TaxTMI 
TaxTMI 
2023 (11) TMI 1329
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..... 2. The appellant craves leave to add, amend or alter any or all the grounds of appeal on or before the date the appeal is finally heard for disposal." Grounds of appeal in ITA No. 517/Jodh/2018: "1. That on the facts and in the circumstances of the case, the CIT(A)-1, Jodhpur erred in sustaining the assessment order framed invoking the provisions of section 147/148. Initiation of reassessment proceeding u/s 148 is without any belief of escapement and on surmise and therefore assessment framed on such belief liable to be quashed. Assessment so framed may kindly be declared void ab initio. 2. That on the facts and in the circumstances of the case, the Ld. CIT (A) 1, Jodhpur erred in sustaining the assessment order framed in the name of MGB Gramin Bank without bringing the successor on record. Assessment order framed u/s 143(3) in the name MGB Gramin Bank is void ab initio as MGB Gramin Bank cease to exist at the time of framing assessment and as such assessment was framed on non existing person. Assessment so framed may kindly be declared void ab initio. 3. That on the facts and in the circumstances of the case, the Ld. CIT (A) 1, Jodhpur erred in sustaining disa....
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....n Bank cease to exist at the time of framing assessment and as such assessment was framed on non existing person. Assessment so framed may kindly be declared void ab initio. 2. That on the facts and in the circumstances of the case, the ld. CIT (A) 1, Jodhpur erred in sustaining disallowance of Rs. 2,76,46,332/- being Provision for Standard Assets allowable on provision basis as per the provisions of section 36(1)(viia) on the finding that Hon'ble ITAT in the assessee's own case in appeal against order u/s 263 for AY 2010-11 in ITA No 143/Jodh/2015 dated 19/05/2017 held that same is not allowable. In ITA No 143/Jodh/2015 dated 19/05/2017 ground about allowability of Provision for Standard Assets has not been decided by the Hon'ble ITAT. 3. That on the facts and in the circumstances of the case, the Ld. CIT (A) 1, Jodhpur erred in sustaining disallowance of Rs. 50,00,00,000/- being Floating Provision Towards Advances allowable on provision basis as per the provisions of section 36(1)(viia) on the finding that Hon'ble ITAT in the assessee's own case in appeal against order u/s 263 for AY 2010-11 in ITA No 143/Jodh/2015 dated 19/05/2017 held that sa....
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....he Ld. CIT (A) 1, Jodhpur erred in sustaining the assessment order framed in the name of MGB Gramin Bank without bringing the successor on record. Assessment order framed u/s 143(3)r.w.s 263 in the name MGB Gramin Bank is void ab initio as MGB Gramin Bank cease to exist at the time of framing assessment and as such assessment was framed on non existing person. Assessment so framed may kindly be declared void ab initio. 2. That on the facts and in the circumstances of the case, the Ld. CIT (A) 1, Jodhpur erred in sustaining disallowance of Rs. 75,00,000/- being Provision for Standard Assets allowable on provision basis as per the provisions of section 36(1)(viia) on the finding that Hon'ble ITAT in the assessee's own case in appeal against order u/s 263 for AY 2010-11 in ITA No 143/Jodh/2015 dated 19/05/2017 held that same is not allowable. In ITA No 143/Jodh/2015 dated 19/05/2017 ground about allowability of Provision for Standard Assets has not been decided by the Hon'ble ITAT. 3. That on the facts and in the circumstances of the case, the Ld. CIT (A) 1, Jodhpur erred in sustaining disallowance u/s 14A for Rs. 11,50,589/- out of Rs. 58,05,476/- dis....
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....noticed that the assessee has earned income of Rs. 16,57,517/- which is claimed as exempted income. However no disallowance of expenses has been made by the AO u/s 14 A read with Rule 8 D. 3. The above income has not been dealt in assessment order u/s 143(3) dated 15.12.2009 as well as u/s 143(3) read with under section 147 dated 22.11.2011 also. The assessee has not furnished any details of working of claim of Rs. 81,99,928/- as well as working of Rs. 16,57,517/- Hence to this extent there is a failure on the part of the assessee to disclose fully and truly material facts. In view of above, I have reasons to believe that Rs. 98,57,443/- is his escaped income for A.Y 2007-08. Accordingly proceeding u/s 147/148 recommended in this case.' Case was reopened after taking approval from The Commissioner of income Tax-1, Jodhpur. Notice u/s 148 dated 26-03-2014 which got served upon assessee on dated 28-03-2014. Assessment was completed and the AO made disallowance of Rs. 78,61,442/- against standard assets (inclusive of sub-standard assets) and; Rs. 12,30,236/- u/s 14A of the Act. 3.1 At the time of hearing, the ld. counsel for the assessee has con....
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....r Pvt. Ltd. [2007] 291 ITR 500 (SC). The ld. counsel for the assessee failed to rebut the finding of the ld. CIT (A) or furnish a case in rebuttal. In view of that matter, we are of the considered view that the AO has valid reasons to form belief under section 147 of the Act to complete assessment order u/s 147 r.w.s. 143(3) of the Act following the due procedure. 3.3 Accordingly, we find no infirmity or perversity in the finding of the CIT(A)to the facts on record in upholding the validity of reopening of assessment and thus the ground no. 1 is dismissed. 4. In the 2nd grounds of appeal, the appellant has challenged the order of the ld. CIT (A) that he was not justified in sustaining the assessment order framed in the name of MGB Gramin Bank without bringing the successor on record. The assessment order framed u/s 143(3) in the name of MGB Gramin Bank is void ab initio as MGB Gramin Bank seized to exist at the time framing the assessment and as such assessment was framed on non existing person and assessment so framed kindly be declared void ab-initio. 5. The issue is squarely covered by the co-ordinate bench decision in ITA No. 143/Jodh/2015 dated 19.056.2017 wherein on i....
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....of ITAT in the case of M/s Nagaur Urban Co-operative bank Ltd Vs. ACIT ITA No. 240/JU/2013 vide order dated 29.11.2013 and the decision of the Chennai Bench of ITAT in the case of Vellore Dist. Central Cooperative Bank Ltd Vs. CIT ITA No. 914/Mds/2013 order dated 17.7.2013 and harping on the additional ground raised. 9. Per contra, the ld. D.R. relied on the orders of the authorities below. 10. We have heard the rival submissions and have perused the relevant material on record. We have also gone through the elaborate paper book filed by the Id. A.R. of the assessee as well as the catena of decisions cited in support of his submissions. We find that during the year under consideration, the assessee had made provision of Rs. 56.70 lakhs for standard assets. It has been noticed that as per guidelines dated 01.07.2009 issued by the Reserve Bank of India through Master circular for prudential norms on income recognition, Asset classification and provisioning pertaining to Advance, the provision under the nomenclature 'Non Performing Assets' (NPA) which covers (1) sub standard, (i) doubtful category je. D-I, D-2 and D-3 and (iii) loss Assets. The Non-Performin....
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....ing Officer in respect of this point is erroneous and prejudicial to the interest of revenue as there is no enquiry on this aspect by the Assessing Officer which was required in accordance to the provisions of section 36(l)(viia) and 37 of the I.T. Act, 1961. He further that the provision for standard assets amounting to Rs. 56.70 lakh is not allowable in accordance to the provisions of section either u/s 36(1)(viia) or u/s 37(1) of the Act. Accordingly, he directed the Assessing Officer to give effect to this finding. In view of discussion above, it is clear that the banks are required to make certain provisions under the guidelines of the RBI, but the allowably of such provisions, for tax purpose, is governed by the provisions of Income Tax Act, 1961. It is also noted that the case laws relied upon by the appellant were also placed before the Hon'ble ITAT. And, in this case of appellant itself, Hon'ble ITAT held the action of the CIT-1, Jodhpur, valid as the appellant had claimed the provision on 'Standard Assets' as well, which otherwise are not allowable as deduction because the same cannot be termed as bad & doubtful debts by any stretch of argument, Thus, addition of R....
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....is eligible for same in light of judgment of Hon'ble Allahabad High Court in the course of Pr. COT vs. Baroda Uttar Pradesh Gramin Bank [2022] 447 ITR 218 (All.)." 12.1 The Hon'ble Apex Court in the latest judgment in the case of "Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. v. Assessing Officer", [2023] 154 taxmann.com 305 (SC) has observed as under: "15.13. Further, under the provisions of the State Act, 1984, 'agricultural and rural development bank' means the Kera/a Cooperative Central Land Mortgage Bank Limited, registered under Section 10 of the Travancore Cochin Co-operative Societies Act, 1951, which shall be known as Kera/a State Co-operative Agricultural and Rural Development Bank Limited i.e. the appellant herein. Thus, from conjoint reading of all the relevant statutory as alluded to hereinabove, it is quite clear that the appellant is not a cooperative bank within the meaning of sub section (4) of Section 80P of the Act. The appellant is a co-operative credit society under Section 80P(2)(a)(i) of the Act whose primary object is to provide financial accommodation to its members who are all other cooperative societies and not member of....
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.... payment were made in F.Y. 2010-11 and that neither the quantum for provision of wage revision had been finalized nor any kind of payment was made till the end of the F.Y. 2009-10. 14.1 learned CIT(Appeal), while deleting the addition made by AO, on account of disallowances of provision for wage revision of workman Rs. amounting to rupees 9,10,42,530/-, has observed as under: 6.2 I have considered the facts of the case, assessment order and the submissions by the appellant. From the facts of the case, assessment order and the submissions by the appellant above it is dear that, wage revision negotiations were actively in progress and the liability of the appellant towards payment of wage arrears was round the corner. Appellant has also placed on record the copy of agreement dated 27.11.2009 which stated, apart from other matters, that the wage revision will be effective from 1.11.2007. Thus, it is clear that the effective date of liability of the appellant was ascertained, the only question left was that of the quantum, which was being negotiated upon It is also rioted that amounts of arrear were pa September, 2010 Rs. 8,85,56,679/-, in February, 2011 Rs. 6,05,795 ....
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....i.e., more likely than not. Possible obligation - an obligation is a possible obligation if, based on the evidence available, its existence at the balance sheet date is considered not probable. That the AS 29 issued by the ICAI mandate to recognize a provision in the books of account when: A provision should be recognized when: (a) An enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and (c) A reliable estimate can be made of the amount of the obligation. If these conditions are not met, no provision should be recognized. That Since all the three conditions laid in the case of assessee bank satisfy the assessee bank recognized a provision amounting to Rs. 5,10,42,530/- for wage revision. That the provisions were recognized where the quantification can be reasonably estimated, though there is certain probability that the ultimate outcome may differ that the amount earlier recognized in the books of account. But merely because the quantification cannot be done with the certainty and was only estimation, provision cannot ....