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2012 (10) TMI 252 - HC - Income TaxPenalty u/s 271(1)(c) - provisions of section 36(viia) as claimed were not applicable to assessee's case - Held that:- No dispute that the provisions of section 36(viia) were not applicable to assessee's case as the primary cooperative agricultural development bank is explicitly excluded from claiming deduction on account of provisions for NPA but as it is seen that the assessee has contended that the provisions for NPA was made as per RBI guidelines in respect of which it has become sub-standard/bad and doubtful. The NPA provision was checked and verified by the auditor before finalizing the balance sheet. It is also seen that non performing assets are classified and quantified as per guidelines of RBI by the banks in respect of cases where recovery becomes difficult. Hence, the provision for NPA is integral part of the business of banking wherein such provision more or less corresponds to the bad debts. It is also true that the assessee, being a co-operative bank is eligible to claim deduction of its entire income from the business of banking u/s 80P. Keeping in view the above facts it could be safely held that there was not a deliberate attempt to claim deduction of provision for NPA. As decided in CIT Versus RELIANCE PETROPRODUCTS FVT. LTD.[2010 (3) TMI 80 - SUPREME COURT] a mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Thus as the revenue was unable to show that the assessee had intentionally not furnished correct particulars no penalty can be levied - in favour of assessee.
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