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.

We heard Shri T. Vasudevan, the Ld.counsel for the assessee also. It is not in dispute that the assessee has furnished entire details of provisions for bad and doubtful debts and average advance of rural branches and also made claim under Section 36(1)(viia) of the Act. The figures with regard to provision made for bad and doubtful debts in the Profit & Loss account and average advance of rural branches are very much available in the material filed along with the return of income. The assessee has claimed the statutory deduction. The question arises for consideration is after furnishing entire details before the Assessing Officer, whether making the statutory claim as provided under Section 36(1)(viia) of the Act amounts to furnishing inaccurate particulars of income or concealing any part of income? This Tribunal is of the considered opinion that after furnishing entire factual details with regard to provision for bad and doubtful debts and the average advance of rural branches, making claim under Section 36(1)(viia) of the Act does not amount to concealing any particulars of income or furnishing inaccurate particulars. Therefore, the CIT(Appeals) has rightly deleted the penalty levied by the Assessing Officer by placing reliance on the judgment of Apex Court in Reliance Petroproducts (P) Ltd. (supra). This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, the appeal filed by the Revenue stands dismissed.