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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI A. K. GARODIA & SMT BEENA PILLAI
O R D E R
Per A.K. Garodia, Accountant Member Out of this bunch of four appeals, it is seen that there are two appeals filed by the Revenue for Assessment Years 2011-12 and 2013-14 and the remaining two appeals are filed by the assessee for Assessment Years 2011- 12 and 2012-13. The cross appeals for Assessment Year 2011-12 are directed against the order of learned CIT(A), Gulbarga, dated 19.12.2017 and the 522, 1102/Bang/2018 Page 2 of 14 appeal of the assessee for Assessment Year 2012-13 is directed against the order of learned CIT(A), Gulbarga, dated 31.01.2018 and the remaining appeal of the Revenue for Assessment Year 2013-14 is directed against the order of learned CIT(A), Gulbarga, dated 19.12.2017. All these appeals were heard together and are being disposed of by way of this common order for the sake of convenience.
First, we take up two appeals filed by the Revenue for Assessment Years 2011-12 and 2013-14 in and 522/Bang/2018. Regarding these two appeals of the Revenue, learned DR of the Revenue supported the Assessment Order whereas learned AR of the assessee supported the order of CIT(A). She also pointed out that even as per grounds raised
by the Revenue, being ground No.3 in both these two years, this is the contention of the Revenue that learned CIT(A) has erred in giving relief by considering the tribunal order in assessee’s own case for Assessment Year 2007-08 and 2009- 10 while the same issues are pending before the Hon’ble High Court for adjudication. It was submitted that this is not the case of the Revenue that the Tribunal order based on which relief is allowed by learned CIT(A) is stayed or reversed by Hon’ble High Court and therefore, no intervention is called for in the order of CIT(A) in these two years in respect of these two appeals of the Revenue. ,521, 522, 1102/Bang/2018 Page 3 of 14
3. We have considered the rival submissions. For ready reference, we reproduce the grounds raised by the Revenue in these 2 appeals for Assessment Years 2011-12 and 2013-14 which are as under:
From ground No.3 reproduced in both the years, it is seen that in the ground itself, the Revenue is also accepting that the relief is allowed by the CIT(A) on the basis of the Tribunal order in the assessee’s own case for Assessment Years 2007-08 and 2009-10 and this is not the claim of the Revenue that this Tribunal order for Assessment Years 2007-08 and 2009-10 is stayed or reversed by Hon’ble Karnataka High Court and under these facts, we decline to interfere in the order of CIT(A) in respect of the issue raised by the revenue in these two appeals.
In the result, both the appeals of the Revenue are dismissed.
ITA Nos.496,521, 522, 1102/Bang/2018 Page 5 of 14 6. Now we take up the remaining two appeals filed by the assessee for Assessment Years 2011-12 and 2012-13 in & 1102/Bang/2018. The grounds raised by the assessee in these two years are as under:
1. The learned. CIT(A) erred in passing the order in the manner which he did.
2. On the facts and in the circumstances of the case, the learned CIT(A) erred in disallowing provision made for privileged leave encashment to the tune of Rs.1,17,79583/- which was made on actual valuation, treating the same as contingent liability without appreciating the submission of Appellant. 3. The learned CIT(A) erred in further disallowing provision made on standard asset of Rs. 23,30,409/- Stating it is a contingent provision. 4. The learned CIT(A) erred in disallowing provision made for bad and doubtful debts of Rs 67,24,316/- u/s 361(1) (VIIa) of the Act. 5. The learned CIT(A) fl.-ther erred in disallowing bad debts written of to the extend of Rs. 1,02,4S,734/- u/s 36(1)(VII) of the Act stating that when the assessee has claimed deduction u/s 36(1) (VIIa) of the Act in respect of provision for bad and doubtful debts in the books, both the deduction u/s 36(1)(VII) cannot be claimed. 6. The learned CIT(A) also disallowed of to the interest paid on bank deposits to the tune of Rs.6,60 00,000/- stating that the Form no.15(G)/15(H) not submitted before the Assessing Officer and also proof for having the filed the same before the concerned CIT (A). 7. The learned CIT(A) err( ci in charging the interest u/s.234B and 234C of the Act. 8. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed ITA Nos.496,521, 522, 1102/Bang/2018 Page 6 of 14
The learned CIT (A) erred in passing the order in the manner which he did.
2. The learned CIT (A) erred in disallowing provision for Standard 3. Assets to the tune of Rs.16,32,869/-. 4. The learned CIT (A) erred in disallowing provision of leave encashment on retirement based on actuarial valuation without appreciating the submission of the Appellant. 5. The learned CIT (A) further erred in disallowing provision made for lead and doubtful debts to the tune of Rs. 5,88,76,704/- under section 36(1) (viia) of the Act. 6. The learned CIT (A) further erred in disallowing interest paid on deposits of Rs. 2,89,00,000/- under section 40(a)(ia) in spite of appellant obtaining form 15G/15H from depositors. 7. The learned CIT (A) erred in confirming the levy of interest under Section 234D of the Act. 8. Without prejudice, the disallowances, addition as confirmed by the learned assessing officer are arbitrary, excessive and ought to be deleted in toto. 9. For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed. 7. In the course of hearing, learned AR of the assessee submitted that ground No.3 in Assessment Year 2011-12 in ITA No. 496/B/2018 and ground No.2 in Assessment Year 2012-13 in ITA No. 1102/B/2018 is in respect of provision made on standard assets and this ground in both years is not pressed and accordingly, this ground in both years is rejected as not pressed. ,521, 522, 1102/Bang/2018 Page 7 of 14 8. She also submitted that ground No.1 in both the years is general for which no adjudication is called for. Thereafter, she submitted that as per ground No.2 in Assessment Year 2011 – 12 and ground No.3 in Assessment Year 201 2 – 13, the dispute is regarding disallowance of provision made for privileged leave encashment to the tune of Rs.1,17,79,583/- in Assessment Year 2011 – 12 and Rs.2,85,72,005/- in Assessment Year 2012 – 13 is covered against the assessee by the judgment of Hon’ble Apex Court rendered in the case of UOI and Ors Vs. Exide Industries Limited as reported in 107 CCH 0427 ISCC, copy submitted by her. She pointed out that as per this judgement, it was held by Hon’ble Apex Court that clause (f) in section 43B of the Income Tax Act, 1961, is valid and operative for all purposes and this disallowance was made by the AO in both the years on the basis of this clause (f) of section 43B as can be seen on page 2 of the Assessment Order for Assessment Year 2011-12 and page 3 of the Assessment Order for Assessment Year 2012-13. In view of this factual and legal position, this issue is decided against the assessee.
9. Thereafter, learned AR of the assessee submitted that as per ground No.4 in both the years, the dispute is regarding disallowance of provision for Bad and Doubtful Debts under section 361(1) (VIIa) of Rs.67,24,316/- in A. Y. 2011 – 12 and Rs.5,88,76,704/- in A. Y. 2012 – 13. Regarding this issue, she submitted that this issue is covered by the Tribunal order in assessee’s 522, 1102/Bang/2018 Page 8 of 14 own case for Assessment Year 2010-11 in ITA No.592/Bang/2014 dated 06.05.2016 and she submitted a copy of this Tribunal order and drawn our attention to para 9 of this Tribunal order and pointed out that in that year, the issue was restored by the Tribunal to the file of CIT(A) for a fresh decision by making this observation that the details as per requirements of Rule 6ABA are not furnished before the AO. In the A. Y. 2011 – 12, it is noted by learned CIT(A) in para 6 of his order that the assessee bank has claimed the deduction under section 361(1)(VII) and 361(1) (VIIa) without adducing any information as laid down in the extant rules. She also submitted that in Assessment Year 2012-13 also, in para 6 of his order, it is noted by learned CIT(A) that in order to claim this deduction, the assessee has to maintain certain statistics and to follow the procedure as per laid provision under Rule 6ABA of the Income Tax Rules and instead of giving information as required, the assessee bank has simply filed statement showing the outstanding advances of rural branches. She submitted that in these two years also, the required information was not made available by the assessee before AO and CIT(A) and therefore, in these two years also, the issue may be restored back to the file of AO/CIT (A) for fresh decision with similar direction. Learned DR of the Revenue supported the orders of authorities below
We have considered the rival submissions. First of all, we reproduce para 6 to 9 from the Tribunal order in assesse’s own case for Assessment Year 522, 1102/Bang/2018 Page 9 of 14 2010-11 in ITA No.592/Bang/2014 dated 06.05.2016 which is available on record. These paras read as under: “6. Ground No.3 is as under:-
The learned CIT (A) erred in allowing the assessee's claim towards provision for bad and doubtful debts without appreciating the fact that the assessee had not furnished complete details towards its claim and the learned CIT (A) erred in relying on the decision of the Apex Court in the case of M/s. Catholic Syrian Bank Ltd vs CIT, 343 ITR 270 without appreciating the fact that the said decision was rendered in context to section 36(1) (vii).
It was submitted by the ld. DR of Revenue that the details available on pages 1 to 7 of the Paperbook were not available before the AO and they were submitted for the first time before the CIT (Appeals) and no remand report has been obtained by the CIT (Appeals) from the AO. He also submitted that as per pages 5 & 6 of the assessment order, it was stated by the AO that the details required as per Rule 6ABA were not furnished before him. The ld. DR of Revenue submitted that even if details submitted before the CIT(Appeals) which are available on pages 1 to 7 of PB are to be considered as details in compliance of Rule 6ABA, the matter should go back to the ld. CIT(Appeals) for fresh decision after obtaining remand report of the AO.
The ld. AR of assessee supported the order of CIT (Appeals).
We have considered the rival submissions. We find that as per assessment order, it is the objection of the AO that the details as per requirement of Rule 6ABA are not furnished before him. In the PB pages 1 to 7, some details are made available before us, but as per the certificate given in the PB, all these details were filed before the CIT (Appeals) and the same were not filed before the AO. We also find that no remand report has been obtained by the ld. CIT (Appeals) from the AO. Under these facts, we find force in the contention of the ld. DR of Revenue that this matter should go back to the file of ld. CIT(Appeals) for fresh decision after obtaining remand report from the AO on this issue. Accordingly, we set aside the order of the ld. CIT (Appeals) on this issue and restore the matter back to his file for a fresh decision in 522, 1102/Bang/2018 Page 10 of 14 light of our above observations, after affording reasonable opportunity of being heard to both the sides. This ground is allowed for statistical purposes.”
From these paras, it is seen that in that year, it is noted by the Tribunal that the details as required as per Rule 6ABA were not furnished before the AO and the Tribunal restored the matter back to the file of the CIT(A) for a fresh decision after affording reasonable opportunity of being heard to both sides. Since the facts in the present two years are similar, in the present two years also, we restore this matter back to the file of CIT(A) for a fresh decision after obtaining the remand report from the AO if the assessee files the required details before the CIT(A) in compliance of Rule 6ABA. Needless to say learned CIT(A) should provide reasonable opportunity of being heard to both sides. Accordingly, the relevant ground on this issue is allowed for statistical purposes in both the years.
Learned AR of the assessee submitted that the only remaining issue is as per ground No.6 in Assessment Year 2011 – 12 and ground No.5 in Assessment Year 2012 – 13 and this issue is regarding the disallowance of interest paid on bank deposits to the tune of Rs.660 lakhs in Assessment Year 2011 – 12 and Rs.289 lakhs in Assessment Year 2012 – 13 and this disallowance was made by the AO in both the years under section 40(a)(ia) of the Income Tax Act, 1961 because Form No.15G / 15H were not submitted before the AO and no proof was submitted before the AO regarding filing the 522, 1102/Bang/2018 Page 11 of 14 copy of the same before the concerned CIT. Regarding this issue, it was submitted by learned AR of the assessee that this issue is covered in favour of the assessee by the Tribunal order in the case of Pragathi Krishna Gramin Bank Vs. ACIT in ITA No.2/Bang/2017 dated 27.09.2017, copy submitted. Learned AR of the assessee drawn our attention to para 6 of this Tribunal order and it was pointed out that in that case, it was held by the Tribunal that if the Form 15G and 15H were filed before the respective CIT even belatedly, the assessee will get the benefit of availability of Form No.15G/15H because the same were available with the assessee and were filed with the jurisdictional CIT concerned. The matter was restored back to the file of AO for a fresh decision with a direction that the AO will adjudicate the matter denovo after affording the assessee adequate opportunity of being heard in the matter and to file details / submissions required in this regard. She submitted in the present case also, in both years, the matter may be restored to AO for fresh decision with similar directions. Learned DR of the Revenue supported the order of authorities below. It was also submitted by him that in para 8.6 of his order for Assessment Years 2011-12 and 2013-13, this is noted by learned CIT(A) that the assessee has not complied with mandatory requirements as well as proper Forms 15G/15H were not brought on record. He submitted that on this issue, the matter should be decided against the assessee and it should not be restored back to the file of AO. ,521, 522, 1102/Bang/2018 Page 12 of 14 13. We have considered the rival submissions. First of all, we reproduce para 6 from the Tribunal order in the case of Pragathi Krishna Gramin Bank Vs. ACIT (supra). This para reads as under:
“6.0 It can be observed from the order of CIT(A), Hubli in assessee's own case for A.Y.2010-11 on the same issue, the assessee had not submitted the required information in time during the TDS verification by the jurisdictional AO. In the A.Y.2011-12 also the assessee has not submitted the information in time for TDS verification. Since the time is getting barred to complete the TDS verification process and to pass the order u/s 201(1)/201(1A) of the Act, the AO cannot wait for information and passed the order u/s 201(1)/201(1A) of the Act. It can be seen that this has become the assessee's regular practice for not producing information in time stating the practical problems of the assessee bank for collecting the information from all its branches. It is assessee's duty to comply with the TDS provisions and to keep the information ready which is mandatorily to be maintained as per the TDS provisions. Whenever jurisdictional AO calls for information for TDS verification it is the assessee's duty to co-operate and provide the information viz complete particulars of interest payments branch wise and deductee wise and filing of the Form 15G/15H which has to be filed before jurisdictional CITs within prescribed time. In this case the assessee failed to provide the information in time to complete the TPS verification process and to pass the order u/s 201(1)/201(1A) of the Act. Hence the disallowance made by the AO is in order and is upheld. The grounds of appeal of the assessee are dismissed. 3.2.2 From a perusal of the observations and findings rendered by the ld CIT(A) at para 5 and 6 of the impugned order for asst. year 2011-12 (Supra), it is amply clear that the AO completed the TDS assessment, and passed the orders u/s 201(1)/201(1A) of the Act for this year, admittedly without affording the assessee sufficient time and opportunity to collect the information from its 325 branches in respect of TDS deducted on interest payments and other relevant information for his consideration. It is further observed by the ld CIT(A) that in similar circumstances, the ld CIT(A) while disposing off the assessee's appeal for asst. year 2010-11 on identical issues had, after considering the assessee's submissions, directed the AO to verify the branch wise and deductee wise details of the interest payments and filing of Form 15G/15H before the respective C'sIT in time and to consider the ,521, 522, 1102/Bang/2018 Page 13 of 14 assessee's claims after affording reasonable opportunity to the assessee. After admittedly observing as above, the ld CIT(A) has strangely proceeded to uphold orders of the AO stating that the assessee is in the regular practice of not providing information required for TDS verification before the AO and since the matter was getting barred by limitation, the AO's action in passing the orders u/s 201(1)/201(1A) of the Act was upheld. In our considered view on an appraisal of the material on record, we find that the factual situation on the identical issue prevailing in the asst. year 2010-11, is similar to that prevailing in the asst. years 2011-12 and 2012-13, i.e the years under consideration before us; where the AO was directed by CIT(A) to verify and examine the issue afresh and consider the assessee's claim after affording the assessee adequate opportunity of being heard. In the case of hand it is not clear from the record as to how many cases of payment of interest the assessee was having Form No.15G/15H and whether these Forms were at all submitted with the jurisdictional CIT. In this factual matrix of the case, as discussed above, we are of the opinion that the impugned orders of the ld CIT(A) for both asst. years 2011-12 and 2012- 13 rejecting the assesse's claims which are presently before us for consideration, cannot be sustained in view of the observations by the ld CIT(A) of the lacuna and shortcomings of the AO in carrying out proper verification in the TDS made on interest payments. In this view of the matter, we, therefore, in the interest of equity and justice, set aside the impugned orders of the ld CIT(A) for asst. years 2011-12 and 2012-13 and restore the matter to the file of the AO for denovo ITA adjudication of this matter, with the directions to verify the assessee's TDS liability branch wise and deductee wise details of interest payments on the point of availability of Form No.15G/15H only in respect of cases when such Forms were before the respective CIT even though belatedly. The assessee will get the benefit of availability of Form No.15G/15H only in respect of cases where such Forms are available with the assessee and submitted with the jurisdictional CIT concerned. Needless to add that the AO will adjudicate the matter denovo only after affording the assessee adequate opportunity of being heard in the matter and to file details/submissions required in this regard. Consequently, the assessee's grounds are treated as allowed for statistical purposes."
14. We find that in that case, it was held by the Tribunal that if the assessee filed the relevant Form 15G/15H before the respective CIT even though belatedly, the assessee will get the benefit of availability of Form No.15G/15H in such cases. Hence, we feel that in the present case also, an opportunity should be given to the assessee to bring on record the respective Form