MAHARASHTRA GRAMIN BANK,,AURANGABAD vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE - 2,, AURANGABAD

आदेश / ORDER PER R.S.SYAL, VP :

These two appeals filed by the assessee - one emanating from the assessment order and the other from the penalty u/s. 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) - relate to the assessment year 2015-16.

2 ITA Nos.1803 & 1804/PUN/2018 Maharashtra Gramin Bank

alia, claiming deduction u/s. 36(1)(viia) of the Act amounting to

Rs.122,56,95,246/-. During the course of assessment proceedings,

the assessee filed a revised return reducing its amount of deduction

u/s.36(1)(viia) to Rs.25,21,93,0828/-, being the amount of

provision for bad and doubtful debts as per the books of 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 originally

claimed by the assessee in the return of income but given up in the

revised return. The ld. CIT(A) echoed the view point of the

Assessing Officer, against which the assessee has come up in

appeal before the Tribunal.

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 whether the

revised return is accepted or not, the computation of total income

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 have

3 ITA Nos.1803 & 1804/PUN/2018 Maharashtra Gramin Bank

been enhanced to the originally claimed amount of Rs.122.56 crore

instead of the revised downsized amount of deduction at Rs.25.21

crore. In view of this, it is held that the appeal of the assessee is

merely academic in nature in so far as the computation of total

income is concerned.

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 only.

In this regard, it is relevant to note that the Assessing Officer has

extracted the statement of Chairman of the assessee recorded 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 aggregate

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.122,56,95,246/-

against the provision for bad and doubtful debts against NPA

4 ITA Nos.1803 & 1804/PUN/2018 Maharashtra Gramin Bank

advances while filing our income tax return”. He further stated

that actual provision for bad and doubtful debts made in the books

of account was only to the tune of Rs.25.21 crore. He still further

explained that “at the time of filing of income-tax return, there

were thoughts before the bank to claim the deduction to the extent

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 within the

permissible maximum limit of this section. The matters in appeal

before the respective appellate authorities are pending for final

decisions”. He further submitted that some of the Benches of 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 of 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 Central

Statutory Auditors. This practice was being followed by the other

assessees similarly placed. It was only later on that when the view

was canvassed against the banks in similar situation that the

assessee came out by a filing revised return reducing the claim of

5 ITA Nos.1803 & 1804/PUN/2018 Maharashtra Gramin Bank

deduction to the actual amount of provision created in the books 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 income.

The actual amount of provision was available before the Assessing

Officer in the Profit and loss account attached along with the return

and the amount of deduction u/s.36(1)(viia) was equally available

as per the Computation of income. If the intention had been to

defraud the Revenue by claiming excess deduction, the assessee

could have wrongly increased the amount of provision in its Profit

and loss account as well, which it did not. Having declared the

figures correctly proves the bona fides of the assessee.

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 which

are not found to be inaccurate. There is no dearth of decisions

holding that penalty under section 271(1)(c) cannot be imposed on

6 ITA Nos.1803 & 1804/PUN/2018 Maharashtra Gramin Bank

disallowance of expenses, which were not otherwise bogus. We,

therefore, set aside the impugned order and direct to delete the

penalty.

dismissed as academic.

Order pronounced in the Open Court on 29th April, 2019.

Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT

पुणे Pune; �दनांक Dated : 29th April, 2019 सतीश

आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत

अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The CIT(A)-2, Aurangabad 4. The Pr.CIT-2, Aurangabad िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 5. “बी” / DR ‘B’, ITAT, Pune; गाड� फाईल / Guard file. / True copy // 6.

आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार

// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

ITA Nos.1803 & 1804/PUN/2018 Maharashtra Gramin Bank

Date 1. Draft dictated on 29-04-2019 Sr.PS 2. Draft placed before author 29-04-2019 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/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.

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