Maharashtra Gramin Bank, Aurangabad V. Assistant Commissioner of Income-tax, Circle - 2, Aurangabad

ITA 1803/PUN/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7091 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-04-2019
• Assessment Year: 2015-2016
• Appeal Filed On: 26-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAMESH MAGAR; ALOKE SINGH
• Keywords: Bad and doubtful debts; Revised return; Set aside; Bogus
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NOS.1803 & 1804/PUN/2018 / ASSESSMENT YEAR : 2015-16 MAHARASHTRA GRAMIN BANK, PLOT NO.35, JEEVANSHREE, SECTOR-G, TOWN CENTRE, CIDCO, AURANGABAD PAN : AACAM8494M VS. ACIT, CIRCLE-2, AURANGABAD (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS FILED BY THE ASSESSEE - ONE EMANATIN G FROM THE ASSESSMENT ORDER AND THE OTHER FROM THE PENALTY U /S. 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO C ALLED THE ACT) - RELATE TO THE ASSESSMENT YEAR 2015-16. 2. IN SO FAR AS THE QUANTUM APPEAL IS CONCERNED, IT IS NOTIC ED THAT THE ASSESSEE IS ENGAGED IN BANKING BUSINESS. RETURN FOR THE YEAR UNDER CONSIDERATION WAS FILED DECLARING TOTAL INCOME AT NIL, INTER APPELLANT BY SHRI RAMESH MAGAR & SHRI ALOKE SINGH RESPONDENT BY SHRI PANKAJ GARG DATE OF HEARING 29-04-2019 DATE OF PRONOUNCEMENT 29-04-2019 ITA NOS.1803 & 1804/PUN/2018 MAHARASHTRA GRAMIN BANK 2 ALIA, CLAIMING DEDUCTION U/S. 36(1)(VIIA) OF THE ACT AMOUNTING TO RS.122,56,95,246/-. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE FILED A REVISED RETURN REDUCING ITS AMOUNT OF D EDUCTION U/S.36(1)(VIIA) TO RS.25,21,93,0828/-, BEING THE AMOUNT O F PROVISION FOR BAD AND DOUBTFUL DEBTS AS PER THE BOOKS O F ACCOUNT. THE ASSESSING OFFICER DID NOT ACCEPT THE REVISED RETURN. HE, HOWEVER, COMPLETED THE ASSESSMENT MAKING ADDITION OF RS.97,35,02,163/-, BEING THE AMOUNT OF EXCESS DEDUCTION O RIGINALLY CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME BUT GIVEN U P IN THE REVISED RETURN. THE LD. CIT(A) ECHOED THE VIEW POINT OF TH E ASSESSING OFFICER, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS THAT ITS REVISED RETURN OFFERING INCOME OF RS.97,35,02,164/- SHOULD HAVE BEEN ACCEPTED RATHER THAN MAKING ADDITION FOR THE EQUAL AMOUNT. IRRESPECTIVE OF THE FACT WHETH ER THE REVISED RETURN IS ACCEPTED OR NOT, THE COMPUTATION OF TOTAL INCO ME AT RS.97.35 CRORE HAS NOT BEEN ASSAILED. THE ASSESSEE HAS NOT CHALLENGED THAT THE CLAIM OF DEDUCTION U/S.36(1)(VIIA) SHOULD H AVE ITA NOS.1803 & 1804/PUN/2018 MAHARASHTRA GRAMIN BANK 3 BEEN ENHANCED TO THE ORIGINALLY CLAIMED AMOUNT OF RS.122.5 6 CRORE INSTEAD OF THE REVISED DOWNSIZED AMOUNT OF DEDUCTION AT RS.2 5.21 CRORE. IN VIEW OF THIS, IT IS HELD THAT THE APPEAL OF THE ASSE SSEE IS MERELY ACADEMIC IN NATURE IN SO FAR AS THE COMPUTATION OF TO TAL INCOME IS CONCERNED. 4. THE SECOND APPEAL IS AGAINST THE CONFIRMATION OF PENALTY U./S.271(1)(C) OF THE ACT IN RELATION TO THE AMOUNT OF ADDITION OF RS.97.35 CRORE MADE BY THE ASSESSING OFFICER RESTRICTING THE PROVISION TO THE AMOUNT DEBITED IN THE PROFIT AND LOSS ACCOUNT O NLY. IN THIS REGARD, IT IS RELEVANT TO NOTE THAT THE ASSESSING OFFICE R HAS EXTRACTED THE STATEMENT OF CHAIRMAN OF THE ASSESSEE RECORDE D BY HIM ON 15-12-2017. IN ANSWER TO THE QUESTION AS TO WHY DEDUCTION U/S.36(1)(VIIA) WAS CLAIMED BY THE ASSESSEE AT 7.5% OF THE PROFIT BEFORE CLAIMING DEDUCTION U/S.36(1)(VIIA) AND 10% OF THE AG GREGATE AVERAGE OF RURAL ADVANCES MADE BY THE RURAL BRANCHES OF THE BANK AS AGAINST THE LOWER AMOUNT OF PROVISION CREATED IN THE BOOKS OF ACCOUNT, THE CHAIRMAN SUBMITTED THAT : AS SUGGESTED BY THE CENTRAL STATUTORY AUDITOR, JHODH AND JOSHI AND COMPANY, THE BANK HAS CLAIMED DEDUCTION U/S.36(1)(VIIA) OF RS.122,56,9 5,246/- AGAINST THE PROVISION FOR BAD AND DOUBTFUL DEBTS AGAINST NP A ITA NOS.1803 & 1804/PUN/2018 MAHARASHTRA GRAMIN BANK 4 ADVANCES WHILE FILING OUR INCOME TAX RETURN. HE FURTHER S TATED THAT ACTUAL PROVISION FOR BAD AND DOUBTFUL DEBTS MADE IN THE B OOKS OF ACCOUNT WAS ONLY TO THE TUNE OF RS.25.21 CRORE. HE S TILL FURTHER EXPLAINED THAT AT THE TIME OF FILING OF INCOME-TAX RETURN, THER E WERE THOUGHTS BEFORE THE BANK TO CLAIM THE DEDUCTION TO THE E XTENT OF 7.5% OF PROFIT AS PER THE SUGGESTION OF THE CENTRAL STATUTORY AUDITORS OF THE BANK. THE THOUGHT CAME BEFORE THE BANK AS OTHER BANKS HAD ALREADY CLAIMED THE DEDUCTION U/S.36(1)(VIIA ) OF AMOUNT MORE THAN THE PROVISION IN THE BOOKS OF ACCOUNT WITH IN THE PERMISSIBLE MAXIMUM LIMIT OF THIS SECTION. THE MATTERS IN APPE AL BEFORE THE RESPECTIVE APPELLATE AUTHORITIES ARE PENDING FOR F INAL DECISIONS. HE FURTHER SUBMITTED THAT SOME OF THE BENCHES O F THE TRIBUNAL, LATER ON, DECIDED THIS ISSUE AGAINST THE BANKS, WHICH LED THE ASSESSEE TO REDUCE ITS CLAIM OF DEDUCTION BY WITHDRAWING THE CLAIM OF ADDITIONAL DEDUCTION OF RS.97.35 CRORE. IN VIEW O F THE ABOVE DISCUSSION, IT IS CLEAR THAT THE ASSESSEE CLAIMED HIGHER DEDUCTION U/S.36(1)(VIIA) ON THE BASIS OF THE OPINION OF THE C ENTRAL STATUTORY AUDITORS. THIS PRACTICE WAS BEING FOLLOWED BY THE OTHER ASSESSEES SIMILARLY PLACED. IT WAS ONLY LATER ON THAT WHE N THE VIEW WAS CANVASSED AGAINST THE BANKS IN SIMILAR SITUATION THAT THE ASSESSEE CAME OUT BY A FILING REVISED RETURN REDUCING THE C LAIM OF ITA NOS.1803 & 1804/PUN/2018 MAHARASHTRA GRAMIN BANK 5 DEDUCTION TO THE ACTUAL AMOUNT OF PROVISION CREATED IN THE BOO KS OF ACCOUNT. IN OUR CONSIDERED OPINION, IT IS A CLEAR CUT CASE OF BONA FIDE OPINION FORMED BY THE ASSESSEE IN CLAIMING DEDUCTION AT A HIGHER AMOUNT. THERE WAS NO MALA FIDE INTENTION OF THE ASSESSEE TO CONCEAL THE INCOME OR FURNISH INACCURATE PARTICULARS OF ITS INC OME. THE ACTUAL AMOUNT OF PROVISION WAS AVAILABLE BEFORE THE AS SESSING OFFICER IN THE PROFIT AND LOSS ACCOUNT ATTACHED ALONG WITH THE R ETURN AND THE AMOUNT OF DEDUCTION U/S.36(1)(VIIA) WAS EQUALLY AVA ILABLE AS PER THE COMPUTATION OF INCOME. IF THE INTENTION HAD BEEN TO DEFRAUD THE REVENUE BY CLAIMING EXCESS DEDUCTION, THE A SSESSEE COULD HAVE WRONGLY INCREASED THE AMOUNT OF PROVISION IN ITS PROFIT AND LOSS ACCOUNT AS WELL, WHICH IT DID NOT. HAVING DECLARE D THE FIGURES CORRECTLY PROVES THE BONA FIDES OF THE ASSESSEE. 5. THE HONBLE SUPREME COURT IN CIT VS. RELIANCE PETROPRODUCTS PRIVATE LTD.(2010) 322 ITR 158 (SC) HAS HELD THAT A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT ATTRACT PENALTY 271(1)(C) OF THE INCOME-TAX ACT, WHEN THE ASSESSEE FURNISHES ALL THE RELEVANT PARTICULARS IN HIS RETURN W HICH ARE NOT FOUND TO BE INACCURATE. THERE IS NO DEARTH OF DEC ISIONS HOLDING THAT PENALTY UNDER SECTION 271(1)(C) CANNOT BE IMPOS ED ON ITA NOS.1803 & 1804/PUN/2018 MAHARASHTRA GRAMIN BANK 6 DISALLOWANCE OF EXPENSES, WHICH WERE NOT OTHERWISE BOGUS. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND DIRECT TO DELETE THE PENALTY. 6. IN THE RESULT, PENALTY APPEAL IS ALLOWED AND QUANTUM APP EAL IS DISMISSED AS ACADEMIC. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 29 TH APRIL, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-2, AURANGABAD 4. 5. THE PR.CIT-2, AURANGABAD , , / DR B, ITAT, PUNE; 6. / GUARD FILE. / TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRE TARY , / ITAT, PUNE ITA NOS.1803 & 1804/PUN/2018 MAHARASHTRA GRAMIN BANK 7 DATE 1. DRAFT DICTATED ON 29-04-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 29-04-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *