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TMI Blog2018 (6) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... NEGI, JUDICIAL MEMBER For The Assessee : Shri Jitesh Kumar For The Revenue : Shri K. P. Dewani ORDER PER SHAMIM YAHYA, A.M. This appeal by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals)-4, Nagpur dated 11.02.2015 and pertains to assessment year 2007-08. 2. The ground of appeal read as under: 1. Whether on the facts and circumstances of the case, and law the CIT(A) erred in deleting penalty levied u/s. 271(1)(c) without appreciating the fact that the assessee had deliberately claimed a deduction under the head Investment Depreciation Reserve without routing the same through the P L account and which was not allowable under the I. T. Act, 1961. 3. Brief facts of the case leading to the levy of penalty u/s. 271(1)(c) are as under: Return of income declaring total loss at ₹ 1,30,74,949/- was filed on 31-10-2007. The assessee is a cooperative bank and derives income from banking activities. Subsequently the assessee had filed revised return of income on 21-07-2008 incorporating therein a claim of deduction u/s 38(l)(viia)(a) towards the provisions for bad and doubtful debts and filed the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the said provisions, which were claimed in the respective years, were suo moto added back by the assessee in its computation of income and that the said claim was not allowable. It was also concluded by the Assessing Officer that the finding of the Hon'ble Supreme Court in the case of United Commercial Bank Vs. CIT (supra) was distinguishable and did not apply to the facts of the case and that the assessee could not make this claim u/s 37 of the Act also as the said section relates to claim of expenses and the said depreciation in investment did not amounts to claim of expenditure. In view of the above facts, the Assessing Officer added an amount of ₹ 8,21,77,045/- to the income of the assessee. 6. During the course of appellate proceedings the above issue was considered by the Ld. CIT(A) and he came to the conclusion that out of the claim of ₹ 8,21,77,045/-, the assessee would only be allowed the claim to the extent of ₹ 82.17 lacs towards amortization of premium. The assessee accepted the said decision of the ld. Commissioner of Income Tax (Appeals) and has not gone out in further appeal. 7. During the course of penalty proceedings detailed submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cannot be defined as concealment or furnishing of inaccurate particulars of income. It is settled position oflearned CIT-A further relied upon following case laws in his order; law that mere incorrect claim in the return of income would not amount to furnishing // of inaccurate particulars of income. The Ld. AO has not pointed out that any facts submitted in the return of income were factually incorrect or false or were stated with intent to mislead. There is nothing to suggest that the appellant was in any manner trying to mislead the Ld. AO and rather it is evident that the appellant was under a bona fide belief that the said amount of ₹ 821.77 lacs was an allowable expenditure. The said claim of appellant may have been incorrect but there does not appear to be any material or anything to suggest that the said claim would amount to furnishing of inaccurate particulars of income or amount to concealment of income. 10. The ld. Commissioner of Income Tax (Appeals) further relied upon the following case laws in his order: 1. CIT vs. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 (SC); 2. CIT vs. International Audio Visual 288 ITR 570 (Del); 3. DCIT vs. M/s. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative Bank Limited Vide order dated 02/05/2016 (P-6 -8)[ Vol-ll] iii) ITAT Order in ITA No 778/Pn/2011 in the case of Latur Urban Cooperative bank Limited Vide order dated 31/08/2012 (P-27-28) [Vol-ll] iv) ITAT Order in ITA No 846/Pn//2006 in the case of The Sangli BankLtd Vide order dated 30/05/2013. (P-32) [Vol-ll] v) (2013) 356 ITR 0549 (Kanrn.) Karnataka Bank Ltd vs ACIT (P-35-37,39,42)[Vol-ll] vi) (2003) 264 ITR 0545 (Ker) CITvs Nedungadi Bank Ltd (P-55)[Vol-II] The ratio laid down by aforesaid decisions squarely applied to facts in case of asseesse. In view of above loss on account of diminution in value of government securities is allowable deduction . F) The penalty proceedings are independent proceedings and once the loss in Govt. Securities is not in dispute the disallowance of claim is unjustified and unsustainable. Diminution in value of securities as claimed in the return being allowable deduction question of levy of penalty on the same does not arise. G) It is settled proposition of law that that mere making a claim which is not accepted or was not acceptable to revenue cannot be said to furnishing of inaccurate of particulars of income so as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005-06 30000000 82131000 15. These amounts were added back in the computation of the respective years itself as they were not allowable. However, in view of the RBI Circular, for charging the depreciation on investment to profit and loss account issued on 13.07.2005, the assessee claimed ₹ 8,21,77,045/- in its return of income for the assessment year 2007-08. In this regard, the assessee placed reliance by the decision of the Hon ble Apex Court in the case of United Commercial Bank (supra), wherein it was held that not making the proper entry in profit and loss account could hardly be a ground for not assessing the real income. The Assessing Officer has distinguished this Hon ble Supreme Court decision on the plea that the afore-aid case relates to claim of deduction u/s. 37, while the present case was depreciation on investment. In our considered opinion, this distinction brought out by the Assessing Officer is not correct and the same is erroneous. Just as the right profit can be determined by allowance of proper claims u/s. 37 so is the case of depreciation in investment. Proper deduction of depreciation also from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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