Deputy Commissioner of Income Tax, Circle-2(1), Mangalore V. M/s Karnataka Bank Ltd., Mangalore

MA 141/BANG/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0576 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 16-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Keywords: Bad and doubtful debts
• Section: 201

Judgement Text

MPNOS.141 & 142/BANG/2018 M/S. THE KARNATAKA BANK LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. NOS.141 & 142/BANG/2018 (ARISING OUT OF ITA NOS.1396 & 1397/BANG/2012 ASSESSMENTYEARS:2009-10 & 2010-11 DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2(1) MANGALORE VS. M/S. KARNATAKA BANK LTD. NEAR MAHAVEER CIRCLE PUMPWELL MANGALORE PAN NO.AABCT5589K APPELLANT RESPONDENT APPELLANT BY : SMT. R. PREMI, D.R. RESPONDENT BY : SHRI BALRAM R. RAO, A.R. DATE OF HEARING : 16.07.2021 DATE OF PRONOUNCEMENT : 16.07.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THESE TWO MISCELLANEOUS APPLI CATIONS AGAINST THE COMMON ORDER DATED 19.1.2018 PASSED BY THE TRIBUNAL, INTER ALIA, FOR ASSESSMENT YEARS 2009-10 & 2010-11. IT IS THE CONTENTION OF THE REVENUE THAT ADDITIONAL GROUNDS R AISED BY IT IN ASSESSMENT YEARS 2009-10 & 2010-11 HAVE NOT BEEN DI SPOSED OF BY THE TRIBUNAL. MP NOS.141 & 142/BANG/2018 M/S. THE KARNATAKA BANK LTD., BANGALORE PAGE 2 OF 7 2. IN THE MISCELLANEOUS PETITION FILED FOR THE A SSESSMENT YEAR 2009-10, IT IS STATED THAT FOLLOWING ADDITIONAL GRO UNDS HAD BEEN RAISED BEFORE THE TRIBUNAL:- A. LEARNED CIT(A) HAS ERRED IN HOLDING THAT RS.47 CROR ES IS THE AMOUNT OF PROVISION IN RESPECT OF RURAL BAD AND DOU BTFUL DEBTS, MADE DURING THE YEAR, WHEREAS THE ASSESSEE .HAS MAD E PROVISION FOR RURAL BAD AND DOUBTFUL DEBTS AMOUNTING TO RS.6. 85 CRORE ONLY (OUT OF TOTAL PROVISION OF RS.47CRORES), WHICH COUL D BE ALLOWED UNDER CLAUSE (VIIA) OF S.36(1), AS HELD BY THE HON' BLE SUPREME COURT IN 343 ITR 270.NO PROVISION WHICH IS MADE FOR NON-RURAL/ URBAN DOUBTFUL DEBTS COULD BE ALLOWED AS DEDUCTION U/S 36(1)(VIIA) IS APPLICABLE ONLY IN RESPECT OF BAD DE BTS OF RURAL BRANCHES. SUCH URBAN BAD AND DOUBTFUL DEBTS HAVE TO BE ALLOWED SEPARATELY AND INDEPENDENTLY, AS AND WHEN THE DEBTS BECOME BAD AND ARE WRITTEN OFF IN THE ACCOUNTS OF ASSESSEE BAN K IN ACCORDANCE WITH PROVISION OF SEC.36(1)(VII). B. LEARNED CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 36(1)(VII) OF RS.7.72 CRORES WHEN NO SUCH AMOUNT OF BAD DEBTS HAS BEEN WRITTEN OFF BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT S NOR DEBITED TO THE P8GL ACCOUNT OR CLAIMED IN THE RETURN. THIS AMOUNT IS MERELY A PROVISION FOR NON-RURAL BAD 86 DOUBTFUL DE BTS OUT OF A TOTAL PROVISION OF RS.47 CRORES WHICH IS NOT ALLOWA BLE UNDER CLAUSE(VII) OF S.36(1). 3. IN THE MISCELLANEOUS PETITION FILED FOR THE AS SESSMENT YEAR 2010-11, IT IS STATED THAT FOLLOWING ADDITIONAL GRO UNDS HAD BEEN RAISED BEFORE THE TRIBUNAL:- A. LEARNED CIT(A) HAS ERRED IN HOLDING THAT RS.41.85 CRORES IS THE AMOUNT OF PROVISION IN RESPECT OF RURAL BAD AND DOUBTFUL DEBTS, MADE DURING THE YEAR, WHEREAS THE A SSESSEE HAS MADE PROVISION FOR RURAL BAD AND DOUBTFUL DEBTS AMOUNTING TO RS.1.G CRORE ONLY (OUT OF TOTAL PROVIS ION OF RS.81CRORES), WHICH COULD BE ALLOWED UNDER CLAUSE(V IIA) OF S.36(1), AS HELD BY THE HON'BLE SUPREME COURT IN 34 3 ITR 270. NO PROVISION WHICH IS MADE FOR NON-RURAL/ URBA N MP NOS.141 & 142/BANG/2018 M/S. THE KARNATAKA BANK LTD., BANGALORE PAGE 3 OF 7 DOUBTFUL DEBTS COULD BE ALLOWED AS DEDUCTION U/S 36 (1)(VIIA) IS APPLICABLE ONLY IN RESPECT OF BAD DEBTS OF RURAL BRANCHES. SUCH URBAN BAD AND DOUBTFUL DEBTS HAVE TO BE ALLOWE D SEPARATELY AND INDEPENDENTLY, AS AND WHEN THE DEBTS BECOME BAD AND ARE WRITTEN OFF IN THE ACCOUNTS OF ASSESSEE BANK IN ACCORDANCE WITH PROVISION OF SEC.36(1)(VII). B. LEARNED CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 36(1)(VII) OF RS.72.74 CRORES WHEN NO SUCH AMOUNT OF BAD DEBTS HAS BEEN WRITTEN OFF BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT S NOR DEBITED TO THE P&L ACCOUNT OR CLAIMED IN THE RETURN. THIS AMOU NT IS MERELY A PROVISION FOR NON-RURAL BAD 86 DOUBTFUL DEBTS OUT O F A TOTAL PROVISION OF RS.81 CRORES WHICH IS NOT ALLOWABLE UN DER CLAUSE(VII) OF S.36(1). 4. IT IS THE PLEA OF THE REVENUE THAT THE TRIBUNAL HAS NOT DISPOSED OF THE ABOVE SAID ADDITIONAL GROUNDS IN BO TH THE YEARS AND HENCE THE SAME CONSTITUTES A MISTAKE APPARENT FROM RECORD IN BOTH THE YEARS UNDER CONSIDERATION. THE LD D.R SUBMITTE D THAT SHE HAS FURNISHED COPIES OF COVERING LETTERS DATED 25.4.201 3 ADDRESSED TO THE ASSISTANT REGISTRAR, THROUGH WHICH THE ADDITION AL GROUNDS HAD BEEN FILED WITH THE REGISTRY FOR BOTH THE YEARS UND ER CONSIDERATION. THE LD D.R HAS ALSO FURNISHED A COPY OF LETTER WRIT TEN BY O/O CIT APPROVING THE DRAFT ADDITIONAL GROUNDS FOR AY 2008- 09 TO 2009-10. 5. ON THE CONTRARY, THE LD. A.R. SUBMITTED THAT THE RE IS NO EVIDENCE TO SHOW THAT THE ADDITIONAL GROUNDS WERE E VER FILED BEFORE THE TRIBUNAL. HE SUBMITTED THAT THE ASSESSEE HAS A LSO NOT RECEIVED COPY OF ALLEGED ADDITIONAL GROUNDS. HE SUBMITTED T HAT THERE IS NO REFERENCE TO ANY ADDITIONAL GROUNDS IN THE COMMON O RDER PASSED BY THE TRIBUNAL FOR AY 2008-09 TO 2011-12. ACCORDINGL Y, HE SUBMITTED THAT THE REVENUE MIGHT HAVE OMITTED TO ACTUALLY FIL E ADDITIONAL GROUNDS BEFORE THE TRIBUNAL AND HENCE, THERE WAS NO OCCASION FOR THE TRIBUNAL TO CONSIDER AND DISPOSE THEM OF. ACCO RDINGLY, HE MP NOS.141 & 142/BANG/2018 M/S. THE KARNATAKA BANK LTD., BANGALORE PAGE 4 OF 7 SUBMITTED THAT THE OMISSION CANNOT BE MADE GOOD THR OUGH THE MISCELLANEOUS PETITIONS. ACCORDINGLY HE CONTENDED THAT THERE IS NO MERIT IN THE PETITIONS FILED BY THE REVENUE. 6. WE ALSO NOTICE FROM THE APPEAL FOLDERS RELATIN G TO AY 2009-10 & 2010-11 THAT THERE ARE NO COPIES OF THE ADDITIONAL GROUNDS CLAIMED TO HAVE BEEN FILED BY THE REVENUE. BEFORE US, THE REVENUE HAS FILED A COPIES OF LETTERS DATED 25.4.2013 ADDRESSED TO TH E ASSISTANT REGISTRAR, ITAT, BENGALURU, WHEREIN IT IS STATED TH AT THE ADDITIONAL GROUNDS ARE BEING FILED FOR ASSESSMENT YEARS 2009-1 0 & 2010-11. THE REVENUE HAS ALSO FURNISHED A COPY OF LETTER DAT ED 19.4.2013, WHEREIN IT IS STATED THAT THE COMMISSIONER OF INCOM E-TAX, MANGALORE HAS APPROVED THE DRAFT ADDITIONAL GROUNDS OF APPEAL FOR AY 2008-09 TO 2010-11. ACCORDINGLY, IT WAS CONTEND ED THAT THE ADDITIONAL GROUNDS HAVE BEEN FILED BEFORE THE TRIBU NAL ON 25.4.2013. 7. WE NOTICE THAT THE LD CIT, MANGALORE HAS APPROVE D DRAFT ADDITIONAL GROUNDS FOR THREE YEARS, VIZ., FOR AY 20 08-09 TO 2010-11. HOWEVER, THE REVENUE HAS FILED MISCELLANEOUS PETITI ONS FOR TWO YEARS ONLY, VIZ., AY 2009-10 & 2010-11, I.E., THE REVENUE HAS NOT FILED ANY MISCELLANEOUS PETITION FOR AY 2008-09. BY WAY OF C OMMON ORDER DATED 19-01-2018, THE TRIBUNAL HAS DISPOSED OF APPE ALS PERTAINING TO FOUR YEARS VIZ., 2008-09 TO 2011-12. IN THE SAI D COMMON ORDER PASSED BY THE TRIBUNAL, THERE IS NO REFERENCE TO AN Y ADDITIONAL GROUNDS IN AY 2008-09, 2009-10 AND 2010-11. 8. WE NOTICE FROM THE COPIES OF LETTERS DATED 25. 4.2013 (REFERRED ABOVE), THROUGH WHICH THE ADDITIONAL GROUNDS HAVE B EEN CLAIMED TO HAVE BEEN FILED THAT THERE IS NO ACKNOWLEDGEMENT S EAL OF THE ITAT. AS OBSERVED EARLIER, THE COPIES OF ADDITIONAL GROUN DS OF APPEAL ARE MP NOS.141 & 142/BANG/2018 M/S. THE KARNATAKA BANK LTD., BANGALORE PAGE 5 OF 7 ALSO NOT AVAILABLE IN THE RELEVANT APPEAL FOLDERS O F THE TRIBUNAL. THE ASSESSEE HAS ALSO DISPUTED ABOUT THE CLAIM OF FILIN G OF ADDITIONAL GROUNDS. HENCE THE BENCH HAD ASKED THE LD DR TO FU RNISH EVIDENCE REGARDING FILING OF ADDITIONAL GROUNDS BEF ORE THE TRIBUNAL FOR THE TWO YEARS UNDER CONSIDERATION. IN PURSUANC E OF THE SAME, THE LD. D.R. HAS REQUESTED THE TRIBUNAL FOR A COPY OF RELEVANT PORTION OF INWARD TAPAL REGISTER MAINTAINED BY TR IBUNAL FOR THE RELEVANT PERIOD, THROUGH HER LETTER DATED 13-12-201 9. LATER THE LD DR ALSO ASKED FOR INSPECTION OF RECORDS OF THE TRIB UNAL, THROUGH HER LETTER DATED 13.7.2020 & 30-07-2020. AT THE TIME O F HEARING BEFORE US, THE LD D.R SUBMITTED THAT SHE SOUGHT INSPECTION OF ORDER SHEET NOTING MADE IN RELEVANT APPEAL FOLDERS AND MISCELLA NEOUS PETITION FOLDERS. THE LD D.R ALSO SUBMITTED THAT THE LD CIT (DR) SHRI RAJESH KUMAR JHA, WHO REPRESENTED THE APPEALS FOR AY 2009- 10 & 2010- 11 BEFORE THE TRIBUNAL HAS FILED AN AFFIDAVIT DATED 08-01-2021 AFFIRMING THAT HE HAS ARGUED THE ADDITIONAL GROUNDS IN THE APPEALS FILED BY THE REVENUE FOR AY 2009-10 & 2010-11. 9. THE LD D.R FURTHER SUBMITTED THAT SHE HAS NOT BEEN ALLOWED INSPECTION OF TAPAL REGISTER NOR SHE WAS GIVEN COPY OF TAPAL REGISTER OF RELEVANT DATES. HOWEVER, WE NOTICE THAT THE RE GISTRY HAS STATED THAT THE RECORDS SOUGHT TO BE INSPECTED ARE VERY OL D AND SAME IS NOT TRACEABLE. IT IS ALSO REPORTED THAT, AS PER EXTANT RULES, THE RECORDS/REGISTERS MAY BE DESTROYED AT THE END OF 6 YEARS FROM THE DATE OF PASSING OF TRIBUNAL ORDER. ACCORDINGLY, IT IS STATED THAT THE ABOVE SAID RECORDS ARE NOT TRACEABLE. 10. ON A CONSPECTUS OF THE MATTER, WE NOTICE TH AT THERE IS NO EVIDENCE TO SHOW THAT THE ADDITIONAL GROUNDS PREPAR ED BY THE REVENUE FOR AY 2009-10 & 2010-11 HAVE ACTUALLY BEEN FILED BEFORE THE TRIBUNAL. AS OBSERVED BY US EARLIER, THE LD CI T, MANGALORE HAS MP NOS.141 & 142/BANG/2018 M/S. THE KARNATAKA BANK LTD., BANGALORE PAGE 6 OF 7 APPROVED DRAFT ADDITIONAL GROUNDS FOR THREE YEARS V IZ., AY 2008-09 TO 2010-11. HOWEVER, THE REVENUE HAS FILED MISCELL ANEOUS PETITIONS FOR AY 2009-10 & 2010-11. THE TRIBUNAL HAD PASSED COMMON ORDERS FOR AY 2008-09 TO 2011-12 AFTER HEARING ALL THE APPEALS RELATING TO THESE YEARS SIMULTANEOUSLY. IN THE APP EAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2008-09, THE TRIBUNAL H AS ADJUDICATED ONLY ORIGINAL GROUNDS OF APPEAL, I.E., THERE IS NO REFERENCE TO ADDITIONAL GROUNDS OF APPEAL. IN AY 2009-10 & 2010 -11 ALSO, THE TRIBUNAL HAS NOT REFERRED TO ANY ADDITIONAL GROUNDS . THOUGH THE LD CIT (DR), WHO ARGUED THE APPEALS BEFORE THE TRIBUNA L HAS FILED AN AFFIDAVIT AFFIRMING THAT HE REMEMBERS TO HAVE ARGUE D THE ADDITIONAL GROUNDS BEFORE THE TRIBUNAL IN AY 2009-10 & 2010-11 , YET THE FACT REMAINS THAT THERE IS NO SINGLE EVIDENCE TO SHOW TH AT THE ADDITIONAL GROUNDS HAVE ACTUALLY BEEN FILED BEFORE THE TRIBUNA L. 11. IN THE ABSENCE OF RECORDS SUPPORTING THE CLA IM OF THE REVENUE, WE ARE UNABLE TO ACCEPT THE PLEA MADE IN THE MISCEL LANEOUS PETITIONS FILED BY THE REVENUE FOR AY 2009-10 & 201 0-11. ACCORDINGLY, WE HAVE NO OTHER OPTION, BUT TO REJECT THEM. 12. IN THE RESULT, BOTH THE MISCELLANEOUS PETIT IONS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JUL, 2021 SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 16 TH JUL, 2021. VG/SPS MP NOS.141 & 142/BANG/2018 M/S. THE KARNATAKA BANK LTD., BANGALORE PAGE 7 OF 7 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.