M/s.Cherpalacherry Co-op Urban Bank Ltd, Palakkad V. The ADCIT, Palakkad

ITA 69/COCH/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96762 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 15-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 28-01-2015
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Keywords: Reasonable cause; Condonation of delay
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH C OCHIN BEFORE S/SHRI B.P. JAIN, AM AND GEORGE GEOR GE K., JM I.T.A. NO.69 /COCH/2015 ASSESSMENT YEAR : 2010-11 M/S. CHERPLACHERRY CO-OPERATIVE URBAN BANK LTD., URBAN BANK BUILDING, CHERPLACHERRY, PALAKKAD-679 503. [PAN:AACFT 9526A] VS. THE ADDITIONAL COMMISSIONER OF INCOME-TAX, PALAKKAD RANGE, PALAKKAD. (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SMT. DIVYA RAVINDRAN, ADV. REVENUE BY SHRI K.P. GOPAKUMAR, SR. DR DATE OF HEARING 15/10/2015 DATE OF PRONOUNCEMENT 16/10/2015 O R D E R PER B.P.JAIN, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE LD. CIT(A)-V, KOCHI DATED 28/05/2014 FOR THE ASSESSMENT YEAR 2010 -11. 2. THERE WAS A DELAY OF 50 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. TH E ASSESSEE HAS FILED A PETITION SEEKING CONDONATION O F DELAY AND ALSO HAS FILED AN AFFIDAVIT EXPLAINING THE REASONS FOR DELAY IN FILIN G THE APPEAL BEFORE THE TRIBUNAL WITHIN THE DUE DATE. THE LD. AR SUBMITTED THAT AFT ER THE APPELLATE ORDER WAS COMMUNICATED TO THE PETITIONER, THE SAME WAS HANDED OVER TO THE CHARTERED I.T.A. NO.69/COCH/2015 2 ACCOUNTANT FOR TAKING FURTHER ACTION. IT WAS SUBMI TTED THAT THE CHARTERED ACCOUNTANT ENTRUSTED THE MATTER TO THE OFFICE OF M/ S. T.M. SREEDHARAN AND ASSOCIATES, ADVOCATES, COCHIN FOR FURTHER ADVICE AN D FOR TAKING FURTHER ACTION REQUIRED IN THE MATTER. SINCE THE SENIOR ADVOCATE WAS OUT OF STATION FREQUENTLY IN CONNECTION WITH HIS PROFESSIONAL WORK, THE PETIT IONERS CHARTERED ACCOUNTANT COULD NOT MEET HIM AND GET HIS ADVICE WHICH CAUSED SOME DELAY IN GETTING THE APPEAL PREPARED. THE APPEAL NOW FILED WAS DELAYED BY 51 DAYS, THE DUE DATE FOR FILING THE APPEAL BEING 60 DAYS, THE LAST DAY FOR F ILING THE APPEAL EXPIRED ON 07/12/2014. THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THERE WAS NO WILLFUL LATCHES, NEGLIGENCE OR OMISSION ON THE PART OF THE PETITIONER IN FILING THE APPEAL BEFORE THE DUE DATE. ACCORDING TO THE PETIT IONER, THERE WAS REASONABLE CHANCE OF SUCCESS IN THE APPEAL AND THE ISSUES INVO LVED ARE COMMON TO A LARGE NUMBER OF CO-OPERATIVE BANKS AND INSTITUTIONS AND S EVERAL APPEALS ARE PENDING IN THE INCOME TAX APPELLATE TRIBUNAL AND BEFORE THE HONBLE HIGH COURT OF KERALA. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IF THE DELAY IS NOT CONDONED AND THE APPEAL IS NOT ADMITTED AND DISPOSE D OF ON MERIT, IT WOULD CAUSE SERIOUS AND IRREPARABLE HARDSHIP AND PREJUDIC E. ACCORDINGLY, THE LD. COUNSEL FOR THE ASSESSEE PRAYED THAT THE ITAT, COCH IN BENCH MAY KINDLY CONDONE THE DELAY OF 51 DAYS IN FILING THE APPEAL A ND TO ADMIT THE SAME. 3. THE LD. DR HAS NOT RAISED ANY SERIOUS OBJECT ION FOR CONDONATION OF DELAY IN FILING THE APPEAL BY THE ASSESSEE. I.T.A. NO.69/COCH/2015 3 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E RECORD. WE FIND THAT THERE EXISTS REASONABLE CAUSE FOR NOT FILING THE APPEAL I N TIME AND THE REASONS ADVANCED BY THE ASSESSEE FOR THE DELAY ARE BONA FID E. BEING SO, WE CONDONE THE DELAY IN FILING THE APPEAL BY THE ASSESSEE AND ADMI T THE APPEAL FOR ADJUDICATION. 5. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS)-V, KOCHI, IN I.T.A. NO.19/PKD/CIT(A)-V/2013-14 DATED 28/05/2014 FOR THE ASSESSMENT YEAR 2010-11, IS OPPOSED TO LAW, FACTS AND CIRCUMST ANCES OF THE CASE. 2. THE CIT(A) WENT WRONG IN CONFIRMING THE DISALLOW ANCE OF RS.54,40,949/- CLAIMED U/S. 36(1)(VII) OF THE INCOM E TAX ACT. 3. IN THIS CONNECTION, IT RESPECTFULLY SUBMITTED T HAT THE LEVY OF INTEREST U/S. 234B AMOUNTING TO RS.8,02,866/- AND INTEREST U /S. 234C AMOUNTING TO RS.25,846/-, ARE ILLEGAL AND UNSUSTAINABLE. 4. THE APPELLANT HUMBLY PRAYS THAT THE GROUNDS O F APPEAL BEFORE THE CIT(A) MAY BE CONSIDERED AS PART OF THESE GROUNDS. 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE HAS CLAIMED EXPENDITURE U/S. 36(1)(VII) TO THE EXTENT OF NPA PROVISION AMOU NTING TO RS.61,51,311/- WHICH INCLUDES 7.5% OF THE GROSS TOTAL INCOME AMOUNTING T O RS.71,40,362/- AS CLAIM FOR EXEMPTION IN RESPECT OF RURAL BRANCHES. THE AS SESSEE CLAIMED THAT 2 BRANCHES (TOWN BRANCH & VALLAPUZHA BRANCH) ARE RURA L BRANCHES. HOWEVER, THE ASSESSING OFFICER OBSERVED THAT IN THE DETAILS PROD UCED BY THE ASSESSEE IN RESPECT OF PROVISIONS MADE BY THE RESERVE BANK OF I NDIA, IT WAS NOT STATED THAT I.T.A. NO.69/COCH/2015 4 THE RBI HAS CLASSIFIED THESE BRANCHES AS RURAL BRAN CHES AND EVEN IF THEY ARE RURAL BRANCH THE DEDUCTION CAN BE ALLOWED ONLY IF T HE PANCHAYATS OR THE ADMINISTRATIVE UNITS IN WHICH THE BANK SITUATED HAV E A POPULATION OF LESS THAN 10,000 AS PER THE LATEST CENSUS FIGURES DECLARED. IT IS PERTINENT TO MENTION HERE THAT THE CLASSIFICATION OF THE BRANCHES AS RURAL BY THE RESERVE BANK OF INDIA AS CLAIMED BY THE ASSESSEE FAILS IN THE FIRST PLACE IT SELF. WITHOUT PREJUDICE TO THE ARGUMENT, THE POPULATION FIGURE ALSO DO NOT COME TO THE RESCUE OF THE ASSESSEE- BANK TO SUPPORT THE CLAIM. THEREFORE, THE CLAIM FOR EXEMPTION IN RESPECT OF RURAL BRANCH WAS NOT CONSIDERED AND HENCE, AN ADDITION OF RS.54,40,949/- (RS.61,51,311 RS.7,10,362/-) I.E. 10% OF AVERAGE ADVANCE OF RURAL BRANCHES LIMITED TO NPA PROVISION 7.5% GROSS TOTAL INCOME WAS MADE TO THE TOTAL INCOME RETURNED. 7. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER AND THE RELEVANT OBSERVATIONS MADE BY THE LD. CIT(A) ARE R EPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE: AS A MATTER OF FACT, THE LIMITED ISSUE INVOLVED IN THIS CASE IS THAT WHETHER ADVANCES HAVE BEEN MADE BY THE RURAL BRANCHES, WI THIN THE MEANING OF PROVISO TO SECTION 36(1)(VIIA). THE ASSESSING OFFI CER HAS MADE EXPLICIT MENTION OF THE FACT THAT THE CONDITION FOR BEING CL ASSIFIED AS RURAL BRANCH FAILS ON BOTH COUNTS I.E. (I) THE BRANCHES HAS NOT BEEN CLASSIFIED AS RURA L BRANCHES BY THE RESERVE BANK OF INDIA AS WELL AS (II) THE POPULATION AS PER THE LATEST CENSUS FIG URE HAS BEEN LESS THAN 10,000/-. I.T.A. NO.69/COCH/2015 5 BASED ON THESE FACTUAL OBSERVATIONS THE ASSESSIN G OFFICER HAS FOUND THAT THE CLAIM OF THE ASSESSEE WAS NOT ALLOWABLE, BECAUS E OF THE RESTRICTIONS PLACED BY THE PROVISO TO SECTION 36(1)(VIIA). THE APPELLANT ON THE OTHER HAND HAS FAILED TO ES TABLISH THAT THE FINDINGS OF THE ASSESSING OFFICER WERE NOT CORRECT. THE RELI ANCE PLACED UPON BY THEM IN THE CASE OF CATHOLIC SYRIAN BANK LTD. VS. CIT 24 3 ITR 270, SC, HOWEVER, NOT AT ALL APPLICABLE IN THIS CASE. SINCE THE APPE LLANT HAS FAILED TO ESTABLISH THAT THE ADVANCES WERE MADE FROM THE RURAL BRANCHES , THE CLAIM U/S. 36(1)(VIIA) IS NOT ALLOWABLE. IN VIEW OF THIS, THE ADDITION MADE BY THE ASSESSING OFFICER IS UPHELD AND THE APPEAL ON THIS GROUND IS DISMISSED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THAT T HE BRANCHES HAVE NOT BEEN CLASSIFIED AS RURAL BRANCHES BY THE RESERVE BANK OF INDIA AS WELL AS THE POPULATION AS PER THE LATEST CENSUS FIGURE HAS BEEN LESS THAN 10,000/-. AS SUCH, BOTH THE CONDITIONS WITH RESPECT TO RURAL BRANCH AS MENTIONED IN SECTION 36(1)(VIIA) OF THE ACT FAILS AND THIS FACT HAS BEEN ADMITTED BY THE LD. COUNSEL FOR THE ASSESSEE . BASED ON THESE FACTUAL OBSERVATIONS MADE BY BOTH THE AUTHORITIES BELOW, THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE. 9. AS REGARDS THE RELIANCE PLACED BY THE LD. COUNSEL O F THE ASSESSEE ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F CATHOLIC SYRIAN BANK LTD. VS. CIT (243 ITR 270), THE LD. CIT(A) HAS RIGHTLY G IVEN THE FINDING THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT THE ADVANCES WERE MADE FROM THE RURAL BRANCHES AND ACCORDINGLY, THE CLAIM OF THE ASSESSEE U/S. 36(1)(VIIA) OF THE ACT IS I.T.A. NO.69/COCH/2015 6 NOT ALLOWABLE. IN THE CIRCUMSTANCES AND FACTS OF TH E CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY CONFIRM ED THE ACTION OF THE ASSESSING OFFICER. ACCORDINGLY, GROUND NO. 2 OF THE ASSESSEE IS DISMISSED. 10. GROUND NO. 3 OF THE ASSESSEE IS WITH REGARD TO LEVY OF INTEREST U/S. 234B AND 234C WHICH IS MANDATORY AND IS CONSEQUENTIAL. ACCORDINGLY, GROUND NO. 3 OF THE ASSESSEE IS DISMISSED. 11. AS REGARDS GROUND NOS. 1 & 4, THE SAME ARE GENE RAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN I.T.A. NO. 69/COCH/2015 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 16-10-2015. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 16TH OCTOBER, 2015 GJ COPY TO: 1. M/S. CHERPLACHERRY CO-OPERATIVE URBAN BANK LTD. , URBAN BANK BUILDING, CHERPLACHERRY, PALAKKAD-679 503. 2. THE ADDITIONAL COMMISSIONER OF INCOME-TAX, PALAK KAD RANGE, PALAKKAD. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, KOCHI . I.T.A. NO.69/COCH/2015 7 4. THE COMMISSIONER OF INCOME-TAX, THRISSUR. 5. D.R., I.T.A.T.,COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR ) I.T.A.T., COCHIN