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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
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, 1961. The assessee has raised the following grounds of appeal:
“1. Condonation of delay in submission of appeal against the Order U/s. 250 and 143 (3) of the Income Tax Act, 1961. M/s The Sahebrao Deshmukh Co-op Bank Ltd, Mumbai 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 Income 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 30th September 2020 by the Maharashtra Govt. of India Therefore, there is delay in filling the appeal before Honourable I.T.A.T and it is hereby prayed to allow the condonation of delay for filling appeal before Honourable I.T.A.T.
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 and 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 claim. The appellant has filed Revised Return of Income executed on 01/09/2017 and submitted on 12/10/2017 during the assessment proceedings which is well within the time 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.
PRAYERS
(i) On the facts and circumstances of the case the appellant submits that the order passed by the Learned Assessing Officer is bad in law as the said order is passed against the M/s The Sahebrao Deshmukh Co-op Bank Ltd, Mumbai 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 that 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 national wide lockdown was declared due to Covid on 23.03.2020 and was further extended by the Govt of Maharashtra till 2nd week of Sep 2020. Therefore, the assessee could file 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 is admitted.
3. The Brief facts of the case are that, the assessee is engaged in the banking business in Maharashtra state. The assessee has filed the Return of income electronically on 24.09.2015 for the A.Y 2014-15 with a total income of Rs.4,17,14,760/-. Subsequently, the case was selected for limited scrutiny under CASS. The Assessing Officer (A.O.) has issued the notice u/s 143(2) and 142(1) of the Act M/s The Sahebrao Deshmukh Co-op Bank Ltd, Mumbai along with questionnaire. In compliance, the Ld. AR of the assessee has furnished the details and appeared 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 assessee 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 income. The assessee has explained the reasons and the basis of deduction claimed @ 7.5% of the total income allowable u/s 36(1)(viia) of the Act. The contentions of the assessee that the amount of deduction in respect of bad debts actually written off u/s 36(1)(vii) of the Act shall be limited to the amount by which such bad debts exceeds the credit balance in the provision for bad and doubtful accounts made u/s 36(1)(viia) of the Act without any distinction between rural advances and other advances. The A.O has dealt on the submissions of the assessee dated 12.12.2017 and observed that the claim of the assessee cannot be accepted. The provisions of section 36(1)(vii) and U/sec 36(1)(vii)(a) of the Act are distinct and independent items of deduction therefore deduction u/s 36(1)(vii) of the Act is allowable subject to provision M/s The Sahebrao Deshmukh Co-op Bank Ltd, Mumbai u/s 36(2) of the Act and the mere provision for bad and doubtful debts is not allowable as a deduction in the 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 extra deduction of bad debts written off to the extent of Rs. 13,01,70,364/-. Whereas the assessee has not claimed this deduction in the original return of income.The assessee has not filed the return of income within the time allowed as per provisions of Sec. 139(5) of the Act. The A.O found that the assessee has not filed the revised return before 31.03.2017 and therefore the claim was denied. Finally, the A.O. has disallowed the provision of Bad Debts of Rs. 34,04,707/- and assessed the total income of Rs. 4,51,19,467/- and passed the order u/s 143(3) of the Act dated 14.12.2017.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas, the CIT(A) dealt 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 filing of Revised return of income. The CIT(A) has distinguished M/s The Sahebrao Deshmukh Co-op Bank Ltd, Mumbai the decisions and confirmed the action of the A.O on this disputed issue. In respect of the other grounds of appeal, the CIT(A) has granted relief to the assessee and partly allowed the assessee appeal. Aggrieved by the CIT(A)order, the assessee has filed an appeal before the Hon’ble Tribunal.
6. At the time of hearing, the Ld. AR submitted that the assessee has filed the revised of income and complied with the directions but the A.O has observed that the claim cannot be allowed as the revised return was filed after the 31.03.2017. The Ld.AR submitted that the additional claim of bad debts was not claimed in the original return of income and the facts & figures of the claim are genuine and relied on the judicial decisions and prayed for allowing the appeal. Contra, the Ld. DR has relied on the orders of the CIT(A).
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 was not claimed in the original return of income and but in scrutiny Assesseement proceedings, a revised computation of income and the revised return of M/s The Sahebrao Deshmukh Co-op Bank Ltd, Mumbai income was filed. But the said claim was rejected by 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 and in the assessment proceedings, the assessee has filed revised computation of income/ revised return of income with the Claim. But the assessing officer has rejected the claim and observed that the assessee should have filed the revised return of income before 31-03-2017. We find the submissions of the Ld.AR are realistic and the A.O. has not doubted the claim but rejected only on the ground of non filling of revised return of income within the time limit. We consider the overall facts, circumstances and the judicial decisions are of the opinion that, the assessee should not be deprived its legitimate right to claim additional claim of Bad Debts Written off which is not fictitious. We considering the principles of natural justice and the judicial decisions admit the claim of the assessee and restore the disputed issue to the file of Assessing Officer for limited purpose to examine and verify the claim and adjudicate on merits. The assessee should be provided adequate opportunity of hearing and shall M/s The Sahebrao Deshmukh Co-op Bank Ltd, Mumbai cooperate in submitting the information and allow the grounds of appeal for statistical purpose.
In the result, the assessee’s appeal is allowed for statistical purposes.