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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: HON’BLE SHRI V. DURGA RAO & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आयकर अपील सं./ (िनधा1रण वष1 / Assessment Year: 2014-15) The Big Kanchipuram Co-Op. Town Bank Ltd. ACIT बनाम 90-91, Annai Indira Gandhi Salai, Circle-1, / Vs. Kanchipuram – 631 502. Kanchipuram. �थायी लेखा सं./जीआइ आर सं./PAN/GIR No. AAAAT-5860-E (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ� की ओरसे/ Appellant by : Shri V. Padmanabhan (FCA)-Ld. AR ��थ� की ओरसे/Respondent by : Mrs. R. Premi (Addl. CIT) – Ld. DR सुनवाई की तारीख/Date of Hearing : 22-03-2023 घोषणा की तारीख /Date of Pronouncement : 22-03-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 17-12-2021 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143(3) r.w.s 147 of the Act on 21-12-2019. The grounds raised by the assessee read as under:
1. The CIT(Appeals) erred in adding an income to Rs.8,88,42,024/- towards accrued interest which is against Facts and Law.
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The CIT(Appeals) failed to understand that the Accrued income of Rs.2,83,48,714/- was already considered and reflected in the P&L as the Assessee follows Mercantile system of accounting.
The assessee is a Banking company regulated under the Banking Regulation Act, 1949 and as a policy of Income recognition norms follows by the Banking Company under the Banking regulation Act, 1949, Income from Non-Performing Assets is not recognized on accrual basis and is booked as income only when it is received. Hence the Assessee during the Fy.2013-14 transferred a sum of Rs.1,56,94,290/- on NPA account to the opening reserves of Rs 4,47,99,020/- and shown a sum of Rs.6,04,93,310/- in the Balance sheet. The same will be recognised as income only when it is received actually. This fact was not considered by the CIT(Appeals) and erred in making additions to entire reserve of Rs. 6,04,93,910/- which was against Facts and Law. 4. On the basis of the above grounds and other supporting materials during the Appeal proceedings, the additions of Rs.8,88,42,024/- may be deleted there by justice be rendered to the assessee.
As is evident, the assessee is aggrieved by confirmation of addition of Rs.888.42 Lacs on account of accrued interest.
2. The Registry has noted delay of 105 days in the appeal, the condonation of which has been sought by Ld. AR on the ground that the delay occurred due to lockdown situation arising out of Covid-19 Pandemic. We find that the effective delay after excluding lockdown period is only for 01 day which stands condoned. Having heard rival submissions and after due consideration of case records, our adjudication would be as under. 3.1 The return of income filed by the assessee was scrutinized u/s. 143(3) of the Act. However, the case was reopened and another assessment was framed u/s. 143(3) r.w.s. 147 after making addition of accrued interest income for Rs.888.42 Lacs. 3.2 During assessment proceedings, the Ld. AO held that the interest receivable for Rs.888.42 Lacs was to be offered by the assessee as interest income on accrual basis but the same was not done. Accordingly, the said amount was added to the income of the - 3 - assessee. Aggrieved, the assessee preferred further appeal before the Ld. CIT(A). However, the Ld. CIT(A) confirmed the stand of Ld. AO against which the assessee is in further appeal before us. Our findings and Adjudication 4. The Ld. AR, drawing attention to the financial statements of the assessee, submitted that the amount of Rs.283.48 Lacs was already considered and reflected in the Profit & Loss Account following mercantile system of accounting. Regarding balance Rs.604.93 Lacs, Ld. AR submitted that the same represent accrued interest on non- performing assets (NPA) which is to be recognized only on receipt basis as per applicable RBI circulars. The Ld. Sr. DR submitted that these facts are not borne out of the orders of lower authorities.
We find that the assessee is a co-operative bank carrying on the business of banking. From the financial statements, it prima facie appears that the amount of Rs.283.48 Lacs has already been credited to Profit & Loss account and therefore, the same could not be brought to tax again. The Ld. AO is directed to verify the same and delete the impugned addition if the same is found to be correct. Regarding balance impugned addition of Rs.604.93 Lacs, the Ld. AO is directed to bring on record factual matrix of the same and re-adjudicate the same after affording an opportunity of hearing to the assessee. The assessee is directed to provide the requisite details and substantiate its stand.
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The appeal stands allowed for statistical purposes.
Order pronounced on 22nd March, 2023.