ACIT, Circle-1, Kadapa, Kadapa V. Andhra Pragathi Grameena Bank, Kadapa, Kadapa

CO 62/HYD/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2810 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 25-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: U MINI CHANDRA
• Assessee Lawyers: N O N E
• Keywords: Bad and doubtful debts; Revised return
• Section: 143(3); 27

Judgement Text

ITA NOS 1050 1051 AND CO 62 AND 63 OF 2016 ANDHRA PRAGATHI GRAMEENA BANK KADAPA PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NOS.1050 & 1051/HYD/2016 (ASSESSMENT YEARS: 2009-10 & 2012-13) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE -1 KADAPA VS ANDHRA PRAGATHI GRAMEENA BANK, KADAPA PAN: AAMFA 8921 A C.O NOS.62 & 63/HYD/2016 (ARISING OUT OF ITA NOS.1050 & 1051/HYD/2016) (ASSESSMENT YEARS: 2009-10 & 2012-13) ANDHRA PRAGATHI GRAMEENA BANK, KADAPA PAN: AAMFA 8921 A VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE -1 KADAPA FOR REVENUE : SMT. U.MINI CHANDRA, DR FOR ASSESSEE : N O N E O R D E R PER BENCH: THE APPEALS ARE FILED BY THE REVENUE, WHILE THE CRO SS OBJECTIONS ARE FILED BY THE ASSESSEE FOR THE RESPEC TIVE A.YS. IN THE REVENUES APPEALS, THE DEPARTMENT IS AGGRIEVED BY T HE ORDER OF THE CIT (A) IN CANCELLING THE PENALTY LEVIED U/S 27 1(1)(C) OF THE ACT FOR THE RESPECTIVE A.YS. DATE OF HEARING : 07.02.2017 DATE OF PRONOUNCEMENT : 10.02.2017 ITA NOS 1050 1051 AND CO 62 AND 63 OF 2016 ANDHRA PRAGATHI GRAMEENA BANK KADAPA PAGE 2 OF 4 2. BRIEF FACTS OF THE CASE FOR THE A.Y 2009-10 ARE T HAT THE ASSESSEE-BANK HAS E-FILED ITS RETURN OF INCOME FOR THE A.Y 2009-10 ON 24.09.2009 AND THEREAFTER FILED A REVISED RETURN OF INCOME ON 3.3.2010 ADMITTING A TOTAL INCOME OF RS.78,40,32,18 5 AFTER CLAIMING DEDUCTION U/S 36(1)(VIIA) OF THE I.T. ACT, 1961. THE ASSESSMENT PROCEEDINGS U/S 143(3) WERE COMPLETED ON 23.12.2011. SUBSEQUENTLY, IT WAS NOTICED THAT THE A SSESSEE HAS COMPUTED PROVISION FOR BAD AND DOUBTFUL DEBTS @10% A S PER SECTION 36(1)(VIIA) WHICH INCLUDES THE PROVISIONS M ADE TOWARDS BAD AND DOUBTFUL DEBTS IN RESPECT OF THE RURAL BRAN CHES. THE AO OBSERVED THAT THIS CLAIM INCLUDES ADVANCES MADE BY SIX RURAL BRANCHES. HE OBSERVED THAT THE PLACES WHERE THOSE B RANCHES ARE LOCATED ARE HAVING POPULATION OF MORE THAN TEN THOU SAND AND THEREFORE, THEY CANNOT BE CONSIDERED AS RURAL BRAN CHES AS PER THE EXPLANATION (IA) TO SECTION 36(1)(VIIA) OF THE ACT. THEREFORE, HE WAS OF THE OPINION THAT THE SAID DEDUCTION NEEDS TO BE DISALLOWED AND HAS THUS ESCAPED THE ASSESSMENT. 3. THEREFORE, A NOTICE U/S 148, DATED 29.10.2013 WA S ISSUED TO THE ASSESSEE. DURING THE RE-ASSESSMENT PR OCEEDINGS, THE ASSESSEE APPEARED THROUGH ITS REPRESENTATIVE AND AG REED FOR THE DISALLOWANCE OF RS.4,01,58,115. ACCORDINGLY, THE SA ME WAS BROUGHT TO TAX. SUBSEQUENTLY, THE AO INITIATED PENA LTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE ASSESSEE EXPLAINED THAT THE CLAIM OF DEDUCTION U/S 36(1)(VIIA) WITH REGARD TO THE SIX RURAL BRANCHES WAS MADE ON THE BASIS OF THE INFORMATION C OLLECTED FROM THE RESPECTIVE VILLAGE HEADS REGARDING THE POPULATI ON BUT AS SOON AS THE ASSESSEE HAS REALIZED ITS MISTAKE, IT HAS AC CEPTED FOR THE DISALLOWANCE AND THEREFORE, PENALTY MAY NOT BE LEVI ED. AO, ITA NOS 1050 1051 AND CO 62 AND 63 OF 2016 ANDHRA PRAGATHI GRAMEENA BANK KADAPA PAGE 3 OF 4 HOWEVER, WAS NOT CONVINCED WITH THE ASSESSEES CONT ENTIONS AND WORKED OUT THE MINIMUM PENALTY AT RS. 1,24,08,861 A ND THOUGHT IT FIT TO IMPOSE A PENALTY OF RS.1,50,00,000 U/S 27 1(1)(C) OF THE I.T. ACT. FOR SIMILAR REASONS FOR THE A.Y 2012-13, THE AO LEVIED THE PENALTY OF RS.1,00,00,000. AGGRIEVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT (A) FOR BOTH THE A.YS. THE CI T (A), AFTER TAKING INTO CONSIDERATION THE ASSESSEES CONTENTION S THAT THE INFORMATION WAS TAKEN BY THE ASSESSEE WITH REGARD T O THE POPULATION OF THE VILLAGES FROM THE VILLAGE HEADS, INSTEAD OF TAKING THE SAME FROM THE CENSUS OF 2001 AND WAS ONLY A TEC HNICAL ERROR AND SHOULD NOT BE VIEWED AS AN ERROR COMMITTED INTE NTIONALLY, HAS DELETED THE PENALTY. THE CIT (A) HAS ALSO CONSIDERE D THE DECISION OF THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, IN THE CASE OF DY.CIT KHANDWA VS. M/S.NEPA LTD IN ITA NO.683/IND/2 013 DATED 13.10.2014 FOR THE A.Y 2003-04 TO HOLD THAT SINCE TH E AO HAS NOT STATED THE REASONS FOR LEVY OF PENALTY IN THE PENAL TY NOTICE, THE PENALTY IS NOT SUSTAINABLE. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DR SUPPORTED THE ORDERS OF THE AO, W HILE NONE APPEARED FOR THE ASSESSEE. IT IS NOTICED THAT THE NOTICE FOR HEARING HAS BEEN SERVED ON THE ASSESSEE BY REGD.POS T A/D AND FURTHER THAT ON THE LAST OCCASION I.E. ON 9.11.2016 , THE APPEAL HAS BEEN ADJOURNED TO 7.2.2017 AT THE WRITTEN REQUEST O F THE ASSESSEE. SINCE NONE APPEARED FOR THE ASSESSEE INSPITE OF SER VICE OF NOTICE, WE HAVE HEARD THE DEPARTMENT, EX-PARTE QUA THE ASSE SSEE AND PROCEED TO DISPOSE OFF THE APPEALS. ITA NOS 1050 1051 AND CO 62 AND 63 OF 2016 ANDHRA PRAGATHI GRAMEENA BANK KADAPA PAGE 4 OF 4 5. HAVING REGARD TO THE MATERIAL ON RECORD AND ALSO THE SUBMISSIONS OF THE LEARNED DR, WE FIND THAT THE ASS ESSEE HAS COME TO THE CONCLUSION THAT THE SIX BRANCHES ARE RU RAL BRANCHES ONLY ON THE BASIS OF THE INFORMATION GATHERED FROM THE VILLAGE HEADS/RECORDS INSTEAD OF THE INFORMATION PUBLISHED IN THE CENSUS. THIS, IN OUR OPINION, IS ONLY A TECHNICAL ERROR AND THE ASSESSEE HAS AGREED FOR THE DISALLOWANCE AS SOON AS IT HAS R EALIZED THE MISTAKE COMMITTED BY IT. IN VIEW OF THIS, WE DO NO T SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT (A). THEREFO RE, REVENUES APPEALS FOR BOTH THE A.YS 2009-10 AND 2012-13 ARE DI SMISSED. 6. THE CROSS OBJECTIONS FILED BY THE ASSESSEE FOR B OTH THE A.YS ARE ONLY IN SUPPORT OF THE ORDER OF THE CIT (A) AND THEREFORE, THEY NEED NO ADJUDICATION. 7. IN THE RESULT, THE REVENUES APPEALS AS WELL AS CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH FEBRUARY, 2017. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 10 TH FEBRUARY, 2017. VINODAN/SPS COPY TO: 1 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1, AAYA KAR BHAVAN, D.NO.2-430-8 NAGARAJUPET KADAPA 516001 2 ANDHRA PRAGATHI GRAMEENA BANK, MARIAPURAM, KADAPA 3 CIT (A)-KURNOOL 4 PR. CIT - KURNOOL 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER