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2012 (9) TMI 662 - AT - Income TaxPenalty u/s. 271(1)(c) - held that:- the assessee's was well aware of the amendment to section 80P - assessee files its tax return only at ₹ 20.16 lakhs, i.e., at less than 1/3rd the income for which it pays advance-tax. - Clearly, some adjustments were made (to the book profit) either at the time of calculating and depositing advance-tax or while finalizing and filing the tax return. - a person can not take the advantage of its own wrong - penalty to be confirmed. The return of income, as it appears, was prepared merely by adopting the figure of net profit as per the profit & loss account without any adjustments. Why, even the simple exercise of examining the details of various expenses, furnished before the Assessing Officer during the course of assessment proceedings, and which would exhibit it to bear sums which are clearly not allowable; rather, do not even qualify as expenditure, was not undertaken. It is rather, as we see it, a case of gross negligence and dereliction of duty – and by more than one person, and would thus qualify to be a conscious disregard of its obligations. - Benefit of section 273B not extended - penalty confirmed. Taxability of interest 'accruing' on the non-performing asset (NPA) - whether non-recognizing interest income on NPAs by the assessee-bank following RBI guidelines, as a matter of accounting policy, would by itself constitute a valid ground for not recognizing the said income on the basis of its non-accrual; the adopted method of accounting being admittedly mercantile? - held that:- even section 43D gives primacy to the bank's accounts, so that where interest stands credited to the profit and loss account for a particular year, the same is to be treated as its income for that year even where not received. - Decided against assessee. Accrual (or otherwise) of an income (or expenditure) is matter of fact, to be decided separately for each case, on the basis of the assessment of the obtaining facts and circumstances. The same cannot be stated as an accounting policy - which by its very nature is to be applied uniformly, except where it is stated in broad terms, bearing the necessary ingredients of the qualifying criterion, i.e., existence of a reasonable certainty as to ultimate realization at the time of raising the claim or even as at the end of the accounting period. The adopted accounting policy, i.e., recognizing income on NPA accounts only subject to realization, does not serve as a valid qualifying category as there could be other mitigating factors, making it reasonable to expect realization despite the account being a NPA. Where there is a difference in the provision (for bad and doubtful debts) in accounts and that allowable or allowed u/s. 36(1)(viia), the assessee shall tabulate a parallel provision statement u/s. 36(1)(viia), annexing it as a part of its computation of income with the return of income, each year, explaining the difference/s therein with reference to its accounts. The assessee's claim qua ₹ 19.23 lacs on the basis of non-receipt of interest income, thus, stands rightly rejected by the Revenue - against assessee. The assessee would only be entitled to a 'provision for bad and doubtful debts' u/s. 36(1)(viia) qua its total advances, including interest debited to the borrower's account and, therefore, forming part of its asset base - The A.O. shall, however, while giving effect to this order, verify and allow the assessee's claim u/s. 36(1)(viia) as eligible under law, seeking the relevant, primary details from the assessee as deemed fit by him.
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