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TMI Blog2021 (3) TMI 1357X X X X Extracts X X X X X X X X Extracts X X X X ..... was no failure on the part of appellant to fully and truly disclose all information required for completion of assessment. Recovery in respect of rural bad debts written off 2.1 The CIT(A) erred in holding that recovery from bad debts written off in respect of rural branches is chargeable to tax even when the bad debt written off was not allowed as deduction on the ground that deduction u/s 36(1)(viia) is allowed without appreciating that the bad debts written off is already reduced from the said provision instead of being claimed as deduction and taxing the recovery would amount to taxing the amount twice. Disallowance u/s 40 (a)(ia) 3.1 The CIT(A) erred in confirming the disallowance u/s 40(a)(ia) without appreciating that TDS is automatically deducted by system and unless there were specific reasons such as exemption certificate etc., question of non-deduction will not arise and the evidence to satisfaction of AO could not be given within a short period due to considerable lapse of time of more than 8 years. 1.3 The grounds raised by the revenue read as under :- 1. Whether, on the facts and in the circumstances of the case and in law, the ld. Commissioner of Income t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts written-off of rural branches. The reasoning was that bad debts written-off relating to rural branches were not claimed as deduction in the earlier years since the credit balance in the provision for bad and doubtful debts relating to rural branches had always been more than the bad debts written off relating to rural branches. The recovery made during the year in respect of bad debts written-off would be taxable u/s 41(4) only if a deduction was allowed u/s 36(1)(vii). Where no deduction was allowed u/s 36(1)(vii) in respect of bad debts written off, the question of taxing the recoveries made during the years in respect of such writeoff will not arise. Since the recovery so made during the year was credited in Profit & Loss Account, it was claimed as deduction in the statement of total income. However, observing that assessee being a bank, 10% of aggregate average advances made by rural branches of such bank would be allowed as deduction every year under specific provisions of Sec.36(1)(viia) towards provision for bad and doubtful debts and thereby a reserve is created to set-off the bad debts in respect of rural branches. Wherever there is bad debts and written-off, it wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opened and examined in AY 2009-10 and disallowance was made u/s 40(a)(ia). Thus, it was a clear case of receipt of tangible information which established that there was failure on the part of assessee to make true and full disclosure of all material facts necessary for assessment. Once reopening was done on a valid ground, other issues which show underassessment or escapement of income could also be considered by Ld. AO and therefore the other grounds of reopening the case, as recorded in the reasons, were also held to be valid. Before us, the Ld. AR has also raised similar grounds and challenged the validity of jurisdiction acquired by Ld. AO for reopening the case. It has been submitted that the assessment was opened after 4 years from the end of relevant assessment year and there was no failure on the part of the assessee to fully and truly disclose all information required for completion of assessment. However, we find that TDS survey carried out by the department against the assessee was subsequent development. The survey findings revealed certain TDS default on the part of the assessee which would require disallowance u/s 40(a)(ia). At the stage of formation of belief, noth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & 4563/Mum/2016 in recent order dated 03/02/2020 wherein the matter was decided in assessee's favor subject to certain verification of by Ld. AO. The adjudication of coordinate bench read as under: - 90. We noted from the above arguments of both the sides and case law cited by the parties, that the issue is squarely covered by a decision of the Bangalore Bench of the Tribunal in the case of State Bank of Mysore Vs. DCIT [2009] 33 SOT 7 (Bangalore), now merged with assessee. We noted that the Tribunal in the case of State Bank of Mysore (supra) narrated the facts and the facts in the present case are exactly the same as in the case of State Bank of Mysore. In the case of State Bank of Mysore (supra), the assessee had claimed deduction under section 36(1)(viia) of the Act and not under section 36(1)(vii) of the Act. Accordingly, the Bangalore Tribunal has held that section 41(4) of the Act cannot be invoked. Sections 41(1), 41(2), 41(3) and 41(4) of the Act operate in different spheres. Each of the sub-sections to section 41 of the Act deals with different and distinct circumstances. Each of the sub-sections deals with different and distinct topics and one cannot read recoupment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Ld. CIT(A) since the assessee was not able to explain the reason for non-deduction of tax at source with proper evidences. Aggrieved, the assessee is in further appeal before us by way of ground no. 3. It has been submitted before us that evidence to the satisfaction of Ld. AO for reasons of non-deduction tax such as Form 15G/15H etc. could not be furnished since considerable period of time had lapsed. The Ld. AR submitted that tax was automatically deducted by the systems and hence the chances of non-deduction without adequate reasons were remote. Upon due consideration of factual matrix, the bench deem it fit to grant another opportunity to the assessee to furnish requisite evidences before Ld. AO in support of non-deduction of tax at source or alternatively prove applicability of second proviso to Sec. 40(a)(ia). This ground stand allowed for statistical purposes. 9. The sole subject matter of revenue's appeal is applicability of Sec.115JB to the assessee Bank for the year under consideration. Regarding adjustment of Book Profits u/s 115JB, relying upon Tribunal decision in assessee's own case for AY 2007-08 as well as in AY 2010- 11, Ld. CIT(A) held that the provisions o ..... 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