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Income Tax Appellate Tribunal, “D” BENCH,
Before: SHRI DT GARASIA, JM & SHRI RAJESH KUMAR, AM
O R D E R PER D. T. GARASIA, JM:
The captioned appeal by the Revenue is directed against the order of the CIT(A)-03, Mumbai dated 23/02/2015, pertaining to the Assessment Year 2010-11, which in turn has arisen from the order passed by the Assessing ACIT Circle-4 dated 27/09/2013 under section 271(1)(c) of the Income Tax Act, 1961 (in short ‘the Act’).
2 Vasai Vikas Sahakari Bank The only ground in this appeal reads as under: 1. On the facts and in the circumstances of the case, the Ld. CIT (A)-3, Thane has erred in deleting the penalty u/s 271(1)(c) of the I. T. Act, 1961 without appreciating the fact that the assessee bank has claimed deduction u/s 36(1)(viia) of the I. T. Act, 1961 without making any provision thereof or debiting the same to the Profit and loss account thereby deliberately making an incorrect, erroneous and false claim of expenditure.
The short facts of the case are as under: 2. The assessee is engaged in banking business. The return declaring an income of Rs.7,43,05,290/- was filed on 13/10/2010. The assessment was completed u/s 143(3) of the I.T. Act, 1961, determining total income at Rs.8,04,32,340/- vide order dated 26/03/2013. During the course of assessment proceedings, on going through the books of accounts, the AO noticed that the assessee had not made any provision for bad and doubtful debts. In fact, against the item Other Provisions (a) Bad and Doubtful debt Reserves, the assessee had debited the amount as Rs.0 in the year under consideration as against Rs.1,25,00,000/- in the previous year. However, in computation of income, the assessee had claimed deduction of Rs.60,24,753/- u/s 36(1)(viia). The A.O., therefore, concluded that since the assessee has not made any provision under the head ‘Bad and doubtful debt’ as per the provision of Section 36(1)(viia) of the Act, during the year, hence, he disallowed the claim of Rs.60,24,753/- made in the computation of income. The AO levied the penalty u/s 271(1)(c) of the Income Tax Act, 1961 and show cause notice was issued the assessee has submitted that the assessee has not furnished inaccurate particulars of income signified a deliberate act or omission on any particulars of income he relied 3 Vasai Vikas Sahakari Bank upon the decision of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproduct in this regard 322 ITR 158 (SC).
The Assessing Officer was not convinced and levied the penalty. Matter carried to CIT(A) and CIT(A)has deleted the penalty by observing as under:- “6.1. Considering the facts in entirety and above case laws, in my considered opinion, this is not a fit case for levy of penalty u/s 271(1)(c) of the I.T. Act, 1961. The appellant has, merely failed to provide the provisions for bad and doubtful debts, though the provisions made as per RBI guidelines, in the earlier year, was in excess. The appellant has directly claimed the deduction in the computation of income instead of providing the same in the books for debiting in the profit & loss account, as per provision of the Act. The appellant, therefore, neither concealed any income nor filed any inaccurate particulars of income. The appellant had duly disclosed the facts of income in its return of income filed before the Department. In view of these facts, penalty of Rs.18,61,650/- imposed u/s 271(1)(c) of the I.T. Act, 1961, is hereby deleted.’’ 4. We have heard the rival contention of both the parties. We find that the assessee has merely failed to provide the provision in bad debt and doubtful debt though the provision is made as per RBI guidelines in the earlier was excess. The assessee has directly claimed the deduction in computation of income instead of providing same in the books for debting in the P & L account as per the provisions of the Act. Therefore, the assessee had neither concealed nor filed any inaccurate particulars of income. The assessee has duly disclosed the facts of income in its return of income filed before the department. Therefore, we are of the view that the issue in controversy is covered by the 4 Vasai Vikas Sahakari Bank ITA No. 2869/M/2017 decision of Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproduct(supra) wherein it is held that a mere making claim which is not sustainable in law will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in return cannot amount to inaccurate particular and no penalty u/s 271(1)(c) can be imposed. We respectively following the same, we confirm the action of CIT(A). In the result Departmental appeal is dismissed. Judgement pronounced in the open court on 22nd March, 2017. sd/- sd/- (RAJESH KUMAR) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 22nd March, 2017 *Rahul Sharma* Copy to : 1) The Appellant 2) The Respondent 3) The CIT(A) concerned 4) The CIT concerned 5) The D.R, “D” Bench, Mumbai 6) Guard file