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Income Tax Appellate Tribunal, KOLKATA BENCH ‘B’, KOLKATA
Before: Shri P.M. Jagtap, AM & Shri S.S. Viswanethra Ravi, JM]
order : October 13, 2017 ORDER Per P.M. Jagtap, AM These two appeals filed by the assessee are directed against the two separate orders passed by the Ld. CIT (Appeals) -7, Kolkata both dated 14.01.2016 for A.Y. 2010-11 and 2011-12 respectively and since the issues involved therein are common, the same have been heard together and are being disposed of by a single consolidated order for the sake of convenience.
As regards the common issue raised in ground no 1 of both these appeals relating to the assessee’s claim for deduction of Rs. 1,91,100/- on account of unrealised rent, the learned counsel for the 2 & 269/Kol/2016 Tamluk Ghatal Central Co-operative Bank Ltd. assessee has not raised any argument at the time of hearing before us in support of the assessee’s case on this issue. Ground no 1 of the assessee’s appeals is therefore treated as not pressed and dismissed accordingly.
The only other common issue involved in theses appeals as raised in ground no 2 and 3 relates to the disallowance of assessee’s claim for reduction on account of provision ploughed back as made for the first time before the Ld. CIT (A).
The assessee in the present case is a cooperative society which is engaged in the business of banking. The return of income for both the years under consideration was filed by it on 15.10.2010 and 30.09.2011 declaring a total income of Rs. 8,75,300/- and loss of Rs. 62,43,150/- for A.Y. 2010-11 and 2011-12 respectively. In the assessment completed under section 143(3) vide orders dated 11.03.2013 and 27.02.2014, the total income of the assessee was determined by the AO at Rs. 38,11,020/- and Rs. 90,96,790/- for A.Y. 2010-11 and 2011-12 respectively after making certain additions.
Against the orders passed by the AO under section 143(3) for both the years under consideration, appeals were preferred by the assessee before the Ld. CIT (A) and besides disputing the additions made by the AO to its total income by raising various grounds, the following additional ground was raised by the assessee during the appellate proceedings before the Ld. CIT (A): The additional ground raised for A.Y. 2010-2011:
3 & 269/Kol/2016 Tamluk Ghatal Central Co-operative Bank Ltd. “That in view of the fact that in the Assessment Years 2008-09 and 2009- 10, the provision made for probable losses in the value of investments of Rs. 5,99,70,274/- and Rs. 7,77,00,000/- aggregating to Rs. 13,76,70,274/-, had been disallowed in the assessments of the said two Assessment Years, the ploughed back amount of Rs. 11,30,41,563/- out of the said disallowed provisions, should not have been treated as the appellant’s income and thus the said amount of Rs. 11,30,41,563/- should have been reduced from the profit of the year while computing the appellant’s total income for the Assessment Year 2010-11.” The additional ground raised for A.Y. 2011-12 “That in view of the fact that in the Assessment Years 2008-09 and 2009- 10, the provision made for probable losses in the value of investments of Rs. 5,99,70,274/- and Rs. 7,77,00,000/- aggregating to Rs. 13,76,70,274/- had been disallowed in the assessments of the said two Assessment Years, the ploughed back amount of Rs. 1,36,01,596/- out of the said disallowed provisions, should not have been treated as the appellant’s income and thus the said amount of Rs. 1,36,01,596/- should have been reduced from the profit of the year while computing the appellant’s total income for the Assessment Year 2011-12”
6. The assessee also filed an application seeking admission of the above additional ground by making the following submissions in support: “That the omission of the aforesaid ground from the grounds of appeal filed along with the form of appeal, was not wilful or unreasonable. The appellant had earlier made provisions of Rs. 5,99,70,274/- and Rs. 7,77,00,000/- against the probable losses of its investments in the Assessment Years 2008-09 and 2009-10 respectively. In the assessments made for both the Assessment Years 2008-09 and 2009-10 the Assessing Officer disallowed the above mentioned two provisions of Rs. 5,99,70,274/- and Rs. 7,77,00,000/- aggregating to Rs. 13,76,70,274/- and in appeals the CIT (Appeals)-XXXIII, Kolkata confirmed such disallowance for both the years. During the Assessment Year 2010-11 (year under appeal) the appellant ploughed back Rs. 13,76,70,274/-. Since, at the time of filing of the return of income for the Assessment Year 2010-11, the appellant’s appeals for the Assessment Years 2008-09 and 2009-10 had not been disposed of by the CIT (Appeals), the appellant could not claim in its return for the Assessment Year 2010-11 a reduction of Rs.
4 & 269/Kol/2016 Tamluk Ghatal Central Co-operative Bank Ltd. 11,30,41,563/- out of the provisions disallowed earlier. In view of the fact that the disallowances of the provisions aggregating to Rs. 13,76,70,274/- have since been confirmed by the CIT (Appeals), the credit of Rs. 11,30,41,563/- being the provision ploughed back, made in the profit and loss account, requires to be reduced from the profit of the year.
The request of the assessee for admission of additional ground raising a new issue was not found acceptable by the Ld. CIT (A) by relying on the decision of Hon’ble Supreme Court in the case of Goetz (India) Ltd. and the same was rejected by him for the following reasons given in his impugned order: “I have gone through the submissions made by the appellant. The appeal is not born out of the assessment order and the Assessing Officer has not given any finding on ploughing back the provisions in the assessment order and no addition was made by the Assessing Officer. This is completely new issue for which the appellant should have filed the revised return of income within the time-limit. The appellant himself has withdrawn the grounds of appeal
before the Hon’ble ITAT as not pressed. Therefore, the appellant’s request for allowing the amounts ploughed back in the year under consideration is not tenable. Now it is well settled issue by Hon’ble Supreme Court in the case of Goetz (India) Ltd. that change of income is by filing the revises return of income but not by filing statement of income. In case the appellant contends that the amount of Rs. 11,30,41,563/- required to be reduced from the returned income, the correct course of action available as per the income Principal Commissioner of Income Tax under section 264 of the I.T. Act. Therefore, this ground of appeal is dismissed.” Aggrieved by the orders of the Ld. CIT (A) on this issue, the assessee has raised ground no 2 and 3 in these appeals preferred before the Tribunal.
8. We have heard the arguments of both the sides and also perused the relevant material available on record. As rightly 5 & 269/Kol/2016 Tamluk Ghatal Central Co-operative Bank Ltd. submitted by the learned counsel for the assessee, the decision of Hon’ble Supreme Court in the case of Goetz (India) Ltd. (supra) is not applicable to the proceedings before the appellate authorities who are sufficiently empowered to entertain the new claim made by the assessee for the first time before them even without filing a revised return. In this regard, he has relied on the decision of Hon’ble Supreme Court in the case of National Thermal Power Station 229 ITR 383 as well as in the case of Jute Corporation of India Ltd. 187 ITR 688 wherein it was held that the appellate authorities under the Income Tax Act are sufficiently empowered to entertain a new claim made by the assessee for the first time provided it involves a legal issue and all the facts required for the adjudication of the same are available on record. As regards the alternative remedy suggested by the Ld. CIT (A) in his impugned orders to the assessee to file the petition before the concerned Principal Commissioner of Income Tax under section 264, the learned counsel for the assessee has submitted that the period for filing such application for both the years under consideration had already expired by the time the impugned orders were passed by the Ld. CIT (A). He has contended that the time limit to file such application for seeking a similar relief for A.Y. 2013-14 however was available to the assessee and while disposing of the such application vide his order dated 28.03.2017 passed under section 264, the Principal CIT – 9, Kolkata has directed the AO to conduct the necessary enquiry upon the claim made by the assessee and take suitable decision. He has urged that a similar direction may be given by the Tribunal for both the years under consideration.
Keeping in view all the submissions made by the learned counsel for the assessee as well as judicial pronouncements cited in support, we find merit in the contention of the learned counsel for the assessee. Even the learned DR has not raised any objection in this regard and submitted that the matter may be send back to the AO for consideration on merit after conducting the necessary enquiry. The impugned orders of the Ld. CIT (A) on this issue are accordingly set aside and the matter is sent to the AO with the direction to decide this new issue raised by the assessee for the first time before the Ld. CIT (A) in accordance with law after conducting the necessary enquiry.
In the result, both the appeals of the assessee are treated as partly allowed for statistical purposes. Order Pronounced in the Open Court on 13th October, 2017. Sd/- Sd/- (S.S. Viswanethra Ravi) (P.M. Jagtap) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 13/10/2017 Biswajit, Sr. PS Copy of order forwarded to:
1. 1. Tamluk Ghatal Central Co-operative Bank Ltd., Tamluk, Purba Medinipur – 721636.
2. ACIT Circle-27, Haldia, Basudevpur, Khanjanchak, Purba Medinipur – 721602.