TMI Blog2017 (3) TMI 1385X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 4,20,47,179/- placed with Madhavpura Mercantile Co-op Bank Limited which included the impugned amount. Assessee’s explanation that the amount was kept intact in the books is quite reasonable and bonafied considering the overall facts. At best, this can be said to be a claim not sustainable in law. However, that automatically does not lead to levy of penalty. - Decided in favour of assessee Disallowance of Reserve for schedule assets - Held that:- The assessee’s claim was based on RBI’s directive, however, admittedly RBI’s directive do not govern the provisions of Income Tax Act. The Ld.CIT(A) has also pointed out that in the case of Southern Technologies Ltd. Vs. JCIT [2010 (1) TMI 5 - SUPREME COURT OF INDIA ], the Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lized u/s.143(3) by making the following additions as under: 1. Disallowance of bad debts provision for matured investments return from MMCO FDI. 2. Disallowance of Reserve for schedule assets ₹ 4,10,000/- The Assessing Officer further observed as under: In respect of the earlier A. Y. 2009-10, the appeal of the assessee filed before the Ld. CIT(A) was dismissed vide order No. CIT(A)/Jam/230/2011-12 dated 24/04/2012 chiefly on the basis of an application dated 24/04/2012 filed by the assessee for withdrawal of the appeal. In the said application, the assessee cited the following reasons for seeking withdrawal of the appeal: (i) Ground No. 1 of appeal is against disallowance of bad debts claimed by the assessee of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for income accrual and prudential norms. It has further been advised to the bank that norms for provisioning are prescribed by the Reserve Bank of India and they are not applicable under the Income Tax Act. And there is no deduction available of this amount under the Income Tax Act. In view of above, the appellant has decided to not to contest this appeal. 4. In view of the above mentioned facts proceedings u/s.263 were initiated for A.Y. 2008-09 and, accordingly, an addition of ₹ 30,89,180/- was made in respect of matured investments which were not written off in the books of account and deduction of ₹ 2,00,000/- was denied in regard to amount debited in profit and loss account Reserve for Standard Assets. The pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercantile Co-op. Bank became bankrupt, therefore, assessee had written off the amounts but in order to keep the balance intact it was shown in the Memoranda accounts. He submitted that claim was actually allowable, in view of the decision of Hon'ble Supreme Court in case of Vijaya Bank. 8. The Ld.Counsel further submitted that, in any case, penalty is not leviable in view of the decision of the Hon'ble Gujarat High Court in the case of Sambhav Media Ltd., 33 taxmann.com 97 (Gujarat) and the decision of Hon'ble Supreme Court in the case of CIT Vs. Reliance Petroproducts Pvt. Ltd., 322 ITR 158 (SC) because assessee had disclosed all relevant facts before the Assessing Officer at the time of filing of return of income. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd disallowance of ₹ 2,00,000/- on account of reserve on standard asset is concerned, the same was claimed based on RBI s directive. This addition was also made because the assessee had proposed for revisionary action u/s 263. The assessee s claim was based on RBI s directive, however, admittedly RBI s directive do not govern the provisions of Income Tax Act. The Ld.CIT(A) has also pointed out that in the case of Southern Technologies Ltd. Vs. JCIT in Civil Appeal No. 1337/2003 dated 11.1.2010, the Hon'ble Supreme Court has also upheld this view. He further pointed out that the return of income was filed by assessee on 39.9.2008 and the issue got settled on 11.01.2010. Thus, prior to this date the issue was highly debatable. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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