JIND CENTRAL CO-OP BANK LTD.,JIND, HARYANA vs. INCOME TAX OFFICER, BHIWANI, HARYANA

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’, NEW DELHI

BEFORE SH. SUDHIR KUMAR, JUDICIAL MEMBER AND SH. MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.9004/Del/2025 Assessment Year: 2016-17 Jind Central Co-operative Vs. ITO, Ward -1 Bhiwani Bank Limited Shiv Colony Bays No. 1-4 District Shopping Centre HUDA Ground Urban Estate Jind-126102 PAN NO. AAAJJ0025A (APPELLANT) (RESPONDENT)

Appellant by Sh. Mohit Gupta, Adv. Sh. Utsav Pareek, CA Respondent by Shri Bhopal Singh, CIT. DR

Date of hearing: 24/06/2026 Date of Pronouncement: 17/07/2026 ORDER PER SUDHIR KUMAR, JUDICIAL MEMBER:

This appeal is preferred by the assessee against the order dated 28.11.2025 of the National Faceless Appeal Centre (NFAC) Delhi [hereinafter referred to as “Ld. NFAC)”] passing against

the assessment order dated 10.04.2023 for the assessment year 2016-17 u/s 147 r.w.s. 144B of the Income Tax Act 1961[hereinafter referred to as “the Act”] 2. The brief facts of the case are that the assessee filed his return of income for the A.Y.2016-17 on 17-10-2016 declaring total income Nil. The original assessment under section 143(3) of the Act was completed on 14-12-2028 and assessed at the income of Rs. Nil. The case of the assessee was reopened by initiating proceedings under section 147 of the Act after recording proper reasons. Accordingly, notice under section 148 of the Act was issued on 30-06-2022. In the response the assessee filed return of income on 21-07-2022 declaring total income Nil. Subsequently notice under section 142(1) of the Act with questionnaire was issued on 28-12-2022. The assessing Officer completed the assessment after considering the submission and made the addition of Rs.26,24,317/- under section 40A(7) of the Act. According to Assessing officer the assessee bank had paid gratuity to the extent of Rs. 74,91,842/- to its retired employees during the current year against the provisions made for the same of Rs.91,41,106/-. The assessing Officer also observed that the assessee itself submitted that an amount of Rs. 26,24,317/- was invested in Group Gratuity Fund with the LIC. The Assessing officer

disallowed the amount of Rs. 26,24,317/- under section 40A(7) of the Act which was invested in gratuity fund with LIC. 3. Aggrieved the order of the Ld. NFAC the assessee filed this appeal before the Tribunal who vide his order dated 24-10-2025 dismissed the appeal. Being aggrieved the order of the Ld. NFAC the assessee raising the following grounds filed this appeal:- 1. That the learned CIT(A) has erred in law and on facts in upholding the disallowance of Rs.26,24,317/- without appreciating that the said amount representing investment in LIC Group Gratuity Scheme was never claimed as a deduction in the Profit & Loss Account. The disallowance under section 40A(7) of the Income Tax Act 1961 is therefore misconceived and unsustainable. 2. That the Hon’ble Commissioner of Income Tax (Appeals) NFAC has erred in complying the principal of natural justice. 3. That the learned CIT(A) has erred in dismissing the appeal on the ground that the assessee failed to furnish employee -wise details of gratuity paid without appreciating that such details were irrelevant to the impugned amount, which was not debited to the P&L Account and not claimed as an expenditure. The finding is based on a fundamental misunderstanding of the facts of the case. 4. That the learned CIT(A) has erred in placing reliance on observations regarding alleged evasiveness or non-cooperation of the assessee, while ignoring the detailed written submission and supporting explanations placed on record demonstrating correct treatment of gratuity liability and investment in LIC. The adverse remarks are unwarranted, arbitrary and contrary to record. 3

RS.26,24,317/- towards gratuity expense debited to the Profit &

Loss account has been made. He further submitted that the

amount of disallowance is the difference of closing balance as

on 31-03-2016 and as on 31-03-2015 and had not debited to

the Profit & Loss account, which has been shown in the Audited

Balance sheet.

authorities.

available on record. The assessee has filed the affidavit of Shri

Jai Prakash Soni to prove that the amount invested in Group

Gratuity Fund with LIC was not debited in Profit & Loss

account. We also observed that the expenditure of

Rs.91,41,106/- was incurred towards gratuity. The assessee

bank has paid the gratuity to the extent of Rs.91,41,106/- and

the list of the employees was enclosed with affidavit. The Ld.

CIT(A) has observed that details of the persons not provided to

whom payment has been made. The assessee bank has filed the

details of the paid gratuity with name and amount to whom

payment was made. The amount of Rs. 26,24,317/- was never

debited from the Profit & Loss account. The auditor also issued

the certificate in this regard. Therefore, the addition made by

the Assessing officer and confirmed by Ld. CIT(A) is liable to be

deleted and accordingly, deleted. The appeal of the assessee is

liable to be allowed

Order pronounced in the open court on 17.07.2026. Sd/- Sd/- (MANISH AGARWAL) (SUDHIR KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER SR BHATNAGGR Date 17.07.2026 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) ` 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6