Delhi State Co-op Bank Ltd., New Delhi V. ACIT, Circle- 52(1), New Delhi

ITA 7065/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5950 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 24-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BHARANWAL
• Assessee Lawyers: SL GUPTA
• Keywords: Set aside
• Section: 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 7065 /DEL/ 2017 ASSESSMENT YEAR: 2013-14 DELHI STATE COOPERATIVE BANK LTD, NEW DELHI AAAAT 9990D VS ACIT, CIRCLE-52 (1), NEW DELHI APPLICANT RESPONDENT ASSESSEE BY MR. SL GUPTA, CA REVENUE BY MR. M. BHARANWAL, SR. DR ORDER PER K. NARASIMHA CHARY, JM AGGRIEVED BY THE ORDER DATED 18/4/2016 IN APPEAL N O. 18/10075/16-17, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-18, NEW DELHI (LD. CIT(A)) FOR THE ASSE SSMENT YEAR 2013-14, M/S DELHI STATE COOPERATIVE BANK LTD (THE ASSESSEE ) FILED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED WITH THE REGISTRAR OF CO-OPERATIVE SOCIE TIES, GNCT OF DELHI, CARRYING ON THE BANKING BUSINESS UNDER LICENSE FROM THE RESERVE BANK OF INDIA AND THE BUSINESS OF THE ASSESSEE BANK IS TO R ECEIVE THE DEPOSITS FROM MEMBERS AND NON-MEMBERS AND TO CARRY ALL OTHER BANK ING ACTIVITIES. FOR THE ASSESSMENT YEAR 2013-14, ASSESSEE FILED THEIR R ETURN OF INCOME ON 24/9/2013 DECLARING AN INCOME OF RS. 26,52,55,940/- . ASSESSMENT WAS DATE OF HEARING 30/9/2020 DATE OF PRONOUNCEMENT 30/9/2020 2 COMPLETE BY ORDER DATED 22/3/2016 PASSED UNDER SECT ION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) AT RS. 2 7,70,39,800/-BY MAKING CERTAIN ADDITIONS. 3. WHEN THE APPEAL WAS PREFERRED BEFORE THE LD. CIT (A), LD. CIT(A) GRANTED RELIEF IN PART TO THE ASSESSEE BUT CONFIRME D THE ADDITIONS OF RS. 37,56,500/-TOWARDS THE 10% OF THE OTHER EXPENSES TO THE TUNE OF RS. 3,75,65,003/-DEBITED BY THE ASSESSEE TO THE P&L ACC OUNT, AND ALSO IN RESPECT OF THE INTEREST RECEIVED ON THE INCOME TAX REFUND AMOUNTING TO RS. 8,03,940/-WHICH THE ASSESSEE CLAIMS TO HAVE ALREADY CONSIDERED AS INCOME IN THEIR COMPETITION OF INCOME. 4. ASSESSEE IS, THEREFORE, AGGRIEVED BY SUCH CONFIR MATION OF THE ADDITIONS AND FILED THIS APPEAL CHALLENGING THOSE T WO ADDITIONS. INSOFAR AS THE DISALLOWANCE OF 10% OF EXPENSES IS CONCERNED, L EARNED ASSESSING OFFICER MADE THE SAME OBSERVING THAT THOUGH THE ASS ESSEE HAD CLAIMED THE OTHER EXPENSES AT RS. 3,75,65,003/-IN THEIR P&L ACC OUNT, WHEN CALLED UPON FAILED TO FURNISH THE BILLS/VOUCHERS, IN SPITE OF SEVERAL OPPORTUNITIES AND THEREFORE, SUCH ADDITION HAD TO BE MADE EVEN WH ILE TAKING A LENIENT VIEW. IN RESPECT OF THE INTEREST RECEIVED ON INCOME TAX REFUND, LEARNED ASSESSING OFFICER OBSERVED THAT THE CONTENTION OF T HE ASSESSEE THAT THE BANK HAD NOT RECEIVED INTEREST ON INCOME TAX REFUND , THE SAME CANNOT BE ACCEPTED BECAUSE IT IS FOUND AS PER 26AS THAT THE A SSESSEE HAD RECEIVED THE INCOME TAX REFUND OF RS. 1,10,72,018/-ON 26/6/2012 INCLUDING THE INTEREST COMPLAINT OF RS. 8,03,940/-AND THE ONUS TO FURNISH THE CORRECT PARTICULARS OF INCOME IN THE INCOME TAX RETURN LIES WITH THE AS SESSEE. 5. ON THE ASPECT OF THE 10% OF DISALLOWANCE OF THE OTHER EXPENSES, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT NO QUESTION OF LEAKAGE OF REVENUE ARISES BECAUSE THE ASSESSEE IS U NDER THE CONTROL OF THE 3 RULES LAID DOWN BY THE RESERVE BANK OF INDIA, WHICH DO NOT ADMIT OF ANY EXTRANEOUS EXPENDITURE BEING INCURRED BY THE ASSESS EE BANK, ASSESSEE REFERRED TO THE SYSTEM OF GOVERNMENT AUDIT CARRIED OUT BY THE AUDIT PARTY EVERY YEAR TO DETECT ANY INCURRING OF EXPENDITURE N OT WHOLLY AND EXCLUSIVELY CONNECTED WITH THE BUSINESS OF THE BANK , AND THAT IT WAS PRACTICALLY NOT POSSIBLE FOR THE ASSESSEE TO MAINTA IN THE DETAILS OF PRETTY EXPENSES WHICH DID NOT INVOLVE THE SYSTEM OF ISSUE OF VOUCHERS, BILLS ETC AGAINST PRICES CHARGED BY THEM. 6. IN RESPECT OF THE INTEREST ON INCOME TAX REFUND, ASSESSEE ARGUED BEFORE THE LD. CIT(A) THAT THE INCOME TAX REFUNDS W ERE REGISTERED BY THE DEPARTMENT AGAINST THE DEMANDS OF EARLIER YEARS AND THE PERSON DEALING WITH COUNSEL NO KNOWLEDGE ABOUT THE INCOME TAX REFU ND RECEIVED DURING THE YEAR, AND IT IS A FACT THAT BEING GOVERNMENT DE PARTMENT AND THE PAYMENT HAS BEEN RECEIVED BY THE CHEQUE, IT HAS DUL Y BEEN ACCOUNTED FOR. 7. LD. CIT(A), HOWEVER, DID NOT AGREE WITH THE ASSE SSEE ON BOTH THE POINTS.IN RESPECT OF THE 10% DISALLOWANCE ON OTHER EXPENSES, LD. CIT(A) OBSERVED THAT THE PROVISIONS OF SECTION 37 OF THE A CT CANNOT BE APPLIED SELECTIVELY, THE CRITERIA IN THE REQUIREMENT LAID D OWN THEREUNDER APPLY TO ALL SUNDRY WITH EQUAL FORCE, THE SAID SECTION DOES STIPULATE THAT ALL EXPENSES OF RESIDUARY NATURE HAVE NECESSARILY TO BE PROVED T O BE IN CONNECTION WITH THE BUSINESS OF THE ASSESSEE FOR AVAILING THE BENEF IT AND SINCE THE ASSESSEE COULD NOT FULFIL THE ENTIRE REQUIREMENT OF THE CLAI M OF THE ASSESSEE, THE SAME IS BEREFT OF ANY MERIT. SO ALSO, THE LD. CIT(A ) OBSERVED THAT IN ONE BREATH THE ASSESSEE ADMITS THAT THE CONCERNED OFFIC IAL HAD NO KNOWLEDGE WHETHER THE INCOME TAX REFUND RECEIVED DURING THE Y EAR WAS ACCOUNTED FOR, AND IN THE SAME BREATH IT WAS CLAIMED THAT THE INTEREST ON INCOME TAX 4 REFUND WAS DULY ACCOUNTED FOR BY ITS TAX AUDITOR UN DER THE MISCELLANEOUS INCOME. ON THIS PREMISE, LD. CIT(A) CONFIRMED BOTH THESE ADDITIONS. 8. NOW, BEFORE US, LD. AR SUBMITS THAT THE ASSESSEE IS AN ENTITY CONTROLLED BY THE RULES LAID DOWN BY THE RESERVE BA NK OF INDIA, THEY DO NOT SPEND ANY AMOUNT FOR THE PURPOSES OTHER THAN TH E BUSINESS PURPOSES, AND GIVEN AN OPPORTUNITY THE ASSESSEE IS READY TO F URNISH THE BILLS/VOUCHERS BEFORE THE ASSESSING OFFICER FOR VERIFICATION. SO A LSO, IT IS SUBMITTED THAT THE ASSESSEE IS READY TO PROVE THEIR CONTENTIONS BE FORE THE ASSESSING OFFICER IN RESPECT OF THE INTEREST ON INCOME TAX REFUND AND THE TREATMENT GIVEN TO SUCH INCOME. LD. DR CONSENTS FOR GIVING AN OPPORTUN ITY TO THE ASSESSEE TO PUT FORTH ALL THEIR CONTENTIONS BEFORE THE LEARNED ASSESSING OFFICER WITH REFERENCE TO THE DOCUMENTARY EVIDENCE, SO THAT THE LEARNED ASSESSING OFFICER CAN TAKE A FRESH VIEW ON BOTH THESE ASPECTS . 9. RECORDING THE SAME, WE SET ASIDE THE IMPUGNED OR DER AND REMAND THE ISSUES TO THE FILE OF THE LEARNED ASSESSING OFF ICER FOR VERIFICATION OF THE RECORD TO BE PRODUCED BY THE ASSESSEE ON BOTH THESE ASPECTS AND TO REACH AJUST CONCLUSION. IT IS MADE CLEAR THAT THE ASSESSE E SHALL AVAIL THIS OPPORTUNITY WITHOUT CONTENDING ANYTHING CONTRARY TO THE SUBMISSIONS MADE BEFORE US. 10. APPEAL OF THE ASSESSEE IS, ACCORDINGLY, ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 30/9/2020. SD/- SD/- (R.K. PANDA) (K. NARASIMHA CHAR Y) ACCOUNTANT MEMBER JUDICIAL MEMBER