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आदेश/Order
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 22.3.2019 of the Commissioner of Income Tax-1, Chandigarh [hereinafter referred to as ‘CIT(A)’]
The assessee in this appeal has taken following grounds of appeal:-
1. The Ld. CIT(A) has erred in law in issuing enhancement notice under section 251(2) of the Income Tax Act, 1961. -Chd/2019 The Punjab State Cooperative Bank Ltd., Chandigarh 2
2. That the Ld. CIT(A) has erred in law and on facts in considering the amount of Rs. 12087000/- as income of the assessee under the provisions of section 43D of the Act.
3. That Ld. CIT(A) has erred on facts and in law in considering the amount of Rs. l2087000/-as income of the assessee when the assessee itself has declared the same as income in AY 2016-17 and 2017-18 at the time of accrual of income.
4. That CIT(A) is erred in law in interpreting the words "actually received" under section 43D of the Act.
5. That the Ld. CIT-(A) has erred on facts and in law in confirming the addition of Rs.743000/- on account of OTS amount received pending adjustment when the amount has not accrued to the assessee.
6. That the Ld CIT(A) has erred on facts and in law in confirming the addition of Rs.743000/- under section 41 of the Act.
7. That the Ld CIT(A) has erred on facts and in law in confirming the addition of Rs.743000/- when the assessee has unclaimed provision for NPA amounting to Rs.3828.94 Lacs.
The assessee craves permission to add, amend or delete any ground of appeal before the finalization of appellate proceedings.
3. Ground Nos. 1, 2, 3 & 4: The sole issue raised through ground Nos. 1 to 4 is regarding the year of taxability of interest income of Rs. 1,20,87,000/- received by the assessee on non-performing assets. The -Chd/2019 The Punjab State Cooperative Bank Ltd., Chandigarh 3 assessee offered the said income in the return of income for taxation in assessment years 2016-17 & 2017-18, whereas, the Assessing Officer taxed the same in the assessment year 2014-15. However, the Ld. CIT(A) while deciding the issue in the cross appeals of the assessee as well as of the Revenue for assessment year 2014-15 held that the said income was to be assessed in the assessment year 2013-14 i.e. the year under consideration. He, accordingly enhanced the income of the assessee for the year under consideration.
4. Both the Ld. representatives of the parties have submitted that in an appeal against the order of the CIT(A) for assessment year 2014-15, the issue has been restored back by the Tribunal vide order dated 6.12.2019 passed in alongwith C.O.No.
4/Chd/2019. The relevant part of the order of the Tribunal for the assessment year 2014-14 is reproduced as under:-
“8. The Ld. DR stated that section related to the taxability of interest and before interpreting the said section, the Ld. DR contended, what was relevant was the fact that the CIT(A) had accepted the allocation of recovery made by the assessee bank of Rs.1.73 crores between the interest and principal as Rs.91 lacs and Rs.79 lacs respectively without verifying the basis of the same. He pleaded that before applying the provisions of section 43D of the Act it was required to first verify what the component of interest was in the entire recovery made and the Ld.CIT(A) by merely accepting the bifurcation made by the assessee had allowed relief to the assessee without verifying the quantum to which the provisions of section 43D of the Act was applicable.
-Chd/2019 The Punjab State Cooperative Bank Ltd., Chandigarh 4 9. The Ld. Counsel for the assessee, on the other hand, contended that even the assessee was aggrieved with the findings of the CIT(A) on this issue treating the interest component taxable in assessment year 2013-14 as against that returned by the assessee for assessment years 2015-16 and 2016-17 when the amount had finally accrued to the assessee when the High Court had denied stay to the guarantor from whom the amount had been recovered. It was contended that even the accounting standards treated receipt of the amount only when there was certainty of the same and in assessment year 2013-14 there was no certainty of receipt of the amount since the guarantor had filed case against the order of the court making recovery. At his juncture the Ld.Counsel for the assessee was asked to address the manner and basis on which the amount recovered had been bifurcated by it between the interest and principal amount. To this the Ld.Counsel for the assessee was unable to given a plausible explanation, stating that it was system generated. The Ld.Counsel for the assessee agreed that the matter be restored back to the CIT(A) to verify and determine the quantum of interest in the amount recovered.
We have heard the contentions of both the parties. We have gone through the orders of the CIT(A) and the AO also. The Ld.CIT(A) has held the interest component, in the total amount recovered, as taxable in the year of receipt as per the provisions of section 43D of the Act and has taken the figure of interest in the total amount recovered as that shown by the assessee in its books in the subsequent years i.e. 2015-16 and 2016-17 when it credited the amount to its Profit & Loss Account.The Ld.CIT(A) has not verified the interest component in the same, which the Ld.Counsel for the assessee admitted was system generated and could not given a plausible basis for the same. In view of the same, since the fact relating to the present issue vis-à-vis the amount of interest earned by the assessee held liable for taxation as per section 43D of the Act ,remains to be determined and verified, we consider it fit to restore the issue back to the CIT(A) to first -Chd/2019 The Punjab State Cooperative Bank Ltd., Chandigarh 5 determine the same and thereafter adjudicate the issue in accordance with law. Needless to add that the assessee is free to raise all contentions before the CIT(A), who in turn is directed to decide the issue after dealing with the same and passing a speaking order in this regard.”
In view of this, since the very issue relating to taxability of the interest income of Rs. 1,20,87,000/- has already been restored by the Tribunal to the file of the CIT(A) and the issue with regard to the year of the taxability is also under the consideration of the said CIT(A), hence, ground Nos.1 to 4 are accordingly restored to the file of the CIT(A) to be decided in view of the directions, as reproduced above, by the ITAT vide order dated 6.12.2019 for the assessment year 2014-15.
Ground Nos. 5, 6 & 7 : The issue raised through ground Nos. 5, 6 & 7 is relating to the taxability of the amount of Rs. 7,43,000/- received by the assessee on account of one time settlement with regard to the non-performing assets. The Ld. Counsel in this respect has moved an application for additional evidences which reads as under:-
“Dated: 20-01-2020 The Presiding Officer, Income Tax Appellate Tribunal, Chandigarh - Bench -B Chandigarh.
Subject:- Permission to file Additional Evidence in IT A. No. 814/Chandigarh/2019 In case of Punjab State Co-operative Bank Ltd Chandigarh -A.Y. 2013-14.
Sir/Madam, -Chd/2019 The Punjab State Cooperative Bank Ltd., Chandigarh 6 Kindly refer to the subject cited above. In this connection it is submitted that Punjab State Co-operative Bank Ltd. Chandigarh had filed the above referred appeal during May 2019 against the orders of Ld CIT(A) Chandigarh on 8 grounds of appeal. Out of that Ground No. 5 was as under::-
"That the Learned CIT(A) Chandigarh has erred in law in confirming the addition of Rs.743000/- on account of OTS amount received pending adjustment when the amount has not accrued to the assessee"
The Ld. CIT (A) Chandigarh had decided the issue vide orders dated 22-03-2019 holding that the assessee was asked to provide party-wise details of OTS but he failed to submit the same. Initially the assessee had stated that it had declared the amount of OTS received amounting to Rs.743000/- as income during the year under consideration. Later he changed the stand that it had not booked the amount as income . However it has failed to show the amount as income which has been recovered from the NPA's . The AO has rightly treated the same as income of the assessee.
In this regard it is submitted that according to OTS Scheme 2011, the customers who had taken Consumer Loans and there amount became NPA up to 31-03-2006 will be eligible for relief under this OTS Scheme. Accordingly the assessee had entered into One Time Settlement with 14 customers DURING THE YEAR.
The same was not available with the assessee at that point of time. However subsequently the information has been received from the auditors on the basis of whose comments the addition has been made by the Ld. A.O.
The documents are crucial evidence to demonstrate that the amount of Rs. 7.43 lacs provided by the auditors and also to appreciate and understand the OTS policy.
Our Prayer -Chd/2019 The Punjab State Cooperative Bank Ltd., Chandigarh 7 In view of the foregoing discussions we are enclosing herewith copies of the following documents as additional evidence with the request that the same kindly be admitted under Rule 29. It is respectfully submitted that facts would play a pivotal role for proper consideration and adjudication of the appeal. Grave prejudice would be caused to the appellant if these documents are not permitted to be filed. a) Details of accounts b) Ledger accounts of the customers Hope to be accommodated and obliged.
Thanking you,
Yours Sincerely,