DY. CIT 6 OTHER WORDS, THE RELEVANT FACT IS THE RECEIPT (BY T HE ASSESSEE) OF THE DECLARATIONS BEFORE THE YEAR-END, THE ONUS TO EVIDENCE WHICH IS ON THE ASSESSEE. THE DUE DATE FOR DEPOSIT OF DECLARATIONS THERETO BEING QUITE PRO XIMATE TO THE CLOSE OF THE YEAR, THE REVENUE ACCEPTS, AND PRAGMATICALLY SO, THE FORM S SUBMITTED BY THE DUE DATE AS HAVING BEEN IN FACT OBTAINED BY THE PAYER BY THE CL OSE OF THE YEAR. THE ASSESSEE HAS BEFORE US SUBMITTED COPIES OF THE DISPATCH REGI STER (OF THE DIFFERENT BRANCHES) IN EVIDENCE OF THE RELEVANT FORMS HAVING BEEN DISPATCH ED BY THEM TO THE REVENUE (IN THE CONCERNED OFFICE), WHICH IT SEEKS FOR BEING ADM ITTED AS AN ADDITIONAL EVIDENCE/S. WHY, WE WONDER, WERE THE SAME NOT PRESE NTED BEFORE THE ASSESSING OR EVEN THE FIRST APPELLATE AUTHORITY? THEN, AGAIN, TH E SAME ARE NOT FROM ALL THE BRANCHES, 44 IN NUMBER. IS IT A TACIT ADMISSION OF THE SAID FORMS HAVING NOT BEEN DISPATCHED BY THE OTHER BRANCHES? FURTHER STILL, HO W WE WONDER DOES IT ADVANCE THE ASSESSEES CASE. THE SAME, FIRSTLY, DO NOT INDICATE THE NUMBER OF DECLARATIONS BEING REMITTED. THIS, THOUGH, COULD BE RESOLVED ON THE BA SIS OF THE NUMBER OF FORMS, WHERE SO, STATED IN THE FORWARDING LETTER, OR RECEI VED BY THE REVENUE WITH REFERENCE TO THE SAID DISPATCH NUMBER/LETTER. TWO, BASED ON T HE DECISIONS BY THE TRIBUNAL CITED SUPRA, NON-FURNISHING OF THE PROOF OF THE SUBMISSIO N OF THE FORMS TO THE REVENUE (BY THE DUE DATE) IN NO MANNER DIMINISHES THE ASSES SEES CASE OF HAVING OBTAINED OR, RATHER, BEING IN RECEIPT OF THE SAID FORMS, BEF ORE THE END OF THE RELEVANT YEAR. THE SAME, I.E., THE SAID RECEIPT, IS, BY OWN ADMISS ION, A SEPARATE TRANSACTIONS/EVENT AND, THEREFORE, TO BE INDEPENDENTLY EVIDENCED. THE RECEIPT OF THE DECLARATION FORMS BY THE ASSESSEE FROM ITS DEPOSITORS, WHICH COULD IN FACT BE AT ANY TIME OF THE RELEVANT YEAR, WOULD SURELY STAND TO BE EVIDENCED B Y THE ASSESSEES INTERNAL RECORD, AND ON THE BASIS OF WHICH THE INTERNAL AS WELL AS T HE EXTERNAL (STATUTORY) AUDITOR WOULD HAVE FINALIZED THEIR RESPECTIVE AUDIT REPORTS . IN THE ABSENCE OF SUCH A RECORD, HOW WOULD THE BANK MONITOR AND EXERCISE CONTROL OVE R THE SAID FUNCTION? HOW WOULD IT KNOW AS TO WHICH OF ITS DEPOSITORS HAVE A ND, THEREFORE, HAVE NOT, ITA NO.681/2017 & SANO.1/18(AY 2014-15) THE GURDASPUR CENTRAL C O-OP. BANK V. DY. CIT 7 FURNISHED THE DECLARATIONS, I.E., AS AT ANY GIVEN P OINT OF TIME, IN WHICH CASE THEREFORE TAX AT SOURCE IS TO BE DEDUCTED, I.E., UP ON CREDIT OF INTEREST. THAT IS, THE BANK WOULD HAVE CERTAINLY EVOLVED SOME MECHANISM FO R REGULATING THE SAID FUNCTION, WHICH WOULD ALSO EVIDENCE THE RECEIPT (IN CLUDING ITS DATE) OF THE RELEVANT FORMS. IT IS THIS EVIDENCE, CONTEMPORANEOUS IN NATU RE, THAT IS RELEVANT. WE HAVE NOT PLACED ANY RESTRICTION - THE MATTER BEING FACTUAL, ON THE MATERIAL THAT CAN BE RELIED UPON BY THE ASSESSEE IN THE SET ASIDE PROCEEDINGS. (C) INTEREST PAID/ALLOWED SUBJECT TO DEDUCTION TAX AT S OURCE : THE DIFFERENCE IN THIS FIGURE, I.E., AS PER THE AS SESSMENT ORDER AND THE RECONCILIATION STATEMENT, IS AGAIN QUIZZICAL, INDIC ATING, ONCE AGAIN, A COMPLETE ABSENCE OF PROPER REPRESENTATION OF ITS CASE AS WEL L AS LACK OF PROPER APPLICATION OF MIND BY THE REVENUE. THE FIGURE IN A TAX OF REPORT U/S. 44AB OUGHT SURELY TO HAVE BEEN GIVEN CREDENCE BY THE REVENUE EVEN AS IT IS EN TITLED (IF NOT DUTY BOUND) TO VERIFY THE SAME, AND SEEK SATISFACTION IN ITS RESPE CT. THIS EXERCISE IN FACT STANDS GREATLY FACILITATED AND ENABLED BY THE LOGGING OF T HE RELEVANT INFORMATION ONLINE, AS PER THE CURRENT PROCEDURES. (D) INTEREST PAID TO HO/SOCIETIES/REVERSAL : THE ASSESSEE HAS ACCOUNTED FOR INTEREST UNDER THE S AID CATEGORIES IN THE RECONCILIATION STATEMENT, WHICH COULD BE SUBJECT TO VERIFICATION. THE INTEREST TO HO WOULD STAND NETTED IN-AS-MUCH IT IS NOT AN EXPENDIT URE, FINDING REFLECTION ONLY IN THE BRANCH, AND NOT THE CONSOLIDATED, ACCOUNTS. SIM ILARLY, THE INTEREST REVERSED WOULD STAND TO BE NETTED, AND THERE IS NO QUESTION OF THE ASSESSEE CLAIMING DEDUCTION IN ITS RESPECT. 3.2 OUR OBSERVATIONS MAY BE REGARDED AS INSTRUCTIVE . THE MATTER IS ACCORDINGLY THE SET ASIDE TO THE FILE OF THE AO FOR ADJUDICATIO N AFRESH BY ISSUING DEFINITE ITA NO.681/2017 & SANO.1/18(AY 2014-15) THE GURDASPUR CENTRAL C O-OP. BANK V. DY. CIT 8 FINDINGS OF FACT, CONSIDERING ANY MATERIAL DEEMED R ELEVANT AND ADDUCED BY THE ASSESSEE IN SUPPORT, OR ON WHICH THE AO MAY WISH TO PLACE RELIANCE ON; THE ASSESSEE HAVING MADE OUT ITS CASE PER THE RECONCIL IATION STATEMENT AFORE-REFERRED. THE BURDEN OF PROOF, WE MAY ADD, QUA ITS VARIOUS CLAIMS, WOULD BE ON THE ASSESSEE. THE ASSESSMENT HAVING BEEN SET ASIDE THUS TO THE FILE OF THE AO, THE IMPUGNED DEMAND OBTAINS NO LONGER, FOR US TO PASS A NY SEPARATE ORDER QUA THE ASSESSEES STAY PETITION, WHICH THUS BECOMES INFRUC TUOUS. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON MAY 24, 2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 24.05.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: THE GURDASPUR CENTRAL CO-OP . BANK, GURDASPUR (2) THE RESPONDENT: DY. CIT, CIRCLE-VI, PATHANK OT (3) THE CIT(APPEALS)-2, AMRITSAR (4) THE CIT CONCERNED (5) THE CIT- DR, I.T.A.T. TRUE COPY BY ORDER