9911796707
TMI Blog2021 (10) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... oportionate basis on diversion of fund on the basis of RBI inspection report and misunderstanding of concept of NPA. 3. That the learned CIT(Appeals), Ghaziabad is in erred in law by confirming the order of Dy. Commissioner of Income Tax, Circle-1, Ghaziabad and on facts in confirming the addition of Rs. 87,74,000/- by disallowing the expenditure without rejecting the accounts, only on the basis of by making the reference of last year's assessment order and RBI Inspection Report, despite and ignoring the facts that the assessee has provided the books of account and complete vouchers with support and bills and explained the genuiness of the related expenditure. 2. Briefly stated facts of the case are that assessee is a cooperative bank, registered under the Cooperative Society Act, 1965 and possesses a license for functioning as bank from the Reserve Bank of India (RBI). The assessee carried out activity of accepting deposits from the members/public, granting loans and bills/cheque discounting etc. For the year under consideration, the assessee filed return of income on 30/11/2014 declaring loss of Rs. 25,75,330/-. The return of income filed by the assessee was selected for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of disallowance of expenses. 4. Aggrieved with the finding of the Ld. CIT(A), the assessee is before the Tribunal raising the grounds as reproduced above. 5. Before us, the parties appeared through videoconferencing facility. The written submission was filed on behalf of the assessee through email. The learned Consul of the assessee submitted that the liquidator has been appointed by the appropriate authority on 31/08/2017 and the assessee society is under liquidation process. The learned Counsel informed that she has been appointed by the liquidator. 6. With reference to ground No.1 of the appeal, the learned Counsel of the assessee submitted that share capital has been obtained by way of proper banking channel and therefore genuineness of the same cannot be doubted. She further submitted that no cross examination has been provided to the assessee and therefore matter maybe restored back to the file of the Assessing Officer for providing opportunity of cross-examination of the persons, those who denied of investing in share capital of the society. 7. On the contrary, the Ld. DR submitted that the onus was on the assessee to produce those alleged shareholders for confirma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gveer (Rs. 160,00,000). The pleas that the amount was received from land compensation is also not supported as the cheques bear name of Shri Hukum Singh S/o Hayat & Shri Ulki S/o Anuchand, which are not the parties from whom share capital has been claimed have been received. This points to serious fraud committed by bank by not only misguiding the investors but also by misguiding the department as the parties have specifically stated on oath that they have not purchased any shares from the Bank and the Bank has misguided them and allotted shares in their name. Simultaneously it is seen that there other names are also appearing as per RBI's report and the total share capital received from them is Rs. 2,27,00,000/- Since, the other amount as per RBI report states that a sum total of Rs. 2,27,00,000/- has been received from the relatives of chairman and the source of funds is not ascertainable, this amount is also being added back as per the capital introduced out of books and not shown in the balance sheet. Hence, the alleged share capital received of Rs. 300,00,000/- and Rs. 2,27,000/- is being added in the income of the assessee U/s 68 of the Income-tax Act, 1961 as the genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shareholders namely Rakesh Kumar and Jagveer. The claim of source of fund in the hands of alleged share holders is also not been found correct as the assessee has not supported any documents in respect of the land compensation received by those alleged shareholders. Further, the Assessing Officer duly confronted the statement of two alleged shareholders during the course of the assessment proceeding. We noticed that no cross-examination was sought by the assessee during the assessment proceeding and for the first time the assessee asked cross-examination before the Ld. CIT(A). Those persons have been claimed by the assessee as shareholders and thus onus was on the assessee to produce before the Assessing Officers. It is only when the assessee failed to produce those persons, the Assessing officers issued summons requesting them to appear before him. When summons were issued to them on the request of the Assessee, the onus was on the assessee to be present during recording of their statement but assessee ignored to present before the AO. The assessee did not ask cross examination even after confronting the statement to the Authorised representative. Thereafter asking cross examinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions were noted i.e. that NPA has been classified deviating from the standards and norms prescribed by RBI. According to the appellant disallowance of expenditure by making a reference to RBI's inspection report without even rejecting the books of accounts is not tenable in the eyes of law. It has been further argued that there is no direct and indirect link of expenditure incurred for banking activities and classification of NPA. However it is noted that AO has observed that an amount of Rs. 12.91 lac advance to Ex. Director Smt. Meenakshi Goel was classified as NPA by the bank. Similarly, AO noted that credit has .been extended to sister concerns violating RBI's guidelines. Considering above facts, AO estimated expenditure not for wholly and exclusively business purpose. During the course of appellate proceedings AR has admitted that expenditure claimed is incurred on granting of loans and advances. The submission of AR is reproduced as under: e. It is also worthwhile to mention here that the expenditure incurred by the Bank is not only for taking deposit its also relates to granting and Loans and advances and other activities. 5.2.1 Considering above facts it is held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer erred in law as if we did not take the income of Rs. 69.17 lacs in the books of accounts, the loss of the assessee would be increased by the same amount. 19. The appeal for AY 2013-14 has been dismissed by the Tribunal as withdrawn. The finding of the Tribunal is reproduced as under: "None is present on behalf of the assessee. However, an application on behalf of the assessee dated 27.01.2020 is placed on record, stating that the assessee does not wish to press this appeal and seeks permission to withdraw the same. The Id. DR reports no objection on this request of the assessee. Therefore, the appeal is liable to be dismissed as withdrawn." 20. Thus assessee has admitted the disallowance in immediately preceding assessment year. In the year under consideration the Assessing Officer made addition relying on his finding in the preceding assessment year. Once the assessee has admitted addition in immediately preceding assessment year, preferring appeal on same issue in the year under consideration is not justified and against the rule of consistency. 21. Further, when the loans have been disbursed in violation of the rules of RBI to give benefit to a few, than ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of observation made by the RBI regarding discrepancy in vouchers arid narration. Initiated' penalty preceding separately U/s 271 (l)(c) for furnishing inaccurate particulars of income and concealment of income. (Addition of Rs. 3.07Lakh) 4. The RBI team has questioned the 10.09 lakh of telephone expense in view of all employees being provided with mobile phones. In this respect the assessee has clarified that this includes phone bills includes internet charges and the cost of the mobile phones to employees also.Hence, it is accepted that despite providing mobile phones, Bank needs other lines as well. No adverse view is being taken. Thus the total expenses disallowed as discussed above is Rs. 88.74 Lakh (Rs. 88,74,,000/-) 24. The Ld. CIT(A) allowed part relief on repair maintenance and travelling and conveyance and restricted the disallowance to 20% instead of 30% made by the Assessing Officer. Accordingly, the Ld. CIT(A) sustained addition of Rs. 85.67 lakhs observing as under: 5.3 Ground no. 3: The appellant has challenged the addition of Rs. 88.74 Sacs being 30% disallowance of repair expenses of Rs. 193.58 lacs (Rs. 58.07 lacs), - 30% of generator travelling, an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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