VIJAY COMMERCIAL CO. OP. BANK LTD.,RAJKOT-GUJARAT V. THE ASSTT. COMMR. OF INCOME TAX, CIR.-2(1), RAJKOT-GUJARAT

MA 13/RJT/2024

AI Insights

The case involves Vijay Commercial Cooperative Bank Ltd., which filed two Miscellaneous Applications against the order of the Income Tax Appellate Tribunal dated 08.04.2024. The applications sought to rectify what the bank claimed was a mistake apparent from the record concerning the non-consideration of certain provisions made for Bad and Doubtful Debts (BDDR) in compliance with section 36(1)(viia) of the Income Tax Act. The Tribunal had previously partly allowed the appeals for the assessment years 2013-14 and 2014-15, but the bank contended that the deductions claimed were not fully considered. The Tribunal, after reviewing the submissions and the records, dismissed the applications, stating that there was no mistake apparent from the record and that the original order was passed after due consideration of all facts and submissions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 792953 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-09-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 20-05-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: J.R. MANKODI
• Keywords: Opportunity of being heard; Bad and doubtful debts

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER Miscellaneous Application No.13 & 16/RJT/2024 (Arising out of ITA. No.117/Rjt/2017) & (Arising out of ITA No. 90/Rjt/2020) (Asst. Year 2013-14 & 2014-15) (Physical Hearing) Vijay Commercial Co-operative Bank Ltd. General Manager, Vijay CommercialCo-op. Bank Ltd. “Vijay Bhavn”, Kanak Road, Rajkot-360001 Vs. The ACIT/DCIT Circle-2(1), Rajkot èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAAAV3799C (Appellant) (Respondent) Appellant by : Shri J.R. Mankodi, AR Respondent by : Shri Abhimanyu Singh Yadav, Sr. D.R. Date of Hearing : 04/07/2025 Date of Pronouncement : 26/09/2025 आदेश / O R D E R PER DR. A. L. SAINI, AM: By way of these captioned two Miscellaneous Applications, the assessee has sought to point out that a mistake apparent from record within the meaning of section 254(2) of the Income Tax Act, 1961 (in short ‘the Act’) has crept in the order of the Tribunal dated 08.04.2024. 2. Since the issue involved in these two Miscellaneous Applications are common and identical and relate to one assessee, therefore, these two Miscellaneous Applications, have been clubbed and heard together, and a consolidated order is being passed for the sake of convenience and brevity. The facts and grievances narrated in M.A. No.13/Rjt/2024, for Printed from counselvise.com Page | 2 M.A. No. 13 & 16-Rjt-2024 A.Y. 2013-14 & 2014-15 Vijay Commercial Cooperative Bank Ltd. the Asst. Year 2013-14, is taken as the lead case to decide these two Miscellaneous Applications. 3. The mistake apparent from record, pointed out by the assessee in these two Miscellaneous Applications, are same and identical, therefore, the contents of M.A. No.13/Rjt/2024 for the Asst. Year 2013-14 is taken as the lead case to decide these two Miscellaneous Applications, which are as follows: “The Appellant, by way of this miscellaneous application is seeking to modify/rectify the order passed by Hon ITAT, Rajkot bench on 08-04-2024 on the reasoning that there is a mistake / non-consideration of facts, apparent from record within the meaning of the provisions of section 254(2) of the Income-tax Act, 1961. The necessary facts are that, the appellant is an Urban Co-operative bank, which had claimed deduction of 8,02,677/- u/s 36(1)(viia) of the Act, but the same was disallowed by Hon ACIT/DCIT, Circle 2(1), Rajkot. Thereafter, the same order for the disallowance was upheld by Hon CIT(A), Rajkot on the ground that the Appellant has not made the provision for BDDR by debiting its Profit & Loss A/c. Appellant's contention was that, it has made total provision of 9,87,433/- and credited and held the same in Books of Accounts as per the Balance Sheet. In the order passed by Hon. ITAT, the accounting treatment of making such provision by debiting Appropriation A/c is considered as being in compliance to the provisions contained in the section 36(1)(viia) of the Act, but out of the amount of 9,87,433/-, 5 lakhs have been isolated and disallowed on the reasoning that the amount represents some other contingency provision and is not \"made \" for Doubtful Debts. As there is an identical issue as regards making/creating in the books, the provision for BDDR in appeal No: ITA/90/Rjt/2020 filed before ITAT for AY 2014-15 also, a joint order but in part for each year has been passed on the above mentioned date ISSUE IN HON. ITAT ORDER, WHICH REQUIRES RECONSIDERATION: Paragraph 9.2 on Page 4 of the order reads as: The ld AR at the time of hearing first time before us contended that there was a provision made under the profit and loss appropriation for the year under consideration amounting to 5 lakhs under the head Contingent general provision of standard assets which should be taken as provision for the purpose of calculating the deduction under section 36(1)(viia) of the Act. In this regard, we Printed from counselvise.com Page | 3 M.A. No. 13 & 16-Rjt-2024 A.Y. 2013-14 & 2014-15 Vijay Commercial Cooperative Bank Ltd. note that such provision has been created by the assesse for some contingency which was disallowed in the computation of income by the assessee itself. Therefore, we are of the view that such provision was not for the purpose of meeting the compliance of the provisions of section 36(1)(viia) of the Act. Accordingly, the deduction claimed by the assessee to the tune of 5 lakhs under the provisions of section 36(1)(viia) of the Act is denied. Hence the ground of appeal of the assessee is partly allowed. APPELLANT'S CONTENSIONS AS TO IMPROPER CONSIDERATION OF FACTS: (1) Reference is invited to Profit and Loss A/c submitted at page 76 of the Paper Book. Against the Head\" Gen. Prov. For St. Assets 5 lakhs have been debited. That provision for Bad and Doubtful Debt is required to be made at 0.25% of Standard Assets [Standard Assets are those Loans/Advances which are not NPA as on the date), so as to provide safe guard against possibility of their turning NPA in future.That kind of BDDR provision is mandatory for all the banks, as per Directives issued by the Reserve Bank of India. Thus, it is improperly considered in the order as created by the assesse for some contingency. That provision is made only for Bad And Doubtful Debts, which entry on the debit of Profit and Loss A/c meets with the pre condition for availing the deduction u/s 36(1)(viia) of the Act as insisted by Hon ACIT/DCIT in the order passed u/s 143(3). Therefore, in the first hearing before Hon ITAT, it was argued that at least, to that extent, the deduction claimed can be undisputedly allowed, because it is BDDR provision and also \"created\" by debiting the P & LA/c. Further, the same is not made under the profit and loss appropriation as stated in the order. It is actual debit to current year Profit & Loss A/c. The creation and holding in books, of that provision can be further verified from Balance Sheet given on Page 77 of the Paper Book as well as from Submission contained on Page 04 of the Paper Book. The opening balance of the amount of such provision held in books has increased from 19.13 lakhs to 24.13 lakhs. In the order passed by Hon. ITAT, a submission filed for hearing session of Partly Heard Appeal on 14-02-2023, with a view to clarifying on the issue related to \"Provision Made\" has also not been considered. It can be seen that total provision made for Bad & Doubtful Debt is 9.87 Lakhs, comprised of 5 lakhs as debit to P & LA/c itself and 4.87 by debit to appropriation of previous year profit. Thus, there was only repetition of facts stated in the Paper Book in the submission of 14-02-2023. (2) Even, in the Appellate order passed by Hon CIT(A), the issue related to 5 lakhs is not isolated and raised either way. During personal hearing, the undisputed eligibility of the appellant for availing the deduction for 5 lakhs was argued out but was also not considered by Hon CIT(A) in the final order passed. Printed from counselvise.com Page | 4 M.A. No. 13 & 16-Rjt-2024 A.Y. 2013-14 & 2014-15 Vijay Commercial Cooperative Bank Ltd. (3) Attention of your honour is invited to the order passed by Ld ACIT/DCIT Circle 2(1)...on Page 7, paragraph number 3.8, which reads as under | Paper Book Page 49]:- As already explained that there is difference between \"Provision\" and \"Reserve\" Whereas the \"Provision\" is a charge on profits, \"Reserve\" is an appropriation of the profits in the P & L Account. Reserves are he funds of the assessee they can be utilized at the whims and fancies of the assessee, however provisions are made for specific purpose they can't be diverted for any other purpose. Thus, in view of he facts and discussion above it is clear that the assessee has failed to \"made provision\" u/s 36(1)(viia) in the books for which it is claiming deduction in the computation of income. Thus the claim of deduction of Rs 8,02,677/- u/s 36(1)(vila) is hereby disallowed and added to the total income of the assessee….” Thus, the Ld AO also has not mentioned anything about 5 lakhs Thus, on one hand, Hon ITAT has rendered decision in favor of the appellant and upheld the contention of the Appellant that, as per the text of the section 36(1)(viia) of the Act, what is to be considered is \"any provision made\" and not only provision made by debiting the Profit and Loss A/c. But on the other hand, provision made by debiting Profit & Loss A/c is disallowed. Further in the ITAT order, the another reasoning for disallowance of 5 lakhs is mentioned. It states that appellant itself has disallowed 5 lakhs in the Computation of Income. It is humbly submitted that the act of offering disallowance suo moto by the appellant has no nexus to the deduction claimed. As the same is not actual expenditure but it is a Provision and therefore, Income-tax has to be calculated and paid on that part of annual net profit also. That action does not jeopardize appellant's eligibility for availing the deduction. On the contrary, considering the disallowance in the Computation coupled with the disallowance of 5 lakhs in the ITAT order amounts to duplicate punishment to the appellant. Thus it is prayed that concluding remarks in the order should be “Fully allowed” instead of partly allowed. From the above, it is our humble submission that there is mistake apparent in the Hon ITAT Order. Therefore u/s. 254(2) it is requested to kindly issue an order recalling the matter for consideration.” 4. The Ld. Counsel for the assessee submitted that in the order of the Tribunal dated 08.04.2024, wherein the Tribunal has adjudicated two appeals of the assessee, vide ITA Nos. 117/Rjt/2017 and ITA No. 90/Rjt/2020 for the Assessment Years 2013-14 & 2014-15 respectively. The Ld. Counsel for the assessee submitted before us the explanations stating the apparent mistake in the combined order of the Tribunal and for Printed from counselvise.com Page | 5 M.A. No. 13 & 16-Rjt-2024 A.Y. 2013-14 & 2014-15 Vijay Commercial Cooperative Bank Ltd. that the Ld. Counsel has filed written submission before as, pointing out apparent mistake, which are reproduced below: “AY 2013-14 EXPLANATORY NOTE In the Computation of Income, the deduction u/s 36(1) (vila) claimed is for Rs 8,02,677/-. As against that, Rs 4,87,343/- provision for BDDR has been made by appropriation of profit for the prior year FY 2011-12 and Rs 5,00,000/- provision for Bad Debts has been made as per RBI directives by debiting the P & LA/c of FY 2012-13, as minimum 0.25% of Standard Assets. Thus, in all the provision made and held in Balance Sheet is Rs 9,87,343/-, which figure is higher than the deduction claimed. Therefore, it is prayed that the deduction may be allowed as claimed. It needs to be further clarified that there is no debit to Profit and Loss A/c on account of any contingencies. AY 2014-15 EXPLANATORY NOTE In the Computation of Income, the deduction u/s 36(1) (vila) claimed is for Rs 4,99,241/. As against that, Rs 8,94,429/- provision for BDDR has been made by appropriation of profit for the prior year FY 2012-13. Thus, in all the provision made and held in Balance Sheet is Rs 8,94,429/-, which figure is higher than the deduction claimed. Therefore, it is prayed that the deduction may be allowed as claimed. 5. Therefore Ld. Counsel submitted that there is mistake apparent from record in both the appeals and hence the order of the Tribunal in ITA Nos. 117/Rjt/2017 and ITA No. 90/Rjt/2020 for the Asst. Year 2013-14 and Printed from counselvise.com Page | 6 M.A. No. 13 & 16-Rjt-2024 A.Y. 2013-14 & 2014-15 Vijay Commercial Cooperative Bank Ltd. 2014-15 vide order dated 08-04-2024, may be recalled and case may be reheard afresh, on merit. 6. On the other hand, Ld. D.R. for the Revenue submitted that there is no mistake apparent from record in the Tribunal order, as the Tribunal has passed the order, on merit, considering the submissions of the assessee and DR for the revenue. Therefore, the Tribunal cannot pass the order again on the same set of facts and circumstances, on merit. Therefore, learned DR submitted that miscellaneous application filed by the assessee should be dismissed. 7. We have heard both the parties and perused the materials available on record. We note that the Tribunal in assessee’s case in ITA No. 117/Rjt/2017 and ITA No. 90/Rjt/2020 vide order dated 08.04.2024 has passed the detailed and elaborate order, after considering the entire facts of the assessee’s case and submissions of both the parties and reached on the conclusion as follows: “9. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee has not made any provision by debiting the profit and loss account to the extent of ₹ 8,02,677.00whereas it is the requirement for the bank to do so. Therefore, we are of the view that such an amount is not eligible for deduction while calculating the income of the assessee. 9.1 However, at the juncture, it is pertinent to note that the assessee in its balance sheet has created some special bad and doubtful reserve out of the accumulated profit. The question arises whether such amount for Rs. 4,87,433.00can be considered as provision made under section 36(1)(viia) the Act. On perusal of the provisions of section 36(1)(viia) the Act, we note that there is no mandatory requirement that the same should be debited in the profit and loss account for claiming the benefit under the provisions of section 36(1)(viia) the Act. The section simply mandates to create the provision which has been done to the extent of Rs. 4,87,433 out of the accumulated profit in the year in dispute as reflected in the audited financial statements. Thus, we are of the view that such amount of ₹ Printed from counselvise.com Page | 7 M.A. No. 13 & 16-Rjt-2024 A.Y. 2013-14 & 2014-15 Vijay Commercial Cooperative Bank Ltd. 4,87,433 should be considered for the purpose of the deduction under section 36(1)(viia) of the Act. 9.2 The ld. AR at the time of hearing first time before us contended that there was a provision made under the profit and loss appropriation for the year under consideration amounting to ₹ 5 lakhs under the head Contingent general provision of standard assets which should be taken as provision for the purpose of calculating the deduction under section 36(1)(viia) the Act. In this regard, we note that such provision has been created by the assessee for some contingency which was disallowed in the computation of income by the assessee itself. Therefore, we are of the view that such provision was not for the purpose of meeting the compliance of the provisions of section 36(1)(viia) of the Act. Accordingly, the deduction claimed by the assessee to the tune of ₹ 5 lakhs under the provisions of section 36(1)(viia) the Act is denied. Hence, the ground of appeal of the assessee is partly allowed. 9.3 In the result, the appeal of the assessee is partly allowed. coming to the ITA No. 90/Rjt/2020 for the AY 2014-15, an appeal by the assessee 10. At the outset, we note that the issue raised by the assessee in the captioned appeal for the AY 2014-15 is identical to the issue raised by the assessee in ITA No. 117/Rjt/2017 for the assessment year 2013-14. Therefore, the findings given in ITA No. 117/Rjt/2017 shall also be applicable for the year under consideration i.e. assessment year 2014-15. The issue raised by the assessee for AY 2013-14 has been decided by us vide paragraph No. 9 of this order partly in favour of the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2013-14 shall also be applied for year under consideration i.e. the assessment year 2014-15. Hence, the appeal filed by the assessee is partly allowed. 10.1 In the result, the appeal of the assessee is partly allowed.11. In the combined result, both the appeals of the assessee are hereby partly allowed.” 8. We have gone through the above findings of the Tribunal, on merit, and noted that there is no mistake apparent on record. For that let us first consult the provisions of section 254(2) of the Act, which reads as follows: “Orders of Appellate Tribunal. “254. (2) The Appellate Tribunal may, at any time within [six months from the end of the month in which the order was passed], with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub- Printed from counselvise.com Page | 8 M.A. No. 13 & 16-Rjt-2024 A.Y. 2013-14 & 2014-15 Vijay Commercial Cooperative Bank Ltd. section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the [Assessing] Officer. Provided that an amendment which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this sub-section unless the Appellate Tribunal has given notice to the assessee of its intention to do so and has allowed the assessee a reasonable opportunity of being heard : [Provided further that any application filed by the assessee in this sub-section on or after the 1st day of October, 1998, shall be accompanied by a fee of fifty rupees.]” 9. Having gone through sub-section 2 of section 254 of the Act, as noted above, we observed that “any mistake apparent from the record” can be rectified. The plain meaning of the word 'apparent' is that it must be something which appears to be ex-facie and incapable of argument and debate. Thus, section 254(2) of the Act does not cover any mistake which may be discovered by a complicated process of investigation, argument or proof. Therefore, amendment of an order under section 254(2) of the Act, does not mean entire obliteration of order originally passed by the Tribunal and its substitution by a new order of Tribunal, this is not permissible under section 254(2) of the Act. Power to rectify an order, under section 254(2) of the Act is extremely limited and it does not extend to correcting errors of law, or re-appreciating factual findings. Therefore, we dismiss these Miscellaneous Applications. 10. In the result, both the Miscellaneous Applications filed by the Assessee, are dismissed. Order is pronounced in the open court on 26/09/2025 Sd/- Sd/- (DINESH MOHAN SINHA) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Rajkot िदनांक/ Date: 26/ 09/2025 Printed from counselvise.com Page | 9 M.A. No. 13 & 16-Rjt-2024 A.Y. 2013-14 & 2014-15 Vijay Commercial Cooperative Bank Ltd. Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot Printed from counselvise.com "