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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI S. RIFAUR RAHMAN, HONBLE & SHRI SANDEEP SINGH KARHAIL, HONBLEShri Keshav Bhujle Smt. Shailja Rai
O R D E R PER S. RIFAUR RAHMAN (AM)
This appeal is filed by the assessee against the order of the Learned Principal Commissioner of Income Tax (Appeals)–1, Mumbai [hereinafter in short “Ld. Pr.CIT”] dated 18.03.2020 for the A.Y.2010-11.
2. Assessee has raised following grounds in its appeal: - (A.Y: 2010-11) Abhyudaya Co-op Bank Limited “1. Notice u/s. 263 dated 02/03/2021 is illegal and invalid: 1.1 The learned Principal Commissioner of Income-tax erred in issuing the notice u/s. 263 of the Income-tax Act, 1961 dated 12.03.2020. 1.2 The learned Principal Commissioner of Income-tax failed to appreciate that the said notice u/s. 263 dated 12.03.2020 is illegal and invalid being without authority in law and without jurisdiction. 1.3 The learned Principal Commissioner of Income-tax failed to appreciate that the assessment order 28.12.2017 is neither erroneous nor prejudicial to the interest of the revenue. 1.4 The learned Principal Commissioner of Income-tax failed to appreciate that the claim for deduction of Rs. 39,27,047/- u/s.36(1)(vii) was allowed in the assessment order dated 16.01.2013 and not in the assessment order dated 28.12.2017 and accordingly the notice u/s. 263 is barred by limitation. 1.5 The Learned Principal Commissioner of Income-tax failed to appreciate that the claim for deduction of Rs. 39,27,047/- u/s.36(1)(vii) is allowable and the claim is also supported by the decision of the jurisdictional Mumbai Bench of the Income Tax Appellate Tribunal dated 12/09/2017 in the case of City Cooperative Bank Ltd., in ITA no. 2884/Mum/2015. 1.6 The learned Principal Commissioner of Income-tax failed to appreciate that the said decision of the jurisdictional Mumbai Bench of the Income Tax Appellate Tribunal dated 12/09/2017 in the case of City Cooperative Bank Ltd., in has reached the finality and is binding on him.
Order u/s. 263 dated 18.03.2020 is illegal and invalid. 2.1 The Learned Principal Commissioner of Income-tax failed to appreciate that the notice u/s. 263 dated 12.03.2020 being illegal and invalid, the consequent order u/s. 263 dated 18.03.2020 is also illegal and invalid. 2.2 The learned Principal Commissioner of Income-tax failed to appreciate that the order u/s. 263 dated 18.03.2020 is illegal and invalid being without authority in law and without jurisdiction. 2.3 The learned Principal Commissioner of Income-tax failed to appreciate that the order u/s. 263 dated 18.03.2020 is illegal and invalid being barred by limitation.
(A.Y: 2010-11) Abhyudaya Co-op Bank Limited 2.4 The learned Principal Commissioner of Income-tax failed to appreciate that the claim for deduction of Rs. 39,27,047/- u/s.36(1)(vii) is allowable deduction and the claim is also supported by the decision of the jurisdictional Mumbai Bench of the Income Tax Appellate Tribunal dated 12/09/2017 in the case of City Cooperative Bank Ltd., in ITA no. 2884/Mum/2015.
The appellant craves leave to add, amend, alter and/or delete any of the grounds of appeal.”
3. At the time of hearing, Ld. AR brought to our notice that similar grounds were raised before the Coordinate Bench in ITA.No. 623/Mum/2021 for the A.Y. 2011-12 and the Coordinate Bench has considered and adjudicated the issue in favour of the assessee and he brought to our notice Para No. 8 and 9 of the order (Copy of the order is placed on record).
Ld. DR fairly agreed that the issue is covered in favour of the assessee.
Considered the rival submissions and material placed on record, we observed that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2011-12 and decided the issue in favour of the assessee. While holding so the Coordinate Bench held as under: - “8. Considered the rival submissions and material placed on record, we observed that this issue is already covered in detail by the (A.Y: 2010-11) Abhyudaya Co-op Bank Limited Coordinate Bench in the case of City Cooperative Bank Ltd. v. ITO (supra) and held as under: - “3. We have gone through the submissions made by both the parties. We noted from the chart available on page 15 of the paper book showing the statement of party-wise bad debts written off and the provision existed as on 31.03.2006 that the assessee has written off the bad debts in respect of 31 parties amounting to `94,45,827/- during the impugned assessment year while the provisions as on 31.03.2006 was to the extent of ₹.83,39,432.57. The assessee has made provision for assessment years 2007-08, 2008-09 and 2009- 10 at ₹.7,96,787/-,₹. 5,029/- and ₹.2,75,628/- respectively. It is a fact that up to A.Y. 2006-07 the income from banking business was fully allowed in the case of the assessee under section 80P of the Income Tax Act. Subsequently by Finance Act, 2006 by insertion of sub-section (4) in section 80P the assessee was not entitled for deduction under section 80P from A.Y. 2007-08. The deduction under section 36(1)(vii) is available in respect of bad debts written off subject to the fulfilment of the conditions specified under section 36(2). Section 36(1)(viia) provides for the treatment of provisions for bad and doubtful debts of an amount not exceeding 7.5% of the total income (computed before making any deduction under this clause and Chapter VIA) and an amount not exceeding 10% of the aggregate average advances made by the rural branches of such banks. The provisions of Section 36(1)(vii) and section 36(1)(viia) are distinct and independent. The provisions of Section 36(1)(viia) are applicable w.e.f. A.Y. 2007-08 to cooperative bank also. Therefore any provision allowed in A.Y. 2007-08 onwards in the case of a cooperative bank under clause (viia) will be hit by this amendment but a provision standing in the account of a cooperative bank prior to 01.04.2006 will not come in the ambit of section 36(1)(viia) and in our opinion if any bad debts written off for which a provision has been created prior to 01.04.2006 will be entitled for deduction under section 36(1)(viia) if the conditions stipulated under section 36(2) are satisfied. From the chart as appearing on page 15 it is apparent that the assessee had written off the bad debts amounting to ₹.92,45,827/- during the year. It is not related to the provisions in respect of which the assessee has claimed deduction in the earlier assessment year. We, therefore, set aside the order of the CIT(A) on this issue and delete the said addition. Thus, this ground stands allowed.
(A.Y: 2010-11) Abhyudaya Co-op Bank Limited 9. Respectfully following the above said decision, we are inclined to allow the claim of the assessee. Moreover, the assessment was originally assessed u/s. 143(3) of the Act and subsequently reopened to examine the same issue. After verification, the Assessing Officer has accepted the contention of the assessee. Once again Ld. Pr.CIT raised the same issue and directs the Assessing Officer to verify the same once again after giving opportunity of being heard to the assessee. The Ld. Pr.CIT cannot impose his views on the issue which was verified twice and respective Assessing Officer’s has taken their view. Considering the sequence of events in our view Ld. Pr.CIT has no jurisdiction to interfere with the completed proceedings otherwise, there is no end to the assessment proceedings. Therefore, the revision order passed u/s.263 is accordingly, set aside. Grounds raised by the assessee are allowed.
Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2011-12, we allow the grounds raised by the assessee.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 28th June, 2022