DCIT, CIRCLE-1, SALEM vs. THE SALEM DISTRICT CENTRAL CO-OPERATIVE BANK LTD, SALEM

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), Salem, dated 07.01.2019 and pertains to assessment year 2008-09, deleting the penalty levied under Section 271(1)(c) of the Income-tax Act, 1961 (in short 'the Act').

Shri S. Bharath, the Ld. Departmental Representative, submitted that in the return of income, the assessee has made provision for bad and doubtful debts to the extent of ₹8,74,58,000/-, however, claimed deduction under Section 36(1)(viia) of the Act for ₹19,49,35,398/-. Apart from that, according to the Ld. D.R., in respect of average advance of rural branches, 10% of such advance is admissible to the extent of ₹15,91,57,697/-. However, the assessee has claimed ₹17,44,41,400/-. Thus, the assessee has claimed excess deduction of ₹1,52,83,073/-. In view of these two claims, which is contrary to the provisions of Income- tax Act, according to the Ld. D.R., the Assessing Officer found that the assessee has concealed the income and furnished inaccurate particulars. Since the deduction under Section 36(1)(viia) of the Act is permissible only to the extent of provision made already, the excess claim cannot be allowed. Therefore, according to the Ld. D.R., the Assessing Officer found that the assessee has furnished inaccurate particulars, hence levied penalty under Section 271(1)(c) of the Act. However, the CIT(Appeals) by placing reliance on the judgment of Apex Court in CIT Vs. Reliance Petroproducts (P) Ltd. (2010) 322 ITR 158 allowed the claim of the assessee. According to the Ld. D.R., since a wrong claim was made in the return of income, the Assessing Officer has rightly levied penalty under Section 271(1)(c) of the Act.