HOOGHLY DISTRICT CENTRAL CO-OPERATIVE BANK LTD.,CHINSURAH vs. ACIT, CIRCLE 23(1), HOOGHLY

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH AT KOLKATA Before SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER Hooghly District Central Co- ACIT, Circle-23(1), Hooghly Operative Bank Ltd. Vs. (Appellant) (Respondent) PAN: AACFH9855Q Appearances: Assessee represented by : Sanjay Bhattacharaya, FCA. Department represented by : Manav Adak, Sr. DR. Date of concluding the hearing : 15.07.2026 Date of pronouncing the order : 03.08.2026 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: These two appeals filed by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals), NFAC [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for AYs 2017-18 & 2018-19 dated 05.01.2023 & 17.01.2023 respectively. Since the issues in both the appeals are related, they were heard together and are being decided vide this common order for the sake of convenience and brevity. 1.1 The Registry has informed that both the appeals are barred by limitation by 1106 days. The assessee has filed a petition for condonation of delay along with an affidavit explaining the reasons that the assessee was pursuing parallel appellate proceedings regarding a TDS default, which formed the sole basis of the additions in these assessments, and upon receiving partial relief from the Tribunal on 05.07.2023 and the subsequent appeal effect order on 21.03.2025 reducing the TDS liability, the assessee sought rectification from the Ld. Assessing Officer but was advised to file the present appeals before the Tribunal to claim the consequential relief. The assessee has requested the Bench to condone the delay in filing the appeal. After perusing the same, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeals within the statutory time limit. We, therefore, condone the delay and admit the appeals for adjudication. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: I. ITA No. 1330/KOL/2026 for AY 2017-18: "1. That the Ld. Commissioner of Income-tax (Appeals), NFAC was wrong in dismissing the Appeal of the appellant as regards the disallowance of Rs.5,01,24,442 u/s 40(a)(ia) for alleged TDS default. 2. That without prejudice to the contention raised in Ground No. 1 above, the Ld. Commissioner of Income-tax (Appeals), NFAC may kindly directed to re- adjudicate the Appeal of the appellant in view of the Order dated 21/03/2025 passed by the Income-tax Officer, TDS Circle 2(2), Kolkata in pursuance of the Order dated 05/07/2023 passed by the Hon'ble Income- tax Appellate Tribunal, 'C' Bench, Kolkata vide its Order dated 05/07/2023 in the case of the appellant in Income-tax Appeal No. ITA No.703/Kol/2022 3. That the appellant craves leave to add, delete or modify any Ground or Grounds of Appeal before or at the time of the Hearing of the Appeal." II. ITA No. 1331/KOL/2026 for AY 2018-19: "1. That the Ld. Commissioner of Income-tax (Appeals), NFAC was wrong in dismissing the Appeal of the appellant as regards the disallowance of Rs.1,85,30,366 u/s 40(a)(ia) for alleged TDS default. 2. That without prejudice to the contention raised in Ground No. 1 above, the Ld. Commissioner of Income-tax (Appeals), NFAC may kindly directed to re- adjudicate the Appeal of the appellant in view of the Order dated 21/03/2025 passed by the Income-tax Officer, TDS Circle 2(2), Kolkata in pursuance of the Order dated 05/07/2023 passed by the Hon'ble Income- tax Appellate Tribunal, 'C' Bench, Kolkata vide its Order dated 05/07/2023 in the case of the appellant in Income-tax Appeal No. ITA No.704/Kol/2022 3. That the appellant craves leave to add, delete or modify any Ground or Grounds of Appeal before or at the time of the Hearing of the Appeal." 3. We shall first take up ITA No. 1330/KOL/2026 for AY 2017-18 for adjudication. Brief facts of the case are that the assessee had filed the return of income for the AY 2017-18 on 07.09.2017 declaring the total income at ₹2,86,48,950/-. During the assessment proceedings, the Assessing Officer (hereinafter referred to as Ld. 'AO') noted that an order u/s 201(1) and 201(1A) of the Act dated 31.01.2018 was passed treating the assessee as an 'assessee in default' for non-deduction of TDS on interest paid to depositors aggregating to ₹16,70,81,472/-. Consequently, the Ld. AO made a disallowance u/s 40(a)(ia) of the Act amounting to ₹5,01,24,442/- and determined the total income of the assessee at ₹7,87,73,392/- in the assessment made u/s 143(3) of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who observed that the assessee was treated as deemed to be in default in the parallel TDS appellate proceedings and, therefore, the Ld. CIT(A) confirmed the action of the Ld. AO and partly allowed the appeal of the assessee. 4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 5. Rival contentions were heard and the submissions made have been examined. The assessee is a co-operative bank. It was submitted by the Ld. AR that an order u/s 201(1) & 201(1A) of the Act was passed and on the basis of which, 30% of the claim of expenses was disallowed out of the deduction claimed u/s 40(a)(ia) of the Act in March 2025. The Tribunal had remanded the order u/s 201(1) & 201(1A) of the Act to the lower authorities and the assessee was subsequently not held to be in default. A copy of the order of the Tribunal in Income-tax Appeal No. ITA No.702, 703 & 704/Kol/2022 dated 05/07/2023 for A.Ys. 2016-17 to 2018-19 has been enclosed. A partial order of the ITO TDS Circle 2(2), Kolkata dated 21.03.2025 has also been enclosed in which the last page 6 is missing. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld. 6. We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). Since the very basis for the disallowance u/s 40(a)(ia) of the Act does not survive as the assessee was no longer held to be in default, therefore, the order of the Ld. CIT(A) is hereby set aside and the issue is remanded before the Ld. Assessing Officer to consider the order of the ITO TDS Circle 2(2), Kolkata dated 21.03.2025 and in the event that the assessee is not held to be in default for the purpose of TDS on the interest paid, he is directed to delete the addition and only to the extent of the assessee being held in default for non-deduction of TDS, the addition would be sustained as per law. The assessee shall furnish the copy of the order giving effect to the order of the Tribunal vide which the assessee is held to be not in default and on verification the same, the Ld. AO is directed to delete the addition made u/s 40(a)(ia) of the Act. Accordingly, all the grounds raised by the assessee are partly allowed for statistical purposes. 7. In the result, the appeal filed by the assessee in ITA No. 1330/KOL/2026 for AY 2017-18 is partly allowed for statistical purposes. 8. As regards the appeal in ITA No. 1331/KOL/2026 for AY 2018- 19, since the facts in this appeal are identical, our findings in ITA No. 1330/KOL/2026 for AY 2017-18 shall mutatis mutandis also apply in the appeal in ITA No. 1331/KOL/2026 for AY 2018-19 since a similar order has been passed by the ITO TDS for this year as well. The grounds taken by the assessee in this appeal are also partly allowed for statistical purposes. 9. In the result, both the appeals filed by the assessee in ITA No(s). 1330 & 1331/KOL/2026 for AY(s) 2017-18 & 2018-19 are partly allowed for statistical purposes. Order pronounced in the open Court on 3rd August, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 03.08.2026 Bidhan (Sr. P.S.) Copy of the order forwarded to: 1. Hooghly District Central Co-Operative Bank Ltd., Netaji Subhash Road, Chinsurah Shanti Kunja, HIG-K-4, Hooghly, West Bengal, 712101. 2. ACIT, Circle-23(1), Hooghly, Roopma Mahal, Khadina More, Station Road, Chinsurah, Hooghly, West Bengal, 712101. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //// By order