INCOME TAX OFFICERWARD-7(3), PUNE, PUNE vs. JANASEVA SAHAKARI BANK LIMITED HADAPSAR PUNE, PUNE

The brief facts of the case are that, the assessee has filed the return of income on 19.11.2020 for the A.Y. 2020-21 disclosing a total income of Rs. 29,87,12,120/-. Subsequently, the assessee has filed revised return of income declaring total income of Rs. 29,57,74,150/- on 26.03.2021. The case was selected for compulsory scrutiny to verify the issues- “(a) High liabilities as compared to low income/receipts. (b). Sale consideration of the property in ITR is less than sale Janaseva sahakare Bank Ltd consideration of property reported in SFT. (c). Taxable income shown in revised return is less than the taxable income shown in the Original return and large refund has been claimed (d). Property sold at a considering (shown in ITR less than the value as per stamp authority u/sec 50C of the Act. Accordingly, the Assessing Officer has issued notice under Section 143(2) and u/sec142(1) of the Act. In compliance to the notice, the assessee has filed details, clarifications and information supporting the return of income filed.

The A.O on perusal of the financial statements find that, the assessee has claimed education cess on the income tax as deduction, whereas the A.O was not satisfied with the explanations and dealt on facts, provisions and judicial decisions and has disallowed an amount of Rs.29,37,970/- u/sec40(a)(ii)r.w.s37910 of the Act.(ii) The A.O on verification of the submissions find that the assessee has paid aggregate amount of interest of Rs.58,14,30,887/- but deducted TDS u/sec194A of the Act on the amount of interest paid to the extent of Rs.26,57,14,130/- and the assessee has not deducted TDS on remaining balance of interest. The A.O has issued a show cause notice to the assessee and there was no proper response and the A.O find that in spite of providing adequate opportunity, the assessee has not filed the reasons or documentary evidence in support of non deduction of TDS on balance interest component. Therefore the A.O has disallowed @30% of non TDS deducted interest amount, which works out to Rs.8,87,15,027/- and (iii) the Assessee in the Assessment proceedings vide letter has made additional claim, which is not made in the return of income, that the recovery in bad debts written off is to be excluded from total income offered to tax. The A.O has dealt on the details and information and has not accepted the claim and observed Janaseva sahakare Bank Ltd that the assessee ought to have filed revised return of income in respect of such claim and issued a show cause notice and there was no proper response and the A.O has rejected the claim of the assessee. Finally the A.O assessed the total income of Rs. 38,74,27,147/- and passed the order u/sec 143(3) r.w.s. 144B of the Act dated 27.09.2022. 4. Aggrieved by the order, the assessee has filed the appeal with the CIT(A). In the appellate proceedings, the CIT(A) has considered the grounds of appeal, statement of facts, findings of the A.O and the assessee submissions with supporting evidences. The CIT(A) dealt on the factual aspects and judicial decisions and has rejected the additional claim in relation to recovery in bad debts written off, But deleted the disallowance u/sec40(a)(i) of the Act made by the A.O and CIT(A) has partly allowed the appeal. Aggrieved by the order of the CIT(A), the revenue and assessee has filed the appeal with the Honble Tribunal.

At the time of hearing, the Ld.DR submitted the CIT(A) has erred in deleting the disallowance u/sec40(a)(ia) of the Act overlooking the factual aspects and ignoring the facts that in the Tax Audit report, the auditor has qualified the TDS information that the assessee should deduct TDS u/sec194A of the Act on entire interest payments, but TDS was deducted on part of interest component and the Ld.DR prayed for allowing the revenue appeal. Per contra, the Ld.AR supported the order of the CIT(A) on this disputed issue.

We heard rival submission and perused the material record. The Ld.DR submitted that the CIT(A) has erred in deleting the disallowance u/sec40(a)(ia) of the Act overlooking the findings of the Assessing Officer and the factual aspects that in the Tax Audit report, the auditor has qualified the TDS Janaseva sahakare Bank Ltd information that the assessee should deduct TDS u/sec194A of the Act on entire interest payments. We find the CIT(A) has considered submissions and evidences filed by the assessee in support of the claim and deleted the disallowance dealt at Page 22 Para 8 to 11 of the order read as under: “Issue 1: Disallowance u/s 40(a)(ia) of the Act During the course of assessment proceedings, the Assessing Officer has made disallowance u/s 40(a)(ia) of the Act by stating as under;

During the course of appellate proceedings, the appellant stated that all the figures mentioned above by the Ld.AO and basis issue is irrelevant and do not pertain to the return submitted by the appellant. The appellant further stated that the total interest paid on its depsotis by the appellant bank during the previous year is Rs. 125,76,47,617/- as can be verified from the Audited Profit and Loss account placed on record, in view of that the addition of Rs. 8,8,7,15,027/- is total erroneous and irrelevant and needs to be cancelled.

I have gone through the P & L account for the relevant F.Y. and it is found that the appellant Bank has paid Janaseva sahakare Bank Ltd interest to the tune of Rs. 125,76,47,617/- on deposits. Therefore, the figures mentioned above by the Ld.AO is very different from the actual interest paid on deposits.

Hence the addition made on this issue is deleted. consequently, all grounds of appeal pertaining to this issue are allowed.”

The Ld.AR submitted that the assessee has filed the details/information before the assessing officer and CIT(A) and there is no new information was filed and when a query was raised to Ld.AR to explain the quantification of TDS deduction u/sec194A of the Act made by auditor in the Tax Audit report, the Ld.AR submissions are not satisfactory. The Ld.DR’s contentions are that the CIT(A) has ignored the observations of the Auditor in the Tax audit report and wrongly deleted the disallowance. We considering the facts, circumstances and submissions set aside the order of the CIT(A) on this disputed issue of TDS disallowance u/sec40(a)(ai) of the Act and restore the issue to the file of the Assessing officer to adjudicate a fresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. And the grounds of appeal of the revenue are allowed for statistical purposes. I T A.No 3159/PUN/2025 A.Y.2020-21(Asseesse Appeal)

The Assesse has raised sole ground of appeal that the CIT(A) has erred in rejecting the additional claim in relation to recovery in bad debts written off made in the assessment proceedings. The Ld.AR submitted that the Assessee in the Assessment proceedings vide letter dated8.12.2021 has made additional claim, which is not made in the income tax return that the recovery in Bad debts Janaseva sahakare Bank Ltd written off is to be excluded from total income offered to tax. The Assessee has filed revised computation along with the details of five assessment years and bad debt provisions, bad debt written off and claim allowed u/sec36(i)(vii)(a) of the Act. But the assessing officer has rejected the claim, as the assessee has not filed revised return of income with additional claim relaying on the judicial decision. We find the CIT(A) has considered submissions and evidences filed by the assessee in support of the claim but sustained the action of the assessing officer and dismissed the claim dealt at Page 22 Para 12 to 14 of the order read as under: “Rejection of the additional claim made by the appellant in relation to Recovery in Bad Debts Written off

During the course of assessment proceedings, the appellant has made an additional claim (which is not claimed in the ITR) that Recovery in Bad Debts written off is to be excluded from total income offered for tax. Such claim of the appellant was not accepted by the A.P. the Ld.AO has mentioned in the Assessment order that there is no provision under the Income Tax Act to make amendment of the income at the assessment stage for which the claim made by the appellant cannot be accepted. Further, the Ld.AO mentioned in the Assessment Order that the appellant ought to have filed revised return of income, if there were any modification/ amendments proposed to be made to the return of income. The Ld.AO placed reliance on the decision of Hon'ble Supreme Court in the case of Goetze (india) Ltd. Vs. commissioner of Income Tax, 284 ITR 323(Supreme Court), where in it was held that the assessee has to file revised return of income for claiming any deduction which was not claimed in the original return of income filed.

The Ld.AO has right rejected the claim of the appellant as there is no provision under the Income Tax Act to make amendment of the income at the assessment stage.

In view of the above, I am not inclined to interfere with the decision made by the AO on this issue. Hence all the ground(s) of appeal pertaining to this issue are dismissed.”

Per Contra, the Ld. DR supported the order of the CIT(A) on this disputed issue and submitted that the assessee is not eligible to claim deduction of the recovery in Bad debts written off in the revised computation of income filed in the scrutiny proceedings.

We heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.AR is with respect to claim in relation to recovery in bad debts written off as it was not claimed in the original return of income and but in scrutiny proceedings revised computation of income was filed but the said claim was rejected by the Assessing Officer and upheld by the CIT(A). We find that the assessee in the original return of income has not made the claim and the Ld.AR submitted that the time limit for filling the revised return of income was over. We find the submissions of the Ld.AR are realistic and the A.O. has not doubted the claim but rejected only on the ground of non filling of revised return of income. We are of the opinion that the assessee should not be deprived of the legitimate right to claim of recovery of bad debt written off which is not considering the facts, circumstances, disputed. We submissions and principles of natural justice, shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, set aside the order of the CIT(A) on this disputed issue and remit the issue to the file of the Assessing Officer for limited purpose to examine and verify the claim and adjudicate afresh on merits and the assessee should be provided adequate Janaseva sahakare Bank Ltd opportunity of hearing and shall cooperate in submitting the information. And the grounds of appeal of the assessee are allowed for statistical purposes.

In the result, the appeals filed by the revenue and the assessee are allowed for statistical purposes.

The Pr. CIT concerned. 4. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, “A” बेंच, पुणे/ DR, ITAT, “A” Bench, Pune. गार्डफ़ाइि / Guard File. 5. ////