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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. SANJAY ARORA & SH. N.K.CHOUDHRY
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA No.438(Asr)/2017 Assessment Year:2006-07
Income Tax Officer Vs. Kamraz Rural Bank Ward-3(5), Baramulla, New Colony, Sopore, Madina Complex, Opp. Baramulla Masoodi Motors NH Kanispora, Baramulla-193101 PAN:AAACK7269A (Appellant) (Respondent) Appellant by: Smt. Prabhojot Kaur (Ld. DR) Respondent by: Sh. Neeraj Goel (Ld. CA) Date of hearing: 02.05.2018 Date of pronouncement: 29.05.2018 ORDER PER N.K.CHOUDHRY, JM: The instant appeal has been preferred by the Revenue Department, on feeling aggrieved against the order dated 28.03.2017 impugned herein passed by the Ld. CIT(A)-J&K, Jammu u/s 143(3) of the I.T. Act, 1961 (herein after called as the ‘Act’) for the Asst. Year:2006-07.
The Revenue Department has raised the following grounds of appeal. “1. Whether the Ld. CIT(A) was right in law and fact in accepting the explanation of the assessee on the basis of the fresh evidence without allowing the opportunity to examine same by the assessing officer as per Rule 46 of the I.T Rule.
ITA No.438/Asr/2017 (Asst. Year: 2006-07) 2 ITO vs. Kamraz rural Bank, Baramulla
Whether the Ld. CIT(A) was right in law and fact in deleting the addition of Rs.7,72,61,404/-out of total addition made at Rs.7,96,80,000/- made u/s 40(a)(ia) of the I.T. Act by admitting the evidence filed by the assessee before the learned CIT(A) and not appreciating the fact that it has failed to file any such evidence before the AO despite many opportunities being afforded during the assessment proceedings.”
The facts of the case are already on record, which are not repeated herein for the sake of convenience and brevity. However, in course, the return declaring an income of Rs.(-) 5,19,46,000/- has been filed by the assessee on 30.10.2006 which was processed u/s 143(1)(a) of the Act on 23rd January, 2006. Thereafter, the case was taken for scrutiny under the CASS and notice u/s 143(2) of the I.T. Act was issued. The bank was asked to produce branch wise details of deposits and interest as well as details of TDS on payment of interest on term deposits. In response to which the assessee bank produced the books of account before the AO who, while examining the same, noticed that the assessee had made payment of interest on term deposits amounting to Rs.7,96,80,000/- and observed that on the said payments, the assessee bank was required to deduct tax at source as per the provisions of Sec. 194A of the I.T. Act, however, the assessee bank has failed to deduct the same. Finally the AO, therefore, disallowed the above sum of Rs.7,96,80,000/- as per the provision of Sec.40(a)(ia) of the Income Tax Act,1961.
ITA No.438/Asr/2017 (Asst. Year: 2006-07) 3 ITO vs. Kamraz rural Bank, Baramulla
The assessee bank challenged the assessment order before the Ld. CIT(A) who had while considering the appellant’s submissions that they had produced books of account and other relevant documentary evidence before the AO during the assessment proceedings which has admittedly test checked by the AO. It was further observed by the Ld. CIT(A) that because of the nature of the assessee bank itself being a Registered Rural Bank located in Baramulla & Kupwara District of Kashmir, the maximum deposits base of clients dealing with the Bank are people living below poverty and residing in far flung area of Kupwara, Bandipora etc. of the valley. Thus, the deposits from individuals are not significant and such deposits where the interest payments are exceeding of Rs.5,000/- are either very few in each branch or in some branches there are no such deposits wherein the interest accruals on deposits are exceeding Rs.5,000/- per year. It was also observed by the Ld. CIT(A) that AO did not provide the assessee sufficient opportunities to collect information from all the branches of the bank. However, the AO has collected the information regarding the payment of interest and deduction of TDS and has compiled branch wise details of total interest paid exceeding of Rs.5,000/- in respect of each depositors together with number of such accounts in each branch for that year and finally the Ld. CIT(A) while considering the relevant documents on record
ITA No.438/Asr/2017 (Asst. Year: 2006-07) 4 ITO vs. Kamraz rural Bank, Baramulla
disallowed the amount of Rs.24,18,596/- in respect of 268 identified accounts as against the total interest payments on deposits of Rs.7,96,80,000/-, as eligible amount for disallowance u/s 40(a)(ia) of the I.T. Act. 5. We have gone through the facts and circumstances of the case. In the instant case the assessment order was passed on 26th December, 2008 as it is admitted facts that the assessee is a Regional Rural Bank and catering to the people below poverty line, who are living in far flung areas of Baramulla, Kupwara and Bandipora and are small time depositors and the relevant books of account have already been submitted to the Assessing Officer and on examining of the same the AO came to conclusion that the assessee had made payment of interest on term deposits amounting to Rs.7,96,80,000/-. It was clearly observed by the Ld. CIT(A) that AO did not provide sufficient opportunities the assessee to collect information from all the branches of the bank. However, the assessee bank has collected the information regarding the payment of interest and deduction of TDS and compiled branchwise details of total interest paid exceeding of Rs.5,000/- in respect of each depositors together with number of such accounts in each branch for that year. The Asseeee bank not only submitted the aforesaid documents/details to the Ld. CIT(A) but also to the Assessing Officer in remand proceedings because the Ld. CIT(A) while considering the relevant documents on record sought the remand report from the assessing officer, who although received many notices and reminders from the
ITA No.438/Asr/2017 (Asst. Year: 2006-07) 5 ITO vs. Kamraz rural Bank, Baramulla
office of the Ld CIT(A) qua remand proceedings, as well as request from the Assessee bank for filing the Remand Report, however did not file the same and in that eventuality, the Ld. CIT(A) , in the constrained circumstances, while considering the documents of record, disallowed the amount of Rs.24,18,596/- in respect of 268 identified accounts as against the total interest payments on deposits of Rs.7,96,80,000/-, as eligible amount for disallowance u/s 40(a)(ia) of the I.T. Act. It is trite to say that power of the CIT(A) is co-terminus with the Assessing Officer and he is at liberty to consider any material for just decision of the case. Therefore on the basis of the facts as the Ld. CIT(A) sought remand report from the Assessing officer and the Assessee Bank had produced all material before the Assessing Officer for its perusal, which have been produced before the ld. CIT(A) , hence it can not be said that that new material or additional evidences have been admitted/perused without consideration of same by the Assessing Officer , hence we are of the considered view that the Ld. CIT(A) did not violate the mandate of rule 46 of the I T Act , hence ground no. 1 and 2 stands dismissed . 6. In the result, the appeal filed by the Revenue Department stands dismissed. Order pronounced in the open Court on 29.05.2018.
Sd/- Sd/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:29.05.2018
ITA No.438/Asr/2017 (Asst. Year: 2006-07) 6 ITO vs. Kamraz rural Bank, Baramulla
/PK/ Ps. Copy of the order forwarded to: (1) Kamraz Rural Bank, New Colony, Sopore, Baramulla (2) The ITO, Ward-3(5), Baramulla (3) The CIT(A)- J&K, Jammu (4) The CIT concerned (5) The SR DR, I.T.A.T., Amritsar True copy By order