MAHESH URBAN CO-OPERATIVE BANK LTD,SOLAPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-1, SOLAPUR, SOLAPUR

This appeal by the assessee is directed against the order dated 08-05-2023 passed by the CIT(A) in National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) Act in relation to the assessment year 2012-13.

The only issue raised in this appeal is against the confirmation of disallowance of Rs.3,61,044/- made by the Assessing Officer (AO) u/s.40(a)(ia) of the Act on account of non-deduction of tax at source on interest paid to certain non-members who were registered as nominal members.

Tersely put, the facts of the case are that the Assessing Officer made the above disallowance on the reason that the assessee failed to deduct tax at source from the payment made to non- members on interest paid/credited. The ld. CIT(A) took note of the judgment of the Hon’ble Jurisdictional High Court in Jalgaon DCC Bank Ltd. Vs. Union of India 265 ITR 423 (Bom.) but did not provide any relief for the reason given in para 4.2 that “The appellant has not provided any evidence during the appellate proceeding to prove that the addition relates to members (Including nominal members).” Thus, it is evident that the ld. CIT(A) accepted, in principle, that the deduction of tax at source was not warranted in respect of payment of interest to members including nominal members. He, however, did not grant the suitable relief for the failure on the part of the assessee to furnish the details of interest paid. On the contrary, the ld. AR submitted that all such details were uploaded to the ld. CIT(A), who did not take cognizance of the same. In view of these facts, we are satisfied that the interest of justice would meet adequately if the impugned order is set-aside and the matter is restored to the file of the ld. CIT(A). We order accordingly and direct him to decide the appeal afresh after allowing a reasonable opportunity of hearing to the assessee.