SULTANPUR ZILA SAHKARI BANK LIMITED,SULTANPUR vs. ACIT, DCIT CIRCLE FAIZABAD

ITA 382/LKW/2025Status: DisposedITAT Lucknow24 September 2026AY 2015-165 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal considered the arguments and facts. It was held that only the employee's contribution pertaining to the current assessment year could be added back to the assessee's income for this assessment year. The Tribunal noted the submission that the Rs. 7.46 crores added back was the sum total of five years of contributions, as indicated in the auditor's note. Since this aggregated amount needed verification and segregation to determine the portion disallowable for the specific assessment year under consideration, the Tribunal restored the matter back to the file of the Assessing Officer. The AO was directed to undertake this exercise, segregate the disallowable amount for AY 2015-16, and pass appropriate orders in accordance with the law. The issue of whether the original assessment order was erroneous and prejudicial to revenue was implicitly addressed by the remand, as the AO would now correctly determine the disallowance for the relevant year. The Tribunal did not expressly decide on the other grounds raised by the assessee, such as set-off of losses or charging of interest, as the primary issue of the addition was remanded.

What were the facts?

The assessee, Sultanpur Zila Sahkari Bank Limited, is appealing an order by the CIT(A), NFAC, which upheld an addition of Rs. 7.46 crores made by the Assessing Officer (AO) for Assessment Year 2015-16. The AO's order, passed under section 143(3) r.w.s. 263, was a revision of an earlier assessment order that had accepted the returned loss. The revision was initiated by the PCIT, Faizabad, who observed that the AO had failed to consider the assessee's non-deposit of employee's provident fund (PF) contributions, which should have been treated as income under section 2(24)(x). The AO subsequently added back Rs. 7.46 crores as deemed income, citing a qualified audit report noting the non-deposit of PF contributions. The assessee argued that the amount pertained to different previous years and that the bank had not benefited from it. The CIT(A) upheld the addition, finding no satisfactory explanation or evidence of timely deposit.

What were the issues?

1. Whether the original assessment order for AY 2015-16 was erroneous and prejudicial to the interest of the revenue, justifying revision under section 263 of the Income Tax Act, 1961. - Assessee's contention: The original assessment order was neither erroneous nor prejudicial. - Revenue's contention: Not explicitly recorded, but implied by the PCIT's action to revise the order due to the AO's failure to examine the PF deposit issue. 2. Whether the addition of Rs. 7.46 crores as deemed income under section 2(24)(x) of the Income Tax Act, 1961, for AY 2015-16, was justified, considering the amount pertains to employee's provident fund contributions not deposited by the assessee. - Assessee's contention: The addition is unsustainable as it aggregates contributions from multiple previous years without segregating the amount pertaining to the current year. The bank did not derive any benefit from the PF Trust's funds, which were utilized by the trust itself. - Revenue's contention: The assessee failed to provide satisfactory explanations or evidence of timely deposit of PF contributions, thus justifying the addition under section 2(24)(x).

Which sections of the Income-tax Act were involved?

Section 2(24)(x),Section 143(3),Section 263,Section 36(1)(va),Section 234A,Section 234B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, LUCKNOW ‘A’ BENCH, LUCKNOW

Hearing: 20.08.2026Pronounced: 24.09.2026

PER NIKHIL CHOUDHARY, A.M.: This is an appeal filed by the assessee against the order of the ld. CIT(A), NFAC dated 21.03.2025, wherein the ld. CIT(A) has dismissed the appeal of the assessee, against the order passed by the ld. Assessing Officer for the assessment year 2015-16 under section 143(3) r.w.s. 263 of the Income Tax Act, 1961 on 26.12.2019. The grounds of appeal are as under:- “1. Ground-The Assistant Commissioner of Income Tax, Sultanpur (hereinafter referred to as the Ld. A.O.) erred on facts and in law passing the assessment order u/s 263/143(3) of the Act without appreciating the fact that the original assessment order passed on 20.12.2017 was neither erroneous nor prejudicial t

The order continues below.

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