ITAT upholds CIT(A) orders on deductions, NABARD provisions, RBI guidelines, and assessment fairness.

The ITAT dismissed both appeals of the assessee, upholding the CIT(A)'s orders for the assessment years 2006-07 and 2007-08. The judgment addressed legal issues regarding the disallowance of deductions under section 36(1)(viia), provisions made through NABARD, applicability of banking guidelines by the Reserve Bank of India, and the fairness of confirming assessment orders.

---

---

Issues:
- Appeal against two separate orders of CIT(A) for assessment years 2006-07 and 2007-08.
- Disallowance of deductions under section 36(1)(viia) of the Income Tax Act, 1961.
- Provision made through NABARD and subsequent writing back of provisions.
- Applicability of banking guidelines by Reserve Bank of India.
- Judicial consciousness and fairness in confirming assessment orders.

Analysis:

Issue 1: Appeal against CIT(A) orders for assessment years 2006-07 and 2007-08
The appeals were filed by the assessee against two separate orders of CIT(A) for the assessment years 2006-07 and 2007-08. Both appeals were heard together and disposed of by a common order for convenience. The grounds raised by the assessee for both years primarily challenged the CIT(A)'s dismissal of the appeal and the confirmation of the assessment orders without considering the facts of the case.

Issue 2: Disallowance of deductions under section 36(1)(viia)
The assessee contended that the CIT(A) erred in disallowing deductions under section 36(1)(viia) of the Income Tax Act, 1961. The appellant argued that they were working under the directions of the Reserve Bank of India and should be entitled to the deductions applicable to scheduled and non-scheduled banks. However, the CIT(A) upheld the disallowances made by the Assessing Officer, leading to a dispute over the availability of these deductions to the appellant bank.

Issue 3: Provision made through NABARD and subsequent writing back of provisions
The assessee made provisions through NABARD, which were subsequently written back in a subsequent year and included in income. The appellant requested a direction to the Assessing Officer to exclude the income declared in the year of writing back of the provision. The ITAT confirmed the CIT(A)'s order in both years but directed the Assessing Officer to reduce the income in the subsequent year if the provisions were written back by the assessee, subject to the burden of proof on the assessee to establish the same.

Issue 4: Applicability of banking guidelines by Reserve Bank of India
The appellant argued that they provided banking facilities to members/borrowers as per the guidelines of the Reserve Bank of India and other banks. They contended that the CIT(A) did not consider this fact, leading to an unjustified and unfair decision against the appellant. The dispute raised questions about the application of banking guidelines in assessing the appellant's case.

Issue 5: Judicial consciousness and fairness in confirming assessment orders
The assessee raised concerns about the CIT(A) not applying judicial consciousness in dismissing the appeal and confirming the assessment orders passed by the Assessing Officer. They argued that the orders were arbitrary and inequitable. The ITAT, however, declined to interfere in the CIT(A)'s orders for both years, emphasizing the burden on the assessee to establish certain aspects before the Assessing Officer in subsequent years.

In conclusion, the ITAT dismissed both appeals of the assessee, upholding the CIT(A)'s orders for the assessment years 2006-07 and 2007-08. The judgment addressed various legal issues, including the disallowance of deductions, provisions made through NABARD, applicability of banking guidelines, and the fairness of confirming assessment orders.

---