TMI Blog2019 (1) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... alid. Addition of Entry fees and Nominal membership fee to the Reserve Funds without routing it through the Profit and loss account - AO treated these amounts as chargeable to tax - Held that:- CIT(A) confirmed the addition by observing that such amounts was received by the assessee from the persons who became members of the society. In the absence of any material coming from the side of the assessee supporting the claim for treating such amounts as not chargeable to tax, we uphold the impugned order to this extent. Addition on account of provision of overdue interest - Held that:- We find that though there is a reference to disallowance of provision for overdue interest of ₹ 1.97 crore on pages 3 and 5 of the impugned order but there is no elaborate discussion on the merits of such ground. Under these circumstances, we set-aside the impugned order to this extent and remit the matter to the file of ld. CIT(A) for passing a speaking order on this issue. Addition u/s 43B - Held that:- In view of the fact that the addition has been deleted by the ld. CIT(A), the assessee has erroneously presumed that this disallowance was confirmed in the first appeal. This ground is di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 wherein the loss returned by the assessee at ₹ 10,53,92,979/- is accepted. The assessee is a co-operative bank. It is noticed that, the assessee has made provision of ₹ 5,22,09,000/- on account of N.P.A., ₹ 13,23,80,669/- on account of overdue interest, and ₹ 24,95,800/- on account of loss on gout. securities in its profit and loss account. These provisions are not allowable as per Income Tax Act, 1961. However, no disallowance is made in the regular assessment on these accounts. During the course of assessment proceedings for A.Y. 2005-2006, 2006-2007 and 2007-2008 the assessee bank taken a stand that these provisions are mandatory for the bank as per guidelines by the RBI and NABARD. The guidelines regarding the provisioning for debts and non performing assets have been made as measure of prudence. By provisioning in such manner, the bank is cushioned from unnecessary shock if certain debts turn bad. The guidelines in this regard which had been made by the RBI re binding or mandatory on the banks which are supervised by the RBI. The provisions of the Income Tax Act supercede all other laws in Income Tax proceedings. A guideline framed by RBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marking securities to the market price as on the last day of the financial year is not an allowable deduction. The guidelines framed by the RBI and NABARD may be binding on the banks but do not have same effect as far as application of the Income Tax Law is concerned. The assessee has not submitted any proof during the course of assessment proceedings to show that the debts mentioned above are actually considered as bad and fully written. off in the books. It has failed to disclose fully and truly all material facts necessary for its assessment. Hence, the proviso to section 147 is not applicable in this case. The, case is also covered' under Explanation 1 of the proviso to section 147. The assessee has claimed loss of ₹ 10,53,92,979/- due to the above provisions which are not at all allowable to the ,assessee. Said loss is further claimed set off against income of A.Y.s 2005-2006, 2006-2007 and 2007-2008. In view of the above, I have reason to believe that the income 'of ₹ 18,85,97,249/- chargeable to tax has escaped assessment. Notice under section 148 of the Act issued to the assessee after approval from the Hon'ble CIT-II, Kolhapur 'vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section . A bare perusal of the above provision manifests that the AO is fully empowered to bring to tax any other income which has escaped assessment and which comes to his notice subsequently in the course of proceedings u/s 147, apart from the income escaping assessment on which the AO formed reason to believe about the escapement of income and issued notice u/s 148. The use of words and between the income escaping assessment forming reasons to believe for issuing notice u/s 148 and other income chargeable to tax which escaped assessment and comes to the notice of the AO in the course of the proceeding, amply shows that the existence of the former is a pre-condition for taxing the latter. To put it simply, if the grounds set out in the re-assessment notice are non-existent, i.e., either no addition is made on such grounds or the addition so made does not finally pass the scrutiny by the appellate forums, then, obviously, no further addition can be made for income which comes to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year . A bare perusal of the proviso indicates that in the case of the earlier completion of assessment u/s.143(3), no action can be taken u/s.147 after the expiry of four years from the end of the assessment year, unless any income chargeable to tax has escaped assessment by reason of failure on the part of the assessee inter alia to disclose fully and truly all material facts necessary for re-assessment . The assessment year involved is A.Y. 2004-05. The period of four years from the end of the relevant assessment year expires on 31- 03-2009. Notice u/s.148 was issued on 28-03-2011, which is obviously beyond the stipulated period of four years from the end of the relevant assessment year. Thus it is apparent that the proviso is triggered in the instant case. Going by the mandate of the proviso, it is sine qua non that in order to initiate reassessment in respect of the originally completed assessment u/s 143(3) and after a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns who became members of the society. 15. In the absence of any material coming from the side of the assessee supporting the claim for treating such amounts as not chargeable to tax, we uphold the impugned order to this extent. 16. In the result, this appeal is dismissed. A .Y. 2007-08 : 17. The only issue raised in this appeal is against the confirmation of addition of ₹ 1,97,08,972/- on account of provision of overdue interest. 18. The assessee made provision for overdue interest at ₹ 1.97 crore, which was disallowed by the AO. 19. We find that though there is a reference to disallowance of provision for overdue interest of ₹ 1.97 crore on pages 3 and 5 of the impugned order but there is no elaborate discussion on the merits of such ground. Under these circumstances, we set-aside the impugned order to this extent and remit the matter to the file of ld. CIT(A) for passing a speaking order on this issue. 20. In the result, the appeal is allowed for statistical purposes. A.Y. 2008-09 : 21. Ground No.1 is against the confirmation of addition of ₹ 1,71,616/- made u/s. 43B of the Act. 22. The facts of the ground are that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision already debited to the profit and loss account. Notice u/s.148 was issued, in response to which the assessee filed return declaring total income of ₹ 5,55,78,080/- before set off of the brought forward losses. The AO completed the assessment at the originally returned income of ₹ 6.59 crore, thereby ignoring the lower income offered in response to notice u/s.148 of the Act. The ld. CIT(A) confirmed the decision of the AO. 30. Having heard the ld. DR and gone through the relevant material on record, it is observed that the assessee furnished a return in response to notice u/s.148 at total income of ₹ 5.55 crore as against the originally filed return with an income of ₹ 6.59 crore. The decision taken by the authorities below in not accepting the lower income in the re-assessment is in accordance with the judgment of Hon ble Supreme Court in the case of CIT Vs. Sun Engineering Works Pvt. Ltd. (1992) 198 ITR 297 (SC) . It goes without saying that the re-assessment is carried out for the benefit of the Revenue and not the assessee. In such re-assessment proceedings, the assessee cannot raise fresh independent claims having the effect of reducing t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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