THE DAKSHIN DINAJPUR DISTRICT CENTRAL COOPERATIVE BANK LTD.,,BALURGHAT vs. ACIT, CIRCLE 3(2),, MALDA

Per Rajesh Kumar, AM:

These are appeals preferred by the assessee against the orders of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 17.07.2025, 21.07.2025, 24.07.2025 for the AY 2012-13 to 2014-15

A.Y. 2012-13 ITA No. 2187/KOL/2025 2. The issue raised in ground no.1 is general in nature and needs no adjudication.

3.1. The facts in brief are that the ld. AO observed from the Profit and Loss account that the assessee has debited under the head miscellaneous expenses under the head other expenses schedule 19 a sum of ₹17,18,192/-. The assessee submitted before the ld. AO that these are the composite expenses of 7 branches of the bank to meet the day-to-day expenses. The assessee also furnished few bills, however, the ld. AO noted that such expenses are represented by self- made vouchers and therefore, not verifiable and were internally maintained by the assessee and thus, to block the leakage of Revenue made adhoc disallowance of 10% of the total expenses.

3.2. In the appellate proceedings, the ld. CIT (A) confirmed the disallowance by observing that since, the assessee has failed to establish the genuineness of the expenses before the ld. AO and before the appellate authority and there was also no explanation apart from furnishing the debit vouchers self-generated for meeting the day-to- day expenses of the bank, therefore the ld. CIT (A) justified the disallowance of expenses.

3.3. After hearing the rival contentions and perusing the materials available on record, we find that the authorities below have disallowed the expenses on the ground that these are the petty expenses incurred by the branches to meet the day-to-day expenses for which there were no proper evidences . Therefore, the genuineness of which could not be established. In our opinion, the authorities below have failed to give any plausible and reasonable findings as to how these were non- genuine. In our opinion, the disallowance of expenses merely on presumption and surmises at the rate of 10% of the said expenses

4.1. The facts in brief are that the ld. AO upon examination of the Profit and Loss account observed that the assessee has debited ₹2,72,91,922/- on account of provisions for NPA under the head “other expenses”. Accordingly, the ld. AO asked the assessee to explain the same. The assessee submitted before the ld. AO that the basis of claiming NPA provisions was n accordance with guidelines and norms framed by the RBI applicable to all banks and making the strict compliance to the same. The assessee also furnished before the ld. AO the details of NPA Provisions along with NPA statement, annexed in the balance sheet. The ld. AO noted therefrom that the assessee created the provisions against NPA and such provisions cannot be debited to the Profit and Loss account and accordingly, a show cause notice was given. The assessee replied the said show cause notice which is extracted by the ld. AO at page no.3,4,5 and 6 of the

4.2. In the appellate proceedings, the ld. CIT (A) affirmed the same.

4.3. After hearing the rival contentions and perusing the materials available on record, we find that u/s 36(1)(viia) of the Act, it has been specifically provided in respect of provisions for bad and doubtful debts created interalia by co-operative banks that all amount not exceeding 7.50% of the total income computed before any deduction under these clauses and chapter VIA, an amount not exceeding 4% of aggregated advances made by the rural branches of such bank computed in the prescribed manner. We have also perused the provisions of Section 36(1)(vii) of the Act, which provides for allowing the amount of any bad debt or a part thereof which is written off as irrecoverable in the account of the assessee. We observe that both these deductions are independent of each other. We note that Section 36(1)(vii) of the Act deals with the writing off bad debts whereas the section 36(1)(viia) deals with creation of provisions for bad and doubtful debts based upon the non-performing assets of the bank, which is in accordance with the guidelines issued by the Reserve Bank of India and NABARD. Therefore, considering these provisions of these se3ctions , we are of the view that the assessee is entitled to deduction u/s 36(1)(viia) of the Act. The case of the assessee is squarely covered by the decision of Hon'ble Apex Court in the case of Catholic Syrian Bank Ltd. Vs CIT (2012)343 ITR 270(SC). We note that the decision relied by the ld. AO in case of Southern Technologies Ltd. vs. Joint Commissioner of Income-tax, Coimbatore [2010] 187 Taxman 346 (SC)/[2010] 320 ITR 577 (SC)/[2010] 228 CTR 440 (SC)[11-01-2010]

A.Ys. 2013-14 & 2014-15 ITA Nos. 2188 & 2189/KOL/2025 5. The issues raised in these appeals are similar to ones as decided by us in ITA No. 2187/KOL/2025. Accordingly, our decision would, mutatis mutandis, apply to these appeals of assessee in ITA No. 2188 & 2198/KOL/2025 as well. Hence, the appeals of assessee are allowed.

Order pronounced in the open court on 10.02.2026.

Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 10.02.2026 Sudip Sarkar, Sr.PS

Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT DR, ITAT, 4. 5. Guard file. BY ORDER, True Copy//

Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata