TMI Blog2017 (12) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... urabh Kumar, CIT-DR ORDER PER Waseem Ahmed, Accountant Member:- Both appeal filed by the assessee are directed against different orders of Commissioner of Income Tax (Appeals)-2, Kolkata of even date i.e. 09.01.2015. Assessments were framed by ITO Ward-4(1), Kolkata u/s 143(3)/147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 31.12.2010 for assessment years 2004-05 2005-06 respectively. Shri P.R. Kothari, Ld. Authorized Representative appeared on behalf of assessee and Shri Surabh Kumar, Ld. Departmental Representative appeared on behalf of Revenue. 2. Both the appeals are heard together and are being disposed of by way of consolidate order for the sake of brevity. First we take up ITA No.426/Kol/2015 for A.Y. 2004-05 . 3. Assessee has raised the following grounds:- 1) Against recourse to reassessment proceeding u/s. 147: a) For that on the facts and circumstances of the case and in law, ld. Commissioner of Income tax (Appeals)[CIT] erred in upholding the order of ld. Assessing Officer (A/O) passed u/s. 147 of the Income tax Act, 1961 without first examining the validity of ld. A/O s reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income has accrued to it but it has never been received from the M/s ISG Traders Ltd. Therefore, the income was not recognized in its books of account. However, AO disregarded the contention of assessee on the ground that assessee failed to satisfy whether any effort was made by it to recover the amount of interest. Thus, the AO made the addition of ₹ 19 lacs as undisclosed interest income of assessee and added to the total income of assessee. 6. Aggrieved, assessee preferred an appeal before Ld. CIT(A). The assessee before Ld. CIT submitted that it has received any amount from M/s ISG Traders Ltd., Therefore, no addition can be sustained on account of interest income. However, Ld. CIT(A) disregarded the contention of assessee by observing as under:- 4.1. I have examined the assessment order as well as the submissions of the A.R. of the appellant. I am not in agreement with the views of the A.R. of the appellant. In appellant's own case for A.Y. 2006-07 on the same issue the Hon'ble ITAT, B Bench Kolkata has adjudicated on 27th May, 2014 at ITA No. 1385/Kol/2011 in favour of the Revenue. The relevant portion of the judgment is elaborated as below :- 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a and say that principles of accrual of income, then mercantile basis of accountancy is followed wound not apply to it. No doubt, section 4 5Q of the R.B.I act is overriding in nature and has to be given primacy. However unless and until an assessee shows that a loan or advance had become a non-performing asset, there can be no question of applying the norms set out for such non-performing asset We are, therefore, of the opinion that Ld. CIT(Appeals) fell in error in deleting the addition made by the assessing Officer. We, therefore, set aside the order of Ld. CIT(Appeal) and the addition made by the Assessing Officer is restored. 11.In the result, appeal of the revenue sands allowed.: 4.2 Humbly following the order of the jurisdictional Tribunal, I am of the opinion that the action of the AO of adding a sum of ₹ 19,00,000/- on account of interest receivable should be confirmed. Grounds No.2(a) (b) are dismissed. Aggrieved by this, the assessee has come up in appeal before us. 7. Ld. AR for the assessee before us filed paper book which is running from pages 1 to 54 and cited various case law. He further submitted that the addition was confirmed by the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also not in dispute that the assessee-company being NBFC was bound by the aforesaid provisions. Therefore, under the aforesaid provisions, it was mandatory on regard to the recognized accounting principles. The accounting principles, which the assessee was indubitably bound to follow, were AS-9. [Para 16] Therefore, it could not be said that income in the form of interest, though not received, had still accrued to the assessee under the provisions of the Income-tax Act and was, therefore, exigible to tax. It was so for the reasons: ( 1)The assessee had not received any interest on the said ICDs placed with S since the assessment year 1996-97 as it had become NPA in accordance with the Prudential Norms, which was entered in the books of account as well. The assessee had further was received and the position remained the same until the assessment year 2006-07. Reason was adverse financial circumstances and the financial crunch faced by S . So much so, it was facing winding up petitions which were filed by many creditors. Those a result of the aforesaid precarious financial position of S . What to talk of interest, even the principal amount itself had become ..... X X X X Extracts X X X X X X X X Extracts X X X X
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