M/S. THE SAHEBRAO DESHMUKH CO-OP. BANK LTD., MUMBAI V. CIT (A)-49, MUMBAI

ITA 1827/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4627 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Appeal Filed On: 09-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KASHYAP
• Keywords: Principle of natural justice; Bad and doubtful debts; Condonation of delay; Revised return; Provision of bad debts
• Section: 139; 143(3); 142(1); 139(5); 250; 143(2); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.1827/MUM/2020 (A.Y: 2015-16) M/S. THE SAHEBRAO DESHMUKH CO-OPERATIVE BANK LTD., 103, TRADE CORNER SOCIETY, SAKINAKA JUNCTION, ANDHERI (EAST), MUMBAI 400072. VS. CIT(A) - 49 ROOM NO. 605, 6 TH FLOOR, PRATISHTA BHAVAN, OLD CGO ANNEXE, MAHARSHI KARVE MARG, MUMBAI 400020. ./ ./ PAN/GIR NO. : AABATT4669A APPELLANT .. RESPONDENT APPELLANT BY : SHRI . SATISH MODY . AR RESPONDENT BY : SHRI . SANJAY KASHYAP. DR DATE OF HEARING 21 .0 9 .2021 DATE OF PRONOUNCEMENT 28 .0 9 .2021 / O R D E R PER PAVAN KUMAR GADALE JM: THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-49, MUMBAI PASSED U/S 143(3) AND 250 OF THE INCOME TAX ACT, 19 61. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. CONDONATION OF DELAY IN SUBMISSION OF APPEAL AG AINST THE ORDER U/S. 250 AND 143 (3) OF THE INCOME TAX ACT, 1 961. ITA NO. 1827/MUM/2020 M/S THE SAHEBRAO DESHMUKH CO-OP BANK LTD, MUMBAI - 2 - THIS APPEAL IS FILED AGAINST THE ORDER OF C.I.T (A) 49 FOR DISALLOWANCES OF CLAIM OF TOTAL LOSS OF RS.13,01,70 ,364/- ON ACCOUNT OF BAD DEBTS AS PER REVISED RETURN OF INCOM E TAX ACT, 1961. DATE OF THE ORDER IS 21ST FEBRUARY 2020. THIS APPEAL NORMALLY SHOULD HAVE BEEN FILED WHETHER 60 DAYS OF RECEIPT OF THE AFORESAID ORDER. THE ORDER OF C.I.T (A) 49 DATED 21/02/2020 RECEIVED BY THE ASSESSEE ON 09/03/2020. DUE TO NATIONWIDE LOCKDOWN AND PANDEMIC DECLARED BY THE GOVT. OF INDIA FROM 23/03/ 2020 AND AS OF TODAY AND THE LOCKDOWN IS EXTENDED TILL 3 0TH SEPTEMBER 2020 BY THE MAHARASHTRA GOVT. OF INDIA TH EREFORE, THERE IS DELAY IN FILLING THE APPEAL BEFORE HONOURA BLE I.T.A.T AND IT IS HEREBY PRAYED TO ALLOW THE CONDONATION OF DELAY FOR FILLING APPEAL BEFORE HONOURABLE I.T.A.T. 2. ALLOWANCE OF CLAIM OF RS.13,01,70,364/- ON ACCOUNT OF BAD DEBTS AS PER REVISED RETURN OF INCOME EXECUTED ON 01/09/2017 AND SUBMITTED MANUALLY ON 12/10/2017 ON THE FACTS OF THE CASE AND IN THE CIRCUMSTANCES A ND IN LAW AND IN THE INTEREST OF NATURAL JUSTICE, THE LD. AO HAS FAILED TO CONSIDER THE CLAIM OF BAD DEBTS OF RS.13,01,70,364/ - WHICH IS WELL WITHIN TIME AND THEREFORE IT IS ALLOWABLE CLAI M. THE APPELLANT HAS FILED REVISED RETURN OF INCOME EXECUT ED ON 01/09/2017 AND SUBMITTED ON 12/10/2017 DURING THE ASSESSMENT PROCEEDINGS WHICH IS WELL WITHIN THE TIM E ALLOWED UNDER SECTION 139 (5) OF THE INCOME TAX ACT, 1961. HENCE, THE APPELLANT PRAYS THAT THE SAID LOSS OF RS. 13,01,70, 364/- BE ALLOWED. 3. PRAYERS (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE A PPELLANT SUBMITS THAT THE ORDER PASSED BY THE LEARNED ASSESS ING OFFICER IS BAD IN LAW AS THE SAID ORDER IS PASSED A GAINST THE ITA NO. 1827/MUM/2020 M/S THE SAHEBRAO DESHMUKH CO-OP BANK LTD, MUMBAI - 3 - PRINCIPLES OF NATURAL JUSTICE; (II) THE APPELLANT FURTHER CRAVES LEAVE TO ADD, ALTER OR AMEND HIS GROUNDS OF APPEAL DURING THE COURSE OF APPEAL. 2. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THA T THERE IS A DELAY OF 154 DAYS IN FILING THE APPEAL AGAINST THE ORDER OF THE CIT(A) DATED 21.02.2020. THE ASSESSEE HAS RECEIVED THE CIT(A) ORDER ON 09.03.2020 AND NATIONA L WIDE LOCKDOWN WAS DECLARED DUE TO COVID ON 23.03.20 20 AND WAS FURTHER EXTENDED BY THE GOVT OF MAHARASHTR A TILL 2 ND WEEK OF SEP 2020. THEREFORE, THE ASSESSEE COULD FI LE THE APPEAL ON 9-10-2020. WE FOUND THAT THE FACTS MENTIONED BY THE LD.AR OF THE ASSESSEE CANNOT BE DISPUTED AND THE LD. DR HAS NO SERIOUS OBJECTIONS. ACCORDINGLY, THE DELAY IS CONDONED AND THE APPEAL I S ADMITTED. 3. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESS EE IS ENGAGED IN THE BANKING BUSINESS IN MAHARASHTRA STAT E. THE ASSESSEE HAS FILED THE RETURN OF INCOME ELECTRO NICALLY ON 24.09.2015 FOR THE A.Y 2014-15 WITH A TOTAL INC OME OF RS.4,17,14,760/-. SUBSEQUENTLY, THE CASE WAS SELECT ED FOR LIMITED SCRUTINY UNDER CASS. THE ASSESSING OFFICER (A.O.) HAS ISSUED THE NOTICE U/S 143(2) AND 142(1) OF THE ACT ITA NO. 1827/MUM/2020 M/S THE SAHEBRAO DESHMUKH CO-OP BANK LTD, MUMBAI - 4 - ALONG WITH QUESTIONNAIRE. IN COMPLIANCE, THE LD. A R OF THE ASSESSEE HAS FURNISHED THE DETAILS AND APPEAR ED FROM TIME TO TIME AND THE CASE WAS DISCUSSED. THE A .O ON PERUSAL OF THE COMPUTATION OF INCOME FOUND THAT THE ASSESSEE HAS CLAIMED THE DEDUCTION OF BAD DEBTS ALLOWABLE AMOUNTING TO RS. 34,04,707/- AND THE ASSE SSEE WAS CALLED TO SUBMIT THE DETAILS OF THE BAD DEBTS. IN COMPLIANCE, THE ASSESSEE HAS SUBMITTED THE DETAILS OF DEDUCTION CLAIMED U/S 36(1)(VIIA) OF THE ACT, BEING PROVISION OF BAD DEBTS @ 7.5% OF THE BUSINESS INCOM E. THE ASSESSEE HAS EXPLAINED THE REASONS AND THE BAS IS OF DEDUCTION CLAIMED @ 7.5% OF THE TOTAL INCOME ALLOW ABLE U/S 36(1)(VIIA) OF THE ACT. THE CONTENTIONS OF THE ASSESSEE THAT THE AMOUNT OF DEDUCTION IN RESPECT OF BAD DEBT S ACTUALLY WRITTEN OFF U/S 36(1)(VII) OF THE ACT SHAL L BE LIMITED TO THE AMOUNT BY WHICH SUCH BAD DEBTS EXCEE DS THE CREDIT BALANCE IN THE PROVISION FOR BAD AND DOU BTFUL ACCOUNTS MADE U/S 36(1)(VIIA) OF THE ACT WITHOUT AN Y DISTINCTION BETWEEN RURAL ADVANCES AND OTHER ADVANC ES. THE A.O HAS DEALT ON THE SUBMISSIONS OF THE ASSESSE E DATED 12.12.2017 AND OBSERVED THAT THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED. THE PROVISIONS OF SECT ION 36(1)(VII) AND U/SEC 36(1)(VII)(A) OF THE ACT ARE D ISTINCT AND INDEPENDENT ITEMS OF DEDUCTION THEREFORE DEDUCT ION U/S 36(1)(VII) OF THE ACT IS ALLOWABLE SUBJECT TO PROVISION ITA NO. 1827/MUM/2020 M/S THE SAHEBRAO DESHMUKH CO-OP BANK LTD, MUMBAI - 5 - U/S 36(2) OF THE ACT AND THE MERE PROVISION FOR BAD AND DOUBTFUL DEBTS IS NOT ALLOWABLE AS A DEDUCTION IN T HE COMPUTATION OF TAXABLE PROFITS. HENCE, THE CLAIM OF THE ASSESSEE WAS DISALLOWED. 4. FURTHER IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED A REVISED COMPUTATION OF INCOME AND THE RETURN OF INCOME ON 01.08.2017 AND CLAIMED EXTR A DEDUCTION OF BAD DEBTS WRITTEN OFF TO THE EXTENT OF RS. 13,01,70,364/-. WHEREAS THE ASSESSEE HAS NOT CLAIME D THIS DEDUCTION IN THE ORIGINAL RETURN OF INCOME.TH E ASSESSEE HAS NOT FILED THE RETURN OF INCOME WITHIN THE TIME ALLOWED AS PER PROVISIONS OF SEC. 139(5) OF TH E ACT. THE A.O FOUND THAT THE ASSESSEE HAS NOT FILED THE R EVISED RETURN BEFORE 31.03.2017 AND THEREFORE THE CLAIM WA S DENIED. FINALLY, THE A.O. HAS DISALLOWED THE PROVIS ION OF BAD DEBTS OF RS. 34,04,707/- AND ASSESSED THE TOTA L INCOME OF RS. 4,51,19,467/- AND PASSED THE ORDER U/ S 143(3) OF THE ACT DATED 14.12.2017. 5. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED A N APPEAL BEFORE THE CIT(A). WHEREAS, THE CIT(A) DEAL T ON THE ISSUE OF ADDITIONAL CLAIM OF BAD DEBTS WRITTEN OFF OF RS. 13,01,70,364/- WHICH WAS NOT ALLOWED BY THE A.O AS THE CLAIM WAS MADE AFTER LAPSE OF TIME LIMIT OF FI LING OF REVISED RETURN OF INCOME. THE CIT(A) HAS DISTINGUIS HED ITA NO. 1827/MUM/2020 M/S THE SAHEBRAO DESHMUKH CO-OP BANK LTD, MUMBAI - 6 - THE DECISIONS AND CONFIRMED THE ACTION OF THE A.O O N THIS DISPUTED ISSUE. IN RESPECT OF THE OTHER GROUNDS OF APPEAL, THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE AND P ARTLY ALLOWED THE ASSESSEE APPEAL. AGGRIEVED BY THE CIT(A)ORDER, THE ASSESSEE HAS FILED AN APPEAL BEFOR E THE HONBLE TRIBUNAL. 6. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THA T THE ASSESSEE HAS FILED THE REVISED OF INCOME AND COMP LIED WITH THE DIRECTIONS BUT THE A.O HAS OBSERVED THAT T HE CLAIM CANNOT BE ALLOWED AS THE REVISED RETURN WAS F ILED AFTER THE 31.03.2017. THE LD.AR SUBMITTED THAT THE ADDITIONAL CLAIM OF BAD DEBTS WAS NOT CLAIMED IN T HE ORIGINAL RETURN OF INCOME AND THE FACTS & FIGURES O F THE CLAIM ARE GENUINE AND RELIED ON THE JUDICIAL DECISI ONS AND PRAYED FOR ALLOWING THE APPEAL. CONTRA, THE LD. DR HAS RELIED ON THE ORDERS OF THE CIT(A). 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE SOLE CRUX OF THE DISPUTED ISSUE ENVISAGED BY THE LD.AR IS WITH RESPECT TO ADDITIONAL CLAIM OF BAD DEBTS WRITTEN OFF, AS IT WA S NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME AND BU T IN SCRUTINY ASSESSEEMENT PROCEEDINGS, A REVISED COMPUTATION OF INCOME AND THE REVISED RETURN OF ITA NO. 1827/MUM/2020 M/S THE SAHEBRAO DESHMUKH CO-OP BANK LTD, MUMBAI - 7 - INCOME WAS FILED. BUT THE SAID CLAIM WAS REJECTED B Y THE ASSESSING OFFICER. WE FIND THAT THE ASSESSEE IN THE ORIGINAL RETURN OF INCOME HAS NOT CLAIMED THE ADDITIONAL CLAIM OF BAD DEBTS FOR VARIOUS REASONS A ND IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FIL ED REVISED COMPUTATION OF INCOME/ REVISED RETURN OF INCOME WITH THE CLAIM. BUT THE ASSESSING OFFICER HA S REJECTED THE CLAIM AND OBSERVED THAT THE ASSESSEE SHOULD HAVE FILED THE REVISED RETURN OF INCOME BEFO RE 31-03-2017. WE FIND THE SUBMISSIONS OF THE LD.AR AR E REALISTIC AND THE A.O. HAS NOT DOUBTED THE CLAIM BU T REJECTED ONLY ON THE GROUND OF NON FILLING OF REVIS ED RETURN OF INCOME WITHIN THE TIME LIMIT. WE CONSIDER THE OVERALL FACTS, CIRCUMSTANCES AND THE JUDICIAL DECISIONS ARE OF THE OPINION THAT, THE ASSESSEE SHO ULD NOT BE DEPRIVED ITS LEGITIMATE RIGHT TO CLAIM ADDIT IONAL CLAIM OF BAD DEBTS WRITTEN OFF WHICH IS NOT FICTITI OUS. WE CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE AN D THE JUDICIAL DECISIONS ADMIT THE CLAIM OF THE ASSES SEE AND RESTORE THE DISPUTED ISSUE TO THE FILE OF ASSES SING OFFICER FOR LIMITED PURPOSE TO EXAMINE AND VERIFY T HE CLAIM AND ADJUDICATE ON MERITS. THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING AND SHA LL ITA NO. 1827/MUM/2020 M/S THE SAHEBRAO DESHMUKH CO-OP BANK LTD, MUMBAI - 8 - COOPERATE IN SUBMITTING THE INFORMATION AND ALLOW T HE GROUNDS OF APPEAL FOR STATISTICAL PURPOSE. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.09.2021. SD/- SD/- ( S RIFAUR RAHMAN ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 28.09.2021 KRK, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) 4. ( ) / CONCERNED CIT 5. '#$%&&' , )* , / DR, ITAT, MUMBAI 6. %-./0 / GUARD FILE. / BY ORDER, '& //TRUE COPY// 1. ( ASST. REGISTRAR) ITAT, MUMBAI