Income Tax Appellate Tribunal - Hyderabad
The Kuppam Co-Operative Town Bank ... vs Acit, Circle-1(1), Tirupathi on 13 April, 2023
ITA No 63 of 2023 Kuppam Cooperative Town Bank Ltd Kuppam
आयकर अपील य अ धकरण, है दराबाद पीठ
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad 'B' Bench, Hyderabad
Before Shri R.K. Panda, Accountant Member
AND
Shri Laliet Kumar, Judicial Member
ITA No.63/Hyd/2023
Assessment Year: 2016-17
The Kuppam Cooperative Vs. Asstt. C. I. T.
Town Bank Ltd, Kuppam Circle 1(1)
PAN:AABAT7171M Hyderabad
(Appellant) (Respondent)
Assessee by: N O N E
Revenue by: Shri Kumar Aditya, DR
Date of hearing: 11/04/2023
Date of pronouncement: 13/04/2023
ORDER
Per R.K. Panda, A.M
This appeal filed by the assessee is directed against the order dated 18.11.2022 of the learned CIT (A)-NFAC Delhi, relating to A.Y.2016-17.
2. None appeared on behalf of the assessee at the time of hearing. No application seeking adjournment of the case has been filed. It was seen from the order sheet entries that even in the past also no one was appearing. Under the circumstances, we deem it proper to decide the issue on the basis of the material available on record and after hearing the learned DR.
3. Facts of the case, in brief, are that the assessee is an AOP and filed its return of income for the impugned A.Y on Page 1 of 7 ITA No 63 of 2023 Kuppam Cooperative Town Bank Ltd Kuppam 31.12.2016 declaring income of Rs.80,58,590/-. The return was processed u/s 143(1) dated15.03.2017. Subsequently, the case was selected for complete scrutiny under CASS and statutory notices u/s 143(2) and 142(1) were issued to the assessee calling for certain details such as (a) list of persons to whom interest was paid during the relevant financial year along with the reasons for non-deduction of tax at source, (b) copy of ledger a/c in respect of contingencies, (c) contingencies, establishment charges and honorarium debited to P&L A/c, (d) details of appraiser fee, copies of invoices for fixed assets, (e) details of amount disallowed u/s 40(a)(ia). The assessee filed part details. After considering the scanty details filed by the assessee, the Assessing Officer completed the assessment u/s 143(3) on 22.12.2018 determining the total income of the assessee at Rs.1,65,37,926/-wherein he made addition of Rs.84,79,336/- by recording the following:
"3.7 In view of the failure on the part of the assessee, to prove that tax at source has been deducted for the interest amount paid to various depositors during the year, aggregating to Rs.2,82,64,453/- as per the table below, and in view of section 40(a)(ia) of the I.T. Act, 1961, an amount of Rs.84,79,336/- being 30% of Rs.2,82,64,453/- is disallowed and brought to tax as income of the assessee for the A.Y 2016-17:
S. No Amount (in Rs.)
1 Total interest paid during the year Rs.2,86,05,877
2 Less: interest amount already Rs.3,39,489
disallowed by the assessee in the
statement of income as per
provisions of section 40(a)(ia)
3 Less: Security deposit interest as Rs.1,935/-
claimed by the assessee in its
submission
Interest amount to be brought Rs.2,82,64,453/-
under the purview of section
40(a)(ia) for disallowance @ 30%
30% of above Rs.84,79,336/-
Addition: Rs.84,79,336/-"
4. In appeal, the learned CIT (A) confirmed the addition made by the Assessing Officer by observing as under:
"5. Decision on Ground of Appeal No.1:Page 2 of 7
ITA No 63 of 2023 Kuppam Cooperative Town Bank Ltd Kuppam 5.1 I have carefully gone through the records and facts of the case. The appellant has raised only one ground of appeal which challenge the disallowance of Rs.84,79,336/- made by the Assessing Officer u/s 40(a)(ia) of the I.T. Act.
5.2 The appellant filed its return of income for the A.Y. 2016-17 on 31.12.2016 declaring a Total Income of Rs.80,58,590/ The return was processed u/s 143(1) of the I.T. Act on 15.03.2017 by the CPC. Assessment in this case was completed u/s 143(3) of the I.T. Act on 22.12.2018 assessing the income atRs.1,65,37,926/-, wherein an addition of Rs.84,79,336/- was made by the AO u/s 40(a)(ia) of the I.T.Act.
5.3 During the course of assessment proceedings, various notices u/s 142(1) of the l.T. Act on various dates requiring the appellant to furnish the list of persons to whom interest was paid during the relevant financial years- along with reasons for non deduction of TDS, copy of ledger account etc. The appellant did not file all the details required as per the notices issued u/s 142(1) of the 1.T Act The appellant had paid an amount of Rs.2,86,05,877/- as interest on deposits. The appellant was required to furnish the list of persons to whom such interest was paid along with the reasons for non deduction of TDS as per notice u/s 142(1) of the I.T. Act dated 15.11.2018. Since the appellant did not furnish these details as per the notice issued by the AO, it was granted further opportunities vide notices issued u/s 142(1) of the I.T. Act dated 01.12.2018 and 07.12.2018 along with copies of Form 15G and 15H and in cases where the depositors did not have PAN, whether the TDS was done @ 20%.
5.4 As per Section 194A(3)(v) of the I.T. Act, in case of a Co-operative Bank, it is supposed to deduct TDS on the interest paid to the depositors from 01.06.2015. In case of interest paid is more than Rs.10,000/- during a financial year, the TDS provisions are applicable and the appellant was required to deduct TDS @10% where the PAN of the depositor is available and where @20% where the PAN of the depositor is not available. In the cases PAN is not available, Form 15G and 15H of the depositors is to be submitted for non-deduction of TDS.
5.5 The appellant did not furnish the list of depositors in spite of number of opportunities granted by the AO during the scrutiny proceedings. The appellant did not furnish the list of depositors where the amount of interest paid exceeded Rs.10,000/-, the details of cases where the deduction 10% 5.5 or 20% was required and also did not furnish the copies of Form 15G and 15H. Since the appellant did not furnish any of the details as required by the Assessing Officer vide his notices amount issued of u/s 142(1) of the 1.T. Act, the Assessing Officer could not quantify the amount of interest paid on which the TDS was made by the appellant. In fact, the appellant could not prove that the TDS was deducted as per the provisions of Chapter XVII-B of the I.T. Act, in spite of number of opportunities granted by the Assessing Officer. Therefore, the AO disallowed an amount of Rs.84,79,336/- being 30% of Rs.2,82,64,453/- (amount of deposits) u/s interest paid on 40(a)(ia) of the I.T. Act.Page 3 of 7
ITA No 63 of 2023 Kuppam Cooperative Town Bank Ltd Kuppam 5.6 During the course of submitted appellate proceedings, the appellant has that the provisions of section 40(a)(ia) of the I.T. Act was not applicable persons which for the amount of Rs.1,91,72,825/- being interest paid to various balance is below Rs.10,000/-per person. lt also submitted that for the amount, it has obtained Form 15G and 15H but however it was not filed to whom with the Department. The appellant has also provided the list of persons grounds of interest was paid of more than Rs,10,000/-. The appellant in its appeal has submitted that the disallowance made by the AO is excessive, is not legally correct and proper. It also submitted that the particulars as required by the Assessing Officer during the scrutiny proceedings was not furnished within the time given. The appellant has also requested to call for a remand report from the Assessing Officer after examining the details.
5.7 The appellant's contention have been considered and it is observed from the assessment order that the appellant did not provide the details as required by the AO in the notices issued u/s 142(1) of the I.T. Act like the details of interest paid (more than Rs.10,000/-) during a financial year where the TDS provisions are applicable, the details of TDS @10 % where the PAN of the depositor is available and @20% where the PAN of the depositor is not available. Also, in the cases where PAN was not available, Form 15G and15H of the depositors for non-deduction of TDS was also not submitted. The appellant did not provide these details till the passing of the assessment order u/s 143(3) of the I.T. Act on 22.12.2018. Now before the First Appellate appellant has requested for calling of the remand report from the Assessing Officer as it has filed the additional evidences before him, which were not filed before the Assessing Officer. However, it is observed that none of the clauses of Rule 46A(1)of the I.T. Rules are applicable to the facts of case as the AO had granted sufficient opportunities to the appellant to produce the necessary evidences. Also, the appellant has not been able to prove that it was prevented by a sufficient cause for producing the evidence before the AO. Therefore, as per Rule 46A(2) of the I.T. Rules, the evidences produced before the First Appellate Authority are not admitted. Hence, the ground of appeal taken by the appellant is hereby dismissed and the disallowance of Rs.84,79,336/- by the AO u/s 40(a)(ia) of the I.T. Act is upheld.
5.8 Accordingly, this ground of appeal is treated as dismissed."
5. Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal by raising the following grounds:
"General
1. The Learned Commissioner of Income-tax (Appeals) has passed the order u/s 250 of the Act in contrary to canons of equity and natural justice, contrary to law and facts involved and contrary to mandatory provisions of the Income-tax Act, 1961 ("Act") and Page 4 of 7 ITA No 63 of 2023 Kuppam Cooperative Town Bank Ltd Kuppam violative of the provisions of law and suffers from lack of mandatory sanctions.
The following grounds of appeal have been raised:
2. That on the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) has erred in law and on facts by disallowing Interest amount to be brought under the purview of Sec.40(a)(ia) for disallowance @ 30% on the interest of Rs.2,82,64,453/- amounts to Rs.84,79,336/-.
3. That on the facts and in the circumstances of the case and in law, the ClIT Appeals failed to consider properly the clauses of Rule 46A(1), not admitting the evidences, ought to have been admitted before him as per Rule 46A(2), denying the opportunity of being heard to the assessee.
4. That on the facts and in the circumstances of the case and in law, the learned A0, without giving the opportunity of being heard to the assessee has passed an order without adhering to the principle of natural justice.
5. That the aforesaid grounds of appeal are without prejudice to each other .
6. That the relief prayed for may kindly be allowed and the order of the CIT (A) may kindly be quashed, set aside, annulled or modified.
7. The Appellant craves leave to add, amend, alter vary and/ or withdraw any or all the above grounds of Appeal"
RELIEF CLAIMED IN APPEAL
1. The Assessee pleads to quash the additions as per the order u/s 250, served by the Commissioner of income Tax (Appeals)
2. The Appellant prays that the disallowance of Rs. 84,79,336/- made in respect with interest expenditure under section 40 (a) (ia) be deleted.
3. To cancel the demand made by the learned Assessing Officer which are in clear contradiction to the law, facts and circumstances of the case.
4. To pass such other orders as your Honor may deem fit considering the facts and circumstances of the case and render justice."
6. We have heard the learned DR and perused the record. It is an admitted fact that the Assessing Officer made addition of Rs.84,79,336/- being 30% of the amount of interest paid to various depositors aggregating to Rs.2,82,64,453/- by invoking Page 5 of 7 ITA No 63 of 2023 Kuppam Cooperative Town Bank Ltd Kuppam the provisions of section 40(a)(ia) of the I.T. Act. We find the learned CIT (A) NFAC sustained the additions made by the Assessing Officer the reasons of which are already reproduced in the preceding paragraph. A perusal of the grounds of appeal and statement of facts clearly shows that the grievance of the assessee is that it has not been allowed sufficient opportunity to substantiate its case before the lower authorities. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one last opportunity to the assessee to prove that the TDS has been deducted from the interest amount aggregating to Rs. 2,82,64,453/- or that the TDS provisions are not applicable. The Assessing Officer shall decide the issue as per fact and law after affording due opportunity of being heard to the assessee. The assessee is also hereby directed to appear before the Assessing Officer and file the requisite details failing which the Assessing Officer is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
7. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 13th April, 2023.
Sd/- Sd/-
(LALIET KUMAR) (R.K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 13th April, 2023.
Vinodan/sps
Page 6 of 7
ITA No 63 of 2023 Kuppam Cooperative Town Bank Ltd Kuppam Copy to:
S.No Addresses 1 The Kuppam Cooperative Town Bank Ltd, 14-61 Nethaji Road, Kuppam 517425 2 Asstt.CIT, Circle 1(1) Tirupati 3 NFAC Delhi 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Page 7 of 7