SURYODAY SMALL FINANCE BANK LIMITED,NAVI MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX 15(3)(2), MUMBAI

By this appeal, the appellant-assessee bank is challenging the order dated 07.03.2025 passed by the National Faceless Appeal Centre (NFAC) (‘CIT(A)’ for short). The appeal relates to assessment year 2021-22.

The brief facts are that the assessee is a scheduled commercial bank. The assessee filed its Return of Income (RoI) for the relevant assessment year declaring taxable income of Rs. 75,86,05,950/-. The return was processed by CPC, Bangalore. By notice dated 04.07.2022, the CPC proposed certain adjustment vide intimation under Section 143(1)(a) of the Income Tax Act, 1961 (‘Act’ for short). The assessee filed it’s response to the proposed adjustment on 03.08.2022. After considering the response, Suryoday Small Finance Bank Ltd. CPC completed a summary assessment which was communicated vide intimation under Section 143(1) of the Act dated 13.11.2022. According to the assessee, the response was not properly considered while making the adjustment. The assessee, therefore, filed an application for rectification under Section 154 of the Act on 29.11.2022 claiming that there was a mistake apparent from the record in the intimation within the meaning of Section 154 of the Act. The CPC vide order dated 29.11.2022 dismissed the application for rectification. The assessee challenged the said order before the CIT(A). The CIT(A) has dismissed the appeal by the impugned order dated 07.03.2025. Feeling aggrieved, assessee is in appeal on the following grounds :-

We have heard parties. Perused record.

It is submitted by the learned AR that there was an apparent error in the Tax Audit Report Form 3CD. It is, therefore, contended that the disallowance of Rs.85,65,000/- under Section 43B of the Act be deleted.

The learned DR has submitted that the adjustment has been rightly made in view of the Tax Audit Report in Form 3CD. The learned DR has relied upon the observations made by the CIT(A). It is submitted that under Section 43B of the Act certain expenses, including leave encashment, are deductible only in the year of actual payment subject to the same being paid before the due date of filing of return under Section 139(1) of the Act. It is submitted that the CIT(A) has found on fact that the appellant did not produce any evidence to substantiate the claim that leave encashment was paid before the due date. It is submitted that in the absence of the same, the CPC was justified in making the addition/adjustment of Rs.85,65,000/- (Rs.1,04,27,000 – Rs.18,62,000).

We have considered the submissions made. The only contention on behalf of the assessee is that there was an inadvertent error while reporting the provision for leave encashment in Form 3CD where the closing balance in the provision account is reported as unpaid instead of the provision made for the year under consideration. It is submitted that relevant documents have been produced, which have not been properly examined.

In such circumstances, we find that it would be appropriate if the matter is remitted back to the AO for verification of the factual aspect about the voluntary disallowance made by the assessee and then consider the issue of disallowance under Section 43B of the Act. In that view of the matter, the appeal is allowed. We direct the AO to verify the documents produced and then decide the issue about disallowance under Section 43B of the Act afresh after giving an opportunity of hearing to the

In the result, appeal of the assessee is allowed for statistical purposes.