Asst. CIT, Circle 11(1), Pune V. M/s. Janata Sahakari Bank Ltd., Pune

MA 42/PUN/2022

AI Insights

The case revolves around a Miscellaneous Application by the Revenue against the order of the Income Tax Appellate Tribunal which had allowed the deduction of bad debts by M/s. Janata Sahakari Bank Ltd. under section 36(1)(vii) of the Income-tax Act, 1961. The Revenue contended that the Tribunal erred in allowing the deduction without the provision created under section 36(1)(viia), as required for scheduled banks. The Tribunal, however, found no apparent mistake in its original decision, citing various Supreme Court and High Court decisions that restrict the scope of rectification under section 254(2) to obvious and patent mistakes.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124431 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 2 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-02-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 29-11-2021
• Other Referred Cases: T.S. Balaram, I.T.O. vs. M/s. Volkart Brothers, Bombay, ACIT Vs. Saurashtra Kutch Stock Exchange Ld., CIT Vs. Ramesh Electric & Trading Company
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts
• Section: 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, PUNE BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER M.A. No. 42/PUN/2022 Arising out of ITA No. 1215/PUN/2013 : A.Y. 2008-09 The Asstt. C.I.T. Cir. 11(1) Pune. Applicant Vs. M/s. Janata Sahakari Bank Ltd., 1444 Bajirao Road, Shukrawar Peth, Pune-411 002 PAN: AAAJJ 0073G Respondent Applicant by : Shri Ramnath P. Murkunde Respondent by : None Date of Hearing : 03-02-2023 Date of Pronouncement : 07-02-2023 ORDER PER SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER This Misc. application preferred by the Revenue emanates from order of the Tribunal in I. T.A. No. 1215//PUN/2013 for A.Y. 2008-09, order dated 02-02-2017. The revenue has taken the following grounds in its Misc. application. “1. The Hon’ble ITAT erred in passing the order on the facts of the case. 2. The Hon’ble ITAT erred in allowing deduction of bad debts u/s 36(1)(vii) of the Income-tax Act, 1961 when the same can be allowed as deduction only against the provision created u/s 36(1)(viia), in terms of section 362)(v) as the assessee is scheduled bank. 3. The Hon’ble ITAT erred in allowing deduction to the assessee an amount of Rs. 77,75,96,444/- as bad debts u/s 36(1)(vii) of the I.T. Act, 1961 when the assessee was not eligible to the said deduction not having fulfilled all the conditions laid down for claiming the same. 4. For these and such other reasons as may be urged at the time of hearing, it is prayed that appeal of the revenue may kindly be restored for decision on merits. 5. The applicant craves, leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon’ble Tribunal.” 2 M.A. No. 42/PUN/2022 Janta Sah. Bank Ltd. A.Y 2008-09 2. At the time of hearing, the ld. D.R could not establish any mistake apparent from record in the order of the Tribunal which is the power and scope as mandated u/s 254(2) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). That on perusal of our order, there is no mistake much less apparent from record. There are series of decisions by the Hon'ble Supreme Court as well as Hon'ble High Courts expounding scope of exercising powers under section 254(2) of the Act. We do not deem it necessary to recite and recapitulate all of them, but suffice to say that core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. For fortifying this view, we make reference to the decision of the Hon'ble Supreme Court in the case of T.S. Balaram, I.T.O. vs. M/s. Volkart Brothers, Bombay, (1971) 82 ITR 50 (SC) where it has been observed and held as under: A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions.” 3. For further fortifying this view, we also make reference to the decision of the Hon'ble jurisdictional High Court in the case of ACIT Vs. Saurashtra Kutch Stock Exchange Ld., 262 ITR 146 which has been upheld by the Hon'ble Supreme Court reported in 305 ITR 227. 4. The Hon'ble Jurisdictional High Court in the case of CIT Vs. Ramesh Electric & Trading Company reported as 203 ITR 497 has held that the scope of section 254(2) is limited to rectification of mistake apparent from record itself and not rectification in error of judgment. The relevant observations of the Hon'ble High Court are as under: 3 M.A. No. 42/PUN/2022 Janta Sah. Bank Ltd. A.Y 2008-09 “The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake which the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself.” 5. We are of considered view that in the guise of rectification, the revenue is seeking review of the order of Tribunal, which is beyond the scope of powers as envisaged u/s. 254(2) of the Act. 6. In view of the above and as per the Miscellaneous Application filed before us, we do not find any mistake, much less apparent from record that warrants rectification in the order of Tribunal dated 02-02-2017. Accordingly, Miscellaneous Application filed by Revenue is dismissed being devoid of any merit. 7. In the result, Misc. Application of the Revenue is dismissed. Order pronounced in the open court on this ___ day of Feb. 2023. Sd/- sd/- (DR. DIPAK P. RIPOTE) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated, the 07 th day of February 2023. Ankam Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The CIT(A)-1, pune 4. The CIT-1 Pune 5. D.R. ITAT „B‟ Bench 5. Guard File BY ORDER, Sr. Private Secretary ITAT, Pune. /// TRUE COPY /// 4 M.A. No. 42/PUN/2022 Janta Sah. Bank Ltd. A.Y 2008-09 Date 1 Draft dictated on 03-02-2023 Sr.PS 2 Draft placed before author 03-02-2023 Sr.PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 07-02-2023 Sr.PS/PS 7 Date of uploading of order 07-02-2023 Sr.PS/PS 8 File sent to Bench Clerk 07-02-2023 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order