INCOME TAX OFFICER, DHAR vs. JILA SAHKARI KENDRIYA BANK MARYADIT, JHABUA

आदेश/ O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by order of first appeal dated 04.04.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 11.09.2021 passed by learned National Faceless Assessment Centre, Delhi [“AO”] u/s 143(3) r.w.s. 263 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2015-16, the revenue has filed this appeal.

Page 1 of 5

Jila Sahkari Kendriya Bank Maryadit ITA No. 479/Ind/2024 – AY 2015-16 (i) The assessee is a co-operative bank. For AY 2015-16, the assessee

filed return declaring a total income of Rs. 8,00,40,650/-. The case

was selected for scrutiny and the AO passed assessment-order dated

03.10.2017 u/s 143(3) determining total income at Rs. 8,81,43,270/-

after making disallowance of deduction of Rs. 81,02,617/- claimed by

assessee u/s 80P.

(ii) Subsequently, the Ld. PCIT, Ujjain passed revision-order dated

23.03.2020 u/s 263 terming the assessment-order passed by AO as

erroneous-cum-prejudicial to the interest of revenue for certain

issue(s). The Ld. PCIT set aside assessment-order and directed AO to

reframe assessment.

(iii) Pursuant to Ld. PCIT’s direction, the AO passed fresh assessment-

order dated 11.09.2021 u/s 143(3) r.w.s. 263 wherein he made two

disallowances, as under:

(a) The assessee claimed deduction of Rs. 4,00,00,000/- u/s

36(1)(viia) on account of provision for bad and doubt debts. Out of

this, the AO allowed deduction to the extent of Rs. 66,10,745/-

(7.50% of gross total income) and disallowed remaining amount of

Rs. 3,33,89,255/-.

(b) The AO disallowed deduction of Rs. 81,02,617/- claimed by

assessee u/s 80P.

Page 2 of 5

Jila Sahkari Kendriya Bank Maryadit ITA No. 479/Ind/2024 – AY 2015-16 (iv) Aggrieved, the assessee carried matter in first-appeal whereupon the

CIT(A) granted part-relief in the matter of disallowance u/s 36(1)(viia)

and partly upheld. Further, the CIT(A) upheld disallowance of section

80P fully.

(v) Now, the revenue is aggrieved by part-relief granted by CIT(A) in the

matter of disallowance u/s 36(1)(viia) and accordingly come up in this

appeal.

Original grounds in Form No. 36:

“1. Whether in the facts and in law in the circumstances of the case, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts and circumstances of the case. 2. Whether in the facts and in law in the circumstances of the case, the Ld. CIT(A) has erred in allowing appeal of the assessee without appreciating the facts discussed by the Assessing Officer in his assessment order. 3. Whether in the facts and in law in the circumstances of the case, the Ld. CIT(A) has accepted the copy of Census of India, 2011 in which the categorization of 10 branches fall under the classification of Rural Branch while the Ld. CIT(A) would took the latest population as per the local municipality, panchayats, etc. 4. Whether in the facts and circumstances of the case, the Ld. CIT(A) is justified in deleting the addition of Rs.322.18 lakhs made by the Assessing Officer under section 36(1)(viia)(a) of the Income Tax Act, 1961. The appellant craves leave to add or to deduct from.” Additional grounds by way of separate application dated 13.02.26:

“1. Whether in the facts and in the circumstances of the case, the Ld. CIT(A), NFAC Delhi, erred in deleting the addition of Rs. 322.18 lakhs

Page 3 of 5

Jila Sahkari Kendriya Bank Maryadit ITA No. 479/Ind/2024 – AY 2015-16 made by the AO u/s 36(1)(viia) of IT Act, 1961 on the basis of non- submission of remand report, when, as per the record, no such remand report was called for from the AO, and the request for the remand report was inadvertently made to the assessee instead of the AO? 2. The appellant craves leave to add to or deduct from or otherwise amend the above additional grounds of appeal.” 4. We have heard learned Representatives of both sides and carefully

considered the documents held in case-file including orders of lower-

authorities.

for aggregate of two components i.e., (i) 7.50% of gross total income (before

deducting provision for bad and doubtful debts) and (ii) 10% of aggregate

average advances made by rural branches of assessee-bank. It further

emerged that the AO has given due deduction for the first component

computed at Rs. 66,10,745/-, there is not dispute about that. However, the

AO did not give any deduction for the second component, which resulted in

impugned disallowance of Rs. 3,33,89,255/-. The reason assigned by AO for

denial of second component, as mentioned in assessment-order, is that the

assessee did not file details/data of rural branches and average advances

made by those branches as per Rule 6ABA of Income-tax Rules, 1963.

During first-appeal, however, the assessee filed details/data and the CIT(A)

granted part-relief on mere submission of assessee but the AO did not get or

avail opportunity to examine those details/data. Therefore, the working of

second component remains unverified by AO as well as CIT(A). Having

regard to the facts and deliberations by learned Representatives of both

Page 4 of 5

Jila Sahkari Kendriya Bank Maryadit ITA No. 479/Ind/2024 – AY 2015-16 sides, the bench proposed to remand this issue to the file of AO for a proper

verification and adjudication afresh and the learned Representatives of both

sides graciously accepted. In that view of matter, we set aside the impugned

order for this limited issue and restore this matter to the file of AO for a

fresh adjudication. Needless to mention that the AO’s adjudication shall be

confined only to the second component of section 36(1)(viia) as discussed

earlier. We direct the assessee to submit complete details to AO. Ordered

accordingly.

Order pronounced in open court on 27/03/2026

Sd/- Sd/-

(PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore

िदनांक/Dated : 27/03/2026

Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPYSr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore

Page 5 of 5