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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER
I.T.A. No. 270/Asr/2015 Assessment Year: 2008-09
Asstt. Commissioner of Income Vs. The Muktsar Central Co-op. Bank Tax, Circle-II, Bathinda Ltd., Kotkapura Road, Muktsar [PAN: AAACT 5773C] (Appellant) (Respondent)
Appellant by : Sh. Ashwani Kalia, CA Respondent by: Sh. S. M. Surendranath, Sr. DR Date of Hearing: 26.04.2022 Date of Pronouncement: 17.05.2022
ORDER Per Anikesh Banerjee, JM:
The instant appeal was filed by the Revenue against the order passed by the Ld. Commissioner of Income Tax (Appeals), Bathinda [in brevity the CIT(A)], bearing Appeal No. 76-IT/CIT(A)/BTI/10-11 dated 20.03.2015 u/s 250(6) of the Income Tax Act, 1961 [in brevity the Act], against the order of the ld. Assessing Officer (in brevity the AO) u/s 143(3) of the Act in respect of Assessment Year 2008-09.
The grounds of appeal is raised by the Revenue is as under:
“i. On the facts and in the circumstances of the case the Ld. CIT(A) erred in directing the AO to allow the claim of the assessee for deduction u/s 36(l)(viia) after verifying that the said claim has been quantified in
2 ITA No. 270/Asr/2015 Asstt CIT v. The Muktsar Central Coop. Bank Ltd. accordance with Rule 6ABA and is consistent with Explanation (ia) of section 36(l)(iia),ignoring the fact that setting aside of assessment is no longer in the preview of the CIT(A) u/s 231(1 )(a) after 01.06.2001.
ii. On the facts and in the circumstances of the case the Ld. CIT(A) erred in directing the AO to allow the claim of the assessee for deduction u/s 36(1)(viia) after verifying that the said claim has been quantified in accordance with Rule 6ABA and is consistent with Explanation (ia) of section 36(l)(iia) ignoring the judgement of jurisdictional High Court in the case of SBP V/s CIT (2005) 272 1TR 54 (P&H), and the CBDT’s Instruction No. 17/2008 dated 26.11.2008.
iii. On the facts and in the circumstances of the case the Ld. CIT(A) erred in directing the AO to verify whether the amounts shown as income tax and FBT paid have been debited to profit & loss a/c and if not, directing the addition to be deleted, ignoring the fact that setting aside of assessment is no longer in the power of the CIT(A) u/s 251(1 )(a) after 01.06.2001.
iv. On the facts and in the circumstances of the case the Ld. C'1T(A) erred in directing the AO to verily the claim of the assessee that the payments (except bonus payable) have been paid before the due date and if paid, directed to allow the claim of the assessee, ignoring the fact that setting aside of assessment is no longer in the power of the CIT(A) u/s 251(1 )(a) after 01.06.2001.
v. The appellant craves the leave to add amend, alter or withdraw any ground of appeal before the same is finally heard.”
Brief fact of the case is that the ld. AO made the additions u/s 36(1)(viia) an amount of Rs. 94,56,000/- provisions for aggregate average advance by rural branches as against deduction of Rs.12,67,24,564/- claimed by assessee in its return of income, also disallowed u/s 40(a) of the Act for payment towards Income Tax and FBT total amount of Rs.11,65,690/- & the disallowance U/s 43B of the Act amount to Rs. 6,83,842/-.
3 ITA No. 270/Asr/2015 Asstt CIT v. The Muktsar Central Coop. Bank Ltd. 4. Aggrieved the assessee filed an appeal before the ld. CIT(A) and the ld. CIT(A) accepted the plea of the assessee and setting aside the issue to the ld. Assessing Officer for further adjudication. Considering the factual matrix, the order of the ld. CIT(A) is reproduced as under:
“5. The submissions of the appellant have been considered. The provisions of section 36(1) (viia) grant deduction in respect of a provision for bad and doubtful debts made by banks subject to certain ceilings based upon percentages of the total income and of the advances made by the rural branches of banks. Explanation (ia) to this section states that a rural branch is one in a “place” that has a population of less than 10000. The “place” referred to must be construed as a village and not a ward, since even some urban wards might have a population of less than 10000. Rule 6ABA of the Income Tax Rule, 1962 prescribe the manner of computing the aggregate average advances in the following manner:
(a) The amounts of advances made by each rural branch as outstanding at the end of the last day of each month comprised in the previous year shall be aggregated separately;
(b) the sum so arrived at in the case of each such branch shall be divided by the number of months for which the outstanding advances have been taken into account for the purposes of clause(a);
(c) the aggregate of the sums so arrived at in respect of each of the rural branches shall be the aggregate average advances made by the rural branches of the scheduled bank.
It is apparent from a bare reading of this section that the deduction u/s 36(1 )(viia) is quantified with reference to percentage (10%) of the aggregate average advances made by the rural branches of the bank and not with respect to the amount provided for in the accounts of the bank. This specific deduction is over and above the deduction of an amount not exceeding 7 and one-half percent of the total income of the bank.
The Assessing Officer is thus directed to allow the claim after verifying that the said claim has been quantified in accordance with Rule 6ABA and is consistent with Explanation (ia) of section 36(1 )(viia).
4 ITA No. 270/Asr/2015 Asstt CIT v. The Muktsar Central Coop. Bank Ltd. 8. So far as the disallowances u/s 40(a) in respect of Income tax of Rs. 10,00,000/ and FBT of Rs. 1,65,690/- aggregating to Rs. 11,65,690/- is concerned, the appellant insists that both the aforesaid amount have not been claimed in the P&L account. The Assessing Officer may verify this assertion and if found correct, the addition shall have to be reversed.”
The ld. DR argued that the ld. CIT(A) has passed the order beyond its jurisdiction. The violation of jurisdiction is due to set aside the issue for further verification. On the other hand, the ld. counsel of the assessee accepted the observation of the ld. CIT(A). He accepted that further verification should be done before the ld. AO.
We consider the rival submissions and consider the documents available in record. During the appeal, the ld. CIT(A) is remanded back to the assessee for further adjudication before the ld. Assessing Officer. The ld CIT(A) has acted beyond its jurisdiction. The Section 251 of the Act has empowered the appellate authority for disposing appeal. Here, read the section as follows:-
Powers of the [***] 1[Commissioner (Appeals)].
“251. (1) In disposing of an appeal, the [***] [Commissioner (Appeals)] shall have the following powers—
(a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment [***];”
The portion beginning with the words "or he may set aside" and ending with the words "on the basis of such fresh assessment;" omitted by the Finance Act, 2001, w.e.f. 1-6-2001. So, the appellate authority is beyond its power to adjudicate the issue.
Both the appellant & respondent are in favour of further adjudication before the ld AO. The issues are dealt by the ld AO without considering the proper fact. As per
5 ITA No. 270/Asr/2015 Asstt CIT v. The Muktsar Central Coop. Bank Ltd. observation of the ld CIT(A) the tax & FBT are not channeled out through the Profit & Loss account. The lacuna of the order of AO was found out by the ld CIT(A). But the order of the ld CIT(A) is in technical defect but not in factual observation. Hence, he impugned order is set aside and the matter is restored back to ld. assessing officer for denovo adjudication after considering the assessee’s evidences. The assessee, in turn, is directed to substantiate its case. Needless to add that adequate opportunity of hearing shall be granted to the assessee.
In the result, the appeal of the Revenue is allowed for statistical purposes.
Order pronounced in the open court on 17.05.2022
Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member
Date: 17.05.2022 *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File