TaxTMI 
TaxTMI 
2017 (3) TMI 1385
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....ting into the levying of penalty are this. The assessee, a co-operative society, in the relevant year, was engaged in the business of banking. It had filed its return of income declaring total income of Rs. 30,81,850/- . Assessment was completed u/s.143(3) vide order dated 07/12/2010, disallowing claim of fringe benefit tax on the expenses of Rs. 7,583/- 3. The Assessing Officer has observed that assessment for assessment year 2009-10 had been finalized 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 Rs. 4,10,000/- The Assessing Officer further observed as under: ''In respect of the earlie....
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....11, the Return of Income should be revised by withdrawing the claim; C. By withdrawing the appeal before your honour for A.Y 2009-2010. In view of this, we request your honour to kindly allow us for withdrawing the appeal on this ground. (iii) Ground No. 2 of appeal is against provisioning of Standard Assets of 0.25% made by the bank of Rs. 4,10,000/-. This provisioning is made based as per the direction of the Reserve Bank of India 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 vi....
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....s provision towards reserve for matured investment in the profit and loss account and corresponding liability was shown in the Balance Sheet under the provisions reserve from matured investments for reserve from matured investments. Ld.Counsel referred to page 43 of paper book wherein Memoranda Accounts of the Madhavpura Mercantile Co-op Bank Limited is contained, wherein, this account was shown. He submitted that since Madhavpura Mercantile 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 f....
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....erall 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. Hon'ble Supreme Court in the case of Reliance Petro Products Ltd.(supra) has held that mere advancing of claim not sustainable in law does not ipso facto lead to levy of penalty. We, therefore, do not find any reason to interfere with the order of the ld. CIT(A). 10. As far as the second disallowance of Rs. 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....