Bank of India Vs ACIT (ITAT Mumbai)
This Tribunal in A.Y.2014-15 had held the action of the ld. PCIT in invoking revisionary jurisdiction in respect of the impugned issue before us as incorrect and decided the same in favour of the assessee.
we notice that ld. PCIT initiated the proceedings under Section 263 of the Act by issuing show cause notice and the reasons mentioned in the show cause notice was that in computing the book profits under Section 115JB of the Act, the profits of foreign branches was wrongly excluded and certain provisions were omitted to be added back, deduction under Section 36(1)(vii) of the Act in respect of bad debts written off was incorrectly allowed and disallowance made as per Rule 8D was not considered in computing the book profits. After careful consideration of the submissions of both the parties, we observe that the issue of applicability of book profits to the nationalised banks was agitated by the assessee before the ld. CIT(A) and the ld. CIT(A) has already passed an order on 21.06.2017 in favour of the assessee that the provisions of Section 115JB of the Act does not apply to the assessee. Now, in the show cause notice, similar issue was raised by ld. PCIT and passed an order on 27.03.2018, therefore, in our considered view, ld. PCIT cannot invoke the provisions of Section 263 of the Act in this matter. With regard to issue of deduction claimed under Section 36(1)(vii) and 36(1)(viia) of the Act, assessee has filed detailed submissions before the Assessing Officer and the Assessing Officer has considered the submissions even though he has not discussed it in his order under Section 143(3) of the Act. The material submitted before us clearly indicate that assessee has made elaborate submissions on this issue and the Assessing Officer has satisfied himself that assessee is eligible to claim deduction under Section 36(1)(vii) and 36(1)(viia) of the Act and, therefore, in our considered view, ld. PCIT cannot form another view on the same issue in which the Assessing Officer has already satisfied himself and passed an order which clearly indicates that the Assessing Officer has verified and investigated the matter in detail. Therefore, even in this issue, the provisions of Section 263 of the Act cannot be invoked. (emphasis supplied by us herein). With regard to the third issue raised in the show cause notice, i.e. disallowance under Rule 8D which was not considered in computing the book profits, we notice that the ld. PCIT himself dropped this issue and has not directed any revision to the Assessing Officer. From the above discussion, it is clear that the issues raised in the show cause notice issued under Section 263 of the Act do not survive. Therefore, in our considered view, the order passed under Section 263 of the Act deserves to be quashed.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal in ITA No.3473/Mum/2019 for A.Y.2015-16 preferred by the order against the revision order of the ld. Pr. Commissioner of Income Tax (Appeals)-2, Mumbai u/s.263 of the Act dated 15/03/2019 for A.Y.2015-16.
2. The only issue to be decided in this appeal is as to whether the ld. Pr. Commissioner of Income Tax (PCIT) was justified in invoking his revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case with regard to provision for bad and doubtful debts u/s. 36(1)(viia) of the Act.
3. We have heard rival submissions. We find that the ld. DR placed reliance on the order of the ld. Pr.CIT u/s.263 of the Act. We find that assessee had filed its return of income for A.Y.2015-16 on 30/11/2015 declaring total income of Rs.1124,60,27,095/- and book profit of Rs.973,05,87,429/-. The revised return of income was filed by the assessee on 25/03/2017 revising the total income to Rs.1149,86,91,658/-and book profit of Rs.937,00,35,558/-. In the revised return of income the assessee bank has claimed deduction u/s.36(1)(viia) of the Act to the tune of Rs.2926,41,40,303/-. We find that assessee had filed detailed notes to the computation of total income alongwith return of income wherein in para 1.1, a detailed note was given with regard to deduction in respect of bad debts written off u/s.36(1)(vii) of the Act which also contained a tabulation stating the details of opening balance claimed u/s.36(1)(viia), bad debts written off and closing balance of provision for bad and doubtful debts for the period from A.Y.1995-96 to A.Y.2015-16. Apart from that the assessee had also filed a separate note justifying its claim of deduction u/s.36(1)(viia) of the Act alongwith return of income. These details are enclosed in pages 14 & 15 of the paper book filed before us. We also find that the ld. AO vide notice u/s.142(1) of the Act had issued a questionnaire dated 16/11/2017 to the assessee during the course of assessment proceeding wherein in question No.5 & 6 thereon, he had raised query as under:-
“Question No.5 note on provision for bad debts calculations as to how the claim is made. Details of claim of bad debts written off u/s.36(1)(vii), nonperforming investments written off, business loss written off alongwith relevant calculations. Explain its allowability.”
“Question No.6 – “Branches considered as “rural branch” alongwith documents justifying the same. Provide details of rural advances against which deduction u/s.36(1)(viia) is made (if any) alongwith relevant calculations.”
3.1. Pursuant to these questionnaires, the assessee had filed a reply vide authorized representative letter dated 28/02/2018 in point 1 d wherein in Annexure-4, the assessee had filed a detailed note with regard to the query raised by the ld. Assessing Officer. These detailed notes are enclosed in pages 36 and 37 of the paper book filed before us. For the sake of brevity, the same are not reiterated herein. The ld. Assessing Officer after examining these details and the reply given by the assessee and considering the prevailing legal position with regard to allowability of deduction u/s.36(1)(vii) and 36(1)(viia) of the Act, allowed the deduction to the assessee and completed the assessment.
3.2. We find that the ld. PCIT wanted to impose another view on the same subject matter in the revision proceedings u/s.263 of the Act. Infact, the same reply which was already filed before the ld. Assessing Officer was again filed before the ld. PCIT. We find that ld. PCIT held in his order passed u/s.263 as under:-
“5.3 In view of the above discussion, the assessee’s claim of debit balance in PBDD account and the computation given is not correct and the same is reworked as under. Opening balance for A.Y. 2013-14 is the amount of deduction allowed to bank u/s 36(1)(viia) in A.Y. 2012-13.
