MALWA GRAMIN BANK,PREM BASTI ROAD, SANGRUR V. DEPUTY COMMISSIONER OF INCOME TAX, AAYKAR BHAWAN, SUNAM ROAD, SANGRUR

SA 21/CHANDI/2025

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Malwa Gramin Bank filed a Stay Application against the recovery of a demand arising from a total income assessment of Rs.39,52,10,070 for the assessment year 2018-19. The Bank had paid Rs.3,12,97,658 towards this demand. The primary contention in the Stay Application was the disallowance of a deduction claim of Rs.28,28,87,000 for provisions and contingencies, which the Assessing Officer (AO) disallowed due to lack of substantiating details and non-compliance with statutory requirements under section 36(1)(viia) of the Income Tax Act. The Tribunal, after hearing the arguments, rejected the Stay Application, emphasizing the need for the assessee to substantiate its claims with adequate evidence and comply with legal provisions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714270 (ITAT-CHANDIGARH)
• Appeal Type: Stay Application
• Pronouncement Date: 04-08-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA DHAR
• Assessee Lawyers: INDERJIT ABHILASHI
• Keywords: Bad and doubtful debts; Application of stay
• Section: 143(3)

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ S.A.No. 21/CHD/2025 in ITA No. 994/CHD/2024 Ǔनधा[रण वष[ / Assessment Year: 2018-19 Malwa Gramin Bank, Prem Basti Road, Sangrur (Punjab). Vs The DCIT, Sangrur. èथायी लेखा सं./PAN NO: AAAJM0359C अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Assessee by : Shri Inderjit Abhilashi, CA Revenue by : Smt. Priyanka Dhar, Sr. DR Date of Hearing : 04.08.2025 Date of Pronouncement : 04.08.2025 HYBRID HEARING O R D E R PER RAJ PAL YADAV, VP The assessee has filed the present Stay Application seeking stay of the recovery of demand arising out of total income determined at Rs.39,52,10,070/-. The ld. counsel for the assessee has submitted that against the above demand, assessee has made payment of Rs.3,12,97,658/- upto 04.07.2025. Printed from counselvise.com SA 21/CHD/2025 in ITA 994/CHD/2024 A.Y. 2018-19 2 2. The brief facts of the case are that assessee has filed its return of income on 26.09.2018 declaring total income of Rs.9,47,42,200/-. The case of the assessee was selected for scrutiny assessment and a notice u/s 143(2) of the Act was issued and served upon the assessee. The assessee, at the relevant time was engaged in business of rural banking. It had claimed deduction of Provision and Contingencies of Rs.28,28,87,000/-. The ld. AO has confronted the assessee to explain how this claim is admissible. No reply was filed by the assessee and accordingly, AO has disallowed the claim by recording following finding : “3. Provisions and contingencies : It is seen from the assessee's P&L a/c of the year that the assessee has claimed deduction of provisions and contingencies of to 28.28,87,0007- and in the P&L a/c of the ITR the assessee has claimed deduction of said amount as Provisions for bad and doubtful debts. The assessee has been vide the questionnaire to the notice u/s. 142(') of the Act specially asked to furnish details of deductions/ claim made alongwith documentary evidences to substantiate is claim. However, the assessee has not furnished any details in respect of its claim of deduction of Provisions and Contingencies. The assessee has not furnished nature and details of its claim of Provisions of Rs.28,28,87,000/- neither has explained under which section of the Act, the claim made Is allowable. The deduction of Provisions u/s 36(1)(viia) of the Act for Scheduled Bank is allowable for 10% of average advances of Rural Branches. A Rural Branch means the place where the Brach is situated has a population less than 10,000 as per the latest census. The assessee has not furnished any details of Rural Branches, advances of such Branches or population of such place. Thus the deduction claimed by the assessee is not allowable u/s.36(1)(viia) of the Act. The details of Provisions as per Balance Sheet shows the provisions for standard assets, provisions for income tax etc. , such provisions are not allowable as deduction under the Income tax Act. In view of the above and the fact that the assessee has not furnished any details in respect of the deduction of provisions claimed, the amount of deduction of Provisions of Rs.28,28,87,0007- claimed by Printed from counselvise.com SA 21/CHD/2025 in ITA 994/CHD/2024 A.Y. 2018-19 3 the assessee is not allowable. It is seen that the deduction of provisions claimed by the assessee was disallowed in the assessment order u/s. 143(3) of the Act for AY. 2015-16 and A.Y.2017-18. Trie assessee has been provided one more opportunity vide the show cause notice dated 27.03.2021 asking to explain with documentary evidences as to why the disallowance of claim of provisions and contingencies of Rs.28,28,87,000/- should not be made. However, the assessee has not furnish any reply /detail within the stipulated time. In view of the above facts and details deduction of provisions and contingencies of Rs.28,28,87,000/- claimed by the assessee is disallowed and added back to its income.” 3. During the course of Stay Application, we have confronted the ld. counsel for the assessee to show how this provision made for Contingency is allowable. We have specifically requested the ld. counsel for the assessee to take us through any reply filed before the AO or before the First Appellate Authority but instead of taking us through any reply, he keeps on emphasizing that assessee is an Institution for public and therefore, it should not be put to such a hardship. However, we are of the view that on merit, ld. counsel for the assessee was unable to prima-facie make out a case as to how this deduction is available to the assessee. More particularly, the assessee did not file any submission before any of the authorities. Therefore, we do not find any merit in this Stay Application. It is rejected. However, Registry is directed to list this appeal for hearing Printed from counselvise.com SA 21/CHD/2025 in ITA 994/CHD/2024 A.Y. 2018-19 4 on an early date i.e. on 11.09.2025 instead of 06.10.2025 i.e. the scheduled date for this appeal. Order pronounced on 04th August,2025. Sd/- Sd/- (KRINWANT SAHAY) (RAJ PAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. Concerned CIT 4. The CIT(A) 5. DR, ITAT, Chandigarh. Assistant Registrar Printed from counselvise.com "