South Indian Bank Ltd. Vs DCIT (ITAT Cochin)
The Income Tax Appellate Tribunal (ITAT) of Cochin has delivered a judgment in the case of South Indian Bank Ltd. Vs. DCIT, affirming a long-standing principle that an Assessing Officer (AO), when issuing a consequential assessment order under Section 263 of the Income Tax Act, 1961, must not exceed the scope of the original revisionary order. The tribunal’s decision came after the South Indian Bank’s appeal against a consequential order that it deemed to have gone beyond the specific directions given by the Principal Commissioner of Income Tax (PCIT).
The case for the Assessment Year 2017-18 began with the South Indian Bank’s income tax return, which was initially assessed by the DCIT. Later, the PCIT, exercising powers under Section 263, found the original assessment to be prejudicial to the revenue and directed the AO to specifically re-verify the bank’s claims regarding “bad debts written off” and “depreciation on investments.”
In the subsequent consequential assessment order, the AO not only addressed the two issues specified by the PCIT but also made additional disallowances, including restricting a deduction under Section 36(1)(viiia). This led the bank to appeal the decision to the CIT(A), and eventually to the ITAT. The bank argued that the AO had overstepped the bounds of the PCIT’s order and also attempted to introduce new claims for provisional bad debts.
