Income Tax Appellate Tribunal - Hyderabad
Acit, Circle-1, Kadapa, Kadapa vs Andhra Pragathi Grameena Bank, Kadapa, ... on 10 February, 2017
ITA Nos 1050 1051 and CO 62 and 63 of 2016
Andhra Pragathi Grameena Bank Kadapa
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ' B ' Bench, Hyderabad
Before Smt. P. Madhavi Devi, Judicial Member
AND
Shri Inturi Rama Rao, Accountant Member
ITA Nos.1050 & 1051/Hyd/2016
(Assessment Years: 2009-10 & 2012-13)
Asstt. Commissioner of Vs Andhra Pragathi Grameena
Income Tax, Circle -1 Bank, Kadapa
Kadapa PAN: AAMFA 8921 A
C.O Nos.62 & 63/Hyd/2016
(Arising out of ITA Nos.1050 & 1051/Hyd/2016)
(Assessment Years: 2009-10 & 2012-13)
Andhra Pragathi Vs Asstt. Commissioner of
Grameena Bank, Income Tax, Circle -1
Kadapa Kadapa
PAN: AAMFA 8921 A
For Revenue : Smt. U.Mini Chandra, DR
For Assessee : None
Date of Hearing: 07.02.2017
Date of Pronouncement: 10.02.2017
ORDER
Per Bench:
The appeals are filed by the Revenue, while the Cross Objections are filed by the assessee for the respective A.Ys. In the Revenue's appeals, the Department is aggrieved by the order of the CIT (A) in cancelling the penalty levied u/s 271(1)(c) of the Act for the respective A.Ys.Page 1 of 4
ITA Nos 1050 1051 and CO 62 and 63 of 2016 Andhra Pragathi Grameena Bank Kadapa
2. Brief facts of the case for the A.Y 2009-10 are that the assessee-bank has e-filed its return of income for the A.Y 2009-10 on 24.09.2009 and thereafter filed a revised return of income on 3.3.2010 admitting a total income of Rs.78,40,32,185 after claiming deduction u/s 36(1)(viia) of the I.T. Act, 1961. The assessment proceedings u/s 143(3) were completed on 23.12.2011. Subsequently, it was noticed that the assessee has computed provision for bad and doubtful debts @10% as per section 36(1)(viia) which includes the provisions made towards bad and doubtful debts in respect of the rural branches. The AO observed that this claim includes advances made by six rural branches. He observed that the places where those branches are located are having population of more than ten thousand and therefore, they cannot be considered as 'rural branches' as per the explanation (ia) to section 36(1)(viia) of the Act. Therefore, he was of the opinion that the said deduction needs to be disallowed and has thus escaped the assessment.
3. Therefore, a notice u/s 148, dated 29.10.2013 was issued to the assessee. During the re-assessment proceedings, the assessee appeared through its representative and agreed for the disallowance of Rs.4,01,58,115. Accordingly, the same was brought to tax. Subsequently, the AO initiated penalty proceedings u/s 271(1)(c) of the Act. The assessee explained that the claim of deduction u/s 36(1)(viia) with regard to the six rural branches was made on the basis of the information collected from the respective village heads regarding the population but as soon as the assessee has realized its mistake, it has accepted for the disallowance and therefore, penalty may not be levied. AO, Page 2 of 4 ITA Nos 1050 1051 and CO 62 and 63 of 2016 Andhra Pragathi Grameena Bank Kadapa however, was not convinced with the assessee's contentions and worked out the minimum penalty at Rs. 1,24,08,861 and thought it fit to impose a penalty of Rs.1,50,00,000 u/s 271(1)(c) of the I.T. Act. For similar reasons for the A.Y 2012-13, the AO levied the penalty of Rs.1,00,00,000. Aggrieved, the assessee preferred appeals before the CIT (A) for both the A.Ys. The CIT (A), after taking into consideration the assessee's contentions that the information was taken by the assessee with regard to the population of the villages from the village heads, instead of taking the same from the census of 2001 and was only a technical error and should not be viewed as an error committed intentionally, has deleted the penalty. The CIT (A) has also considered the decision of the Income Tax Appellate Tribunal, Indore Bench, in the case of Dy.CIT Khandwa vs. M/s.Nepa Ltd in ITA No.683/Ind/2013 dated 13.10.2014 for the A.Y 2003-04 to hold that since the AO has not stated the reasons for levy of penalty in the penalty notice, the penalty is not sustainable. Aggrieved, the Revenue is in appeal before us.
4. The learned DR supported the orders of the AO, while none appeared for the assessee. It is noticed that the notice for hearing has been served on the assessee by Regd.Post A/d and further that on the last occasion i.e. on 9.11.2016, the appeal has been adjourned to 7.2.2017 at the written request of the assessee. Since none appeared for the assessee inspite of service of notice, we have heard the Department, ex-parte qua the assessee and proceed to dispose off the appeals.
Page 3 of 4ITA Nos 1050 1051 and CO 62 and 63 of 2016 Andhra Pragathi Grameena Bank Kadapa
5. Having regard to the material on record and also the submissions of the learned DR, we find that the assessee has come to the conclusion that the six branches are rural branches only on the basis of the information gathered from the village heads/records instead of the information published in the census. This, in our opinion, is only a technical error and the assessee has agreed for the disallowance as soon as it has realized the mistake committed by it. In view of this, we do not see any reason to interfere with the order of the CIT (A). Therefore, Revenue's appeals for both the A.Ys 2009-10 and 2012-13 are dismissed.
6. The cross objections filed by the assessee for both the A.Ys are only in support of the order of the CIT (A) and therefore, they need no adjudication.
7. In the result, the Revenue's appeals as well as cross objections filed by the assessee are dismissed. Order pronounced in the Open Court on 10th February, 2017.
Sd/- Sd/-
(Inturi Rama Rao) (P. Madhavi Devi)
Accountant Member Judicial Member
Hyderabad, dated 10th February, 2017.
Vinodan/sps
Copy to:
1 Asstt. Commissioner of Income Tax, Circle-1, Aayakar Bhavan, D.No.2-430-8 Nagarajupet Kadapa 516001 2 Andhra Pragathi Grameena Bank, Mariapuram, Kadapa 3 CIT (A)-Kurnool 4 Pr. CIT - Kurnool 5 The DR, ITAT Hyderabad 6 Guard File By Order Page 4 of 4