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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: HON’BLE SHRI SANDEEP GOSAIN, JM &
ORDER PER: SANDEEP GOSAIN, J.M. This appeal by the assessee is directed against the order dated 04.08.2023 of ld. CIT (A), National Faceless Appeal Centre (NFAC), Delhi passed under section 250 of the IT Act, 1961 for the assessment year 2013-14. The assessee has raised the following grounds :-
1. Whether on the facts and circumstances of the case, the learned CIT (A), NFAC, Delhi was justified in deleting the addition of Rs. 6,97,23,892/- was made on account of wrong provision of bad and doubtful debts.
The appellant craves to add, amend, alter, delete or liberty to raise additional ground and to modify/amend the ground of appeal at the time of hearing.
2. The brief facts of the case are that the assessee is a primary Co-operative Society/Rural Development Bank and filed its original return of income for the AY 2013-14 on 30.09.2013 declaring total income of Rs. Nil, which was processed under section 143(1) of the IT Act by CPC. The case of the assessee was selected for scrutiny through CASS. Notice under section 143(2) of the IT Act was issued on 01.09.2014 which was duly served on the assessee on 04.09.2014 and in compliance to the notice the assessee appeared on 15.09.2014 before the AO. Subsequently, notices under section 142(1) were issued on 16.06.2015 and 02.11.2015 along with questionnaire. In response to the said notices, assessee appeared from time to time and submitted copy of return, computation, audit report with P & L a/c and balance sheet etc. which were checked and placed on record. 2.1 On perusal of documents furnished by the assessee, the AO found that the assessee in its return of income has shown current year losses of Rs. 5,80,42,890/- which is shown after claiming provision for B.D. Debts of Rs. 7,06,71,000/- out of which provision for bad & doubtful debts of Rs. 3,47,17,040/- & Rs. 3,59,54,000/- provision for Doubtful Interest subvention in the P & L account. Accordingly, the AO issued show cause vide order sheet entry dated 26.02.2016 asking the assessee as to why the claim of provision for bad & doubtful debts & interest subvention against business income should not be disallowed. In compliance the assessee replied that “In this regards assessee most respectfully submits that the assessee made provision for bad & doubtful debts & Interest subvention as per guidelines issued by the NABARD letter dt. 24.05.2013.” The AO considered the reply of the assessee but could not found it acceptable, accordingly he completed the assessment vide his order dated 17.03.2016 by making an addition of Rs. 6,97,23,892/- on account of wrong provision of bad and doubtful debts. Aggrieved by the assessment order, the assessee preferred appeal before the ld. CIT (A). The learned CIT (Appeals) after going through the assessment order and considering the submission of the assessee allowed the appeal of the assessee. Now the revenue is in appeal before us.
3. Before us, the ld. A/R of the assessee reiterated the submission as made before the ld. CIT (A) as under :- “ The appellant is a primary co-operative agricultural and rural development bank derives income from banking business and providing credit facilities to its members. The assesee is eligible for deduction u/s 80P and it is confirmed in the order of the Honourable Income Tax Appellate Tribunal, Jaipur vide the appeal no. 650/JP/2016. In assessment order the learned officer disallowed provision for bad and doubtful debts of Rs. 7,06,71,000/- which is more than the actual provision made in this year i.e. Rs. 5,75,79,000/- (bad and doubtful debts Rs. 3,47,17,000 + bad and doubtful interest Rs. 2,28,62,000/-). The Primary Co-operative Agricultural and rural Development Banks are eligible for deduction either in Section 36(1)(viia) or in Section 80P in both cases demand will be nil. Moreover the AO assessed income considering the original return of income whereas the appellant filed revised return of income.”
On the other hand, the ld. D/R supported the order of the A.O.
We have heard the rival contentions, perused the material on record and gone through the orders of the revenue authorities. At the outset, we find that the ld. CIT (Appeals) allowed the appeal of the assessee by observing in para 4.2.1 as under : “ 4.2.1 In this ground, the main contention of the appellant is that the learned AO has not considered the revised return of income filed while determining the taxable income in the impugned order. It is seen that the appellant has filed a revised return on 09.12.2013 which is before issue of first notice u/s 143(2) of the Act dated 01.09.2014. As per this, the loss from the business or profession is Rs. 24,17,698/-, against loss of Rs. 5,80,42,890/- in the original return of income. It is seen from the revised return of income that the appellant has already disallowed the provision for bad and doubtful debts and interest of Rs. 5,75,79,000/-. As the appellant itself has already disallowed the provision in the revised return of income, there is no need of any further addition on this ground. It is also seen from the assessment order that the AO has taken the provision for bad and doubtful debts to be Rs. 7,06,71,000/-. The profit and loss account was perused as it was seen that the ld. AO has taken the gross figure of provision instead of taking the net provision of Rs. 5,75,79,000/-. The provision that has been debited in the P & L A/c is Rs. 5,75,79,000/- and the appellant has disallowed it in the revised return of income. Therefore, the addition done by the AO is deleted and the appeal is allowed on this ground.”
In the totality of facts and circumstances of the case as narrated herein above, we find that the ld. CIT (A) after considering the revised return of the assessee filed on 09.12.2013 which is before issue of first notice under section 143(2) of the Act dated 01.09.2014 deleted the addition. On perusal of the assessment order, it is noted that the assessment order is silent in respect of the revised return filed on 09.12.2013 and thus the AO failed to consider the same. We, therefore, find no infirmity in the order of the ld. CIT (A) and the same is upheld.
In the result, this appeal of the revenue is dismissed. Order pronounced in the open court on 19/12/2023.